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22 October 2015

Residential building statistics
Absa - South Africa
Continued single-digit growth in residential building activity

Building activity with regard to new private sector-financed housing in South Africa (see explanatory notes) continued to grow at single digits in the first eight months of 2015 compared with the corresponding period in 2014, based on data published by Statistics South Africa. However, growth in activity levels in both the planning and construction phases of new housing remained largely segment driven up to August.

Year-on-year (y/y) growth in the number of new housing units for which building plans were approved came to 6,8%, with a total of just more than 41 000 units planned since January. This growth was largely driven by the segments for houses less than 80m² and flats and townhouses, with these two segments showing combined growth of 10,1% y/y to a total level of 29 855 units in the eight-month period.

The volume of newly constructed housing units increased by 7% y/y to a total of more than 25 000 units in the period January to August this year. This growth was largely the result of a relatively strong improvement of 14,5% y/y in new houses built to an overall total of 18 028 units. The number of new flats and townhouses built dropped by 8,1% y/y in the eight-month period. However, flat and townhouse developments normally take quite some time to complete as a result of the extent of construction activity, with the growth of almost 10% y/y in the planning phase of these types of housing so far this year expected to be reflected in the construction phase at a later stage.
Building stats Aug 2015

Successful property investors continuously upgrade their portfolios
Rawson - South Africa
A property investment cannot be regarded as successful unless it gives a return at least equal to that of a reputable money fund – with the capital appreciation then being a bonus. This was said recently by Bill Rawson, Chairman of the Rawson Property Group.

“Achieving successful returns of this type,” added Rawson, “can only come about if a continual policy of upgrading the property portfolio is accepted and adhered to year in, year out.”

As a corollary to this, said Rawson, it should be accepted that low performing properties, where possible, should be sold off to finance upgrades and better buys.
Rawson

Holding out for a high rental may prove costly
IolProperty - South Africa
Landlords need to guard against pricing themselves out of the market as rental prices slow in tandem with the movement out of a sellers' property market.

That's according to Lorraine-Marie Dellbridge, rentals manager for Lew Geffen Sotheby's International Realty in the southern suburbs, Noordhoek and False Bay, who says: "In 2014 rentals were already hitting a ceiling, but this year they've exploded through the roof and we are finding that many properties, especially at the upper end of the market, are now sitting empty for months.

"This essentially means that landlords are actually losing money as their properties are not earning anything while they are empty. So, over a year they will yield much smaller returns than if they had been rented out immediately at realistic, market-related rentals."

Although the goal is to maximise return on investment, rent should be set at the highest point that will easily attract tenants, and Dellbridge says the best way for landlords to determine realistic rentals is through research.
IolProperty

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