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Discussion Starter · #2 ·
BUYING|SELLING
Building costs make homes too dear

Fri, 29 Jun 2007

New homes will cost twice as much just five years from now, thanks to rocketing building costs.

According to Tony Clarke, managing director of Rawson Properties, building costs are rising at 17 percent per annum, which in turn are pushing up the cost of new homes. As a result, he says, now is a good time to invest in the residential market.

The Western Cape market in particular is looking likely to see the biggest gains, despite seeing a slow-down in sales.

Lower end homes

At the moment, small properties in the Western Cape have an average price of R759 604, medium-sized bracket properties an average value of R1.04-million and large-sized properties an average of R1.5-million.

In all categories these prices are significantly higher than the SA national averages. The homes at the lower end of the market are still appreciating fastest (by 18 percent per annum).

That’s why Clarke believes that the best buys right now are in Cape Town in the fringe areas of the traditionally high-priced suburbs like Plumstead , Kirstenhof, Wynberg and Observatory. Coming off a low base, these are appreciating fastest as a result of demand from fast-growing upwardly mobile new buyers.

Property cycles

Residential developments and renovated homes in and around commercial centres, particularly the CBD of Cape Town are also booming because prices there are still “reasonable” and people have grown tired of the time wastage of commuting.

In Johannesburg, he said, the investment hotspot is the 2010 sport precincts such as Ellis Park, which is now undergoing an urban rejuvenation of unprecedented proportions.

According to Clarke, “Over the last 30 years, economic cycles have sent property prices up and down — but property has had an average annual growth of 18 percent and remains the safest of all investments.”

Lower asking prices

He says that while the boom of the last few years has enabled prices to catch up with international levels, we still have a long way to go.

“But this stabilisation (with 74 percent of properties now sold below the asking price) has led to more realistic prices and increased buyers’ interest."

Buyers are now putting in bids 15 to 20 percent below the asking price and are less urgent to conclude deals because their options have increased. The implementation of the Credit Act in June has further strengthened buyers’ positions because some bond applicants will find that they do not qualify for bonds at the level they had anticipated.
 

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Discussion Starter · #3 ·
Cape Town taking the lead?
Presenter: Lindsay Williams Guest(s): Kura Chihota

Is the most expensive South African office space located in Sandton with all those fancy new glass towers that are going up? Maybe not. Classic Business Day gets Kura Chihota on the line from Khokhela Properties

LINDSAY WILLIAMS: According to Kura Chihota the most expensive office space will soon be located in an “iconic position” in Cape Town. Kura, is this just an isolated case, or is there a trend emerging?

KURA CHIHOTA: In this particular instance it’s an isolated case - this is at the top of the stunning development that Madison is doing at the end of the Cape Town Convention Centre. It’s about 1,200 square metres of the total 16,000 square metres. The rest of the building will still be pretty trend setting at about R120 per square metre, but there are other areas in Cape Town that are competing at that sort of a level.

LINDSAY WILLIAMS: Yes, I can actually see the building from the Classic Business Day Cape Town studio window at the moment - that’s the sixteenth floor penthouse suite at Cape Town’s premier address, the superbly located convention tower. What are you going to get for that?

KURA CHIHOTA: Madison is putting it out at around R200 a square metre. If you compare that with international rentals that are bumping happily around R1,300 a square metre taking London as the highest benchmark price it’s still a bargain for those lads who want a spot in the sun.

LINDSAY WILLIAMS: Yes, very true. It might be a little bit difficult commuting down here, but I get your point...

KURA CHIHOTA: It’s nice for board meetings and stuff…

LINDSAY WILLIAMS: What do you think it’s going to do? It’s all very well that Madison is putting this particular development out at this price, but whether it’s going to be taken up or not is another matter, and whether there’s a knock-on effect on the Cape Town central business district is another thing. Is there a shortage of office space in Cape Town?

KURA CHIHOTA: Absolutely, there is a shortage. The trend has seen office space converted to residential, with upwards of 3,000 or 4,000 units coming into the city. That’s really taken existing C-grade stock out of the market, and when that tightens up people have moved to the B-grade stock, and when that runs out people upgrade to the A-grade stock. The real estate dynamics of the Cape Town city bowl means you have to be there - it’s got good transport, it’s got the amenities one needs, and there’s a shortage because God isn’t making any more land between the mountain and the sea…

LINDSAY WILLIAMS: What do you think of the theory that more and more businesses if they’re flexible enough are now moving down from smokey and crime-ridden Johannesburg to Cape Town because of the lifestyle, and maybe the cost of living is less here - is that a reality?

KURA CHIHOTA: High value intellectual property industries like financial services can do that, but the last research shows 70% of the JSE-listed companies still have their headquarters up in Gauteng. The Cape lifestyle is attractive, but it’s only a certain kind of business that can afford to be there or telecommute…

LINDSAY WILLIAMS: Are international companies relocating to Cape Town? We hear a lot about call centres, and companies that don’t need to be tied to one geographical location like IT companies - is that a myth?

KURA CHIHOTA: It’s not a myth. There is strong international interest - Cape Town is poised for a boom with the confidence shown in the purchase of the V&A, and the mixed use development around the Greenpoint Stadium is creating an international buzz. The demand is for well-located space that’s on a popular route - and Cape Town is by all means on that popular route. That’s a trend we are going to see...

LINDSAY WILLIAMS: This should be good for the GDP of the region - obviously the GDP of South Africa is always going to be dominated by Gauteng, with over 60% generated in that particular node - but will Cape Town catch up slowly in significant percentage terms?

KURA CHIHOTA: I think the jury is out. The dynamics of real estate is about fixed locations - New York is Madison Avenue. You could build in the next street, but that wouldn’t be the same thing. In Cape Town there are some real geographical issues - the road network there to get people around really prescribes where an office complex of scale needs to be. Johannesburg has a number of nodes that can take significant development - there’s something happening at 1 Sandton Drive where Fricker Road has been developed out - so there are alternatives in Johannesburg. There’s a compression factor in Cape Town because of the limited supply of land and strong demand - they’re coming off a lower base, but there’s added pressure without available land to develop to demand.
 

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VERY good read...what will be the next buy? I can already see the Durban Point becoming a purchase, so too the Tongaat Hulett land all along the north coast. As for the Centrum site...surely someone see's the value there?

The Property Prance
04 Jul 2007 - Finweek -

Intro
Some of the wealthiest property investors in Britain, Europe and the Middle East have hit town ready to bulk up their global portfolios with large investments in prime South African real estate

The bigger players have billions to spend. And they're not averse to aggressively outbidding South African buyers for what they perceive to be highly undervalued commercial and leisure property assets. First prize for most of those investors is to buy directly into single, mixed-use developments that offer a combination of retail, office, hotel and residential opportunities - deals that have the potential to become another V&A Waterfront, Century City or Melrose Arch.

But some are also making a play for JSE-listed companies with sizeable underlying property portfolios: gaming/hotel operators and corporates alike. Foreign investors aren't necessarily interested in the core businesses of such companies - it's more about stripping out the underlying property assets. Talk is that a number of offshore players are keen to get their hands on the large tracts of undeveloped land owned by the likes of Tongaat-Hulett and AECI.

To date, the biggest single property deal in SA involving foreign investors was the sale of the V&A Waterfront to British-based London & Regional Properties and its Dubai partner, Istithmar PJSC, in September last year for R7bn.

Both London & Regional - recently rated by the London Financial Times as the biggest privately owned property company in Europe, with assets of around R100bn - and Istithmar want to increase their exposure to SA property.

Finweek hears that London & Regional is already negotiating an offer to buy another iconic SA development: Melrose Arch. Industry insiders place a value of at least R3bn on the trendy, mixed-use precinct just off the N1 north of Johannesburg.

London & Regional is also rumoured to be one of the suitors eyeing listed casino/resort operator Gold Reef Resorts. Earlier this year, London & Regional was involved in unsuccessful talks with Peermont Global, another SA gaming/hotel operator.

Gold Reef Resorts recently said that it was in talks with three or four "selected" parties that could result in a buyout offer for the entire company. Mvelaphanda chairman Tokyo Sexwale, together with Durban-based businessman Vivian Reddy and US-based casino group Harrah's, are other likely bidders.

Casinos in the Gold Reef stable include Gold Reef City (south of Johannesburg), Garden Route (Mossel Bay), Golden Horse (Maritzburg), Goldfields (Welkom) and a majority stake in Casino Mykonos (Cape West Coast). The deal is estimated to be worth R10bn. It will be interesting to see to what extent SA buyers will be prepared to match or exceed the bids of their offshore competitors.

Meanwhile, Dubai-based Istithmar subsidiary Leisurecorp earlier this month announced it had bought Pearl Valley Signature Golf Estate and Spa in the Cape Winelands. Leisurecorp isn't disclosing what it paid for Pearl Valley or how much it will spend to turn the 170ha development into a major international golfing resort. However, Leisurecorp CEO David Spencer says the acquisition was a "significant" investment, both in terms of the initial price paid and the development plans it hopes to implement.

Spencer says it's likely that Istithmar and its real estate investment arm will be involved in more deals in SA. Says Spencer: "SA is currently one of our leading target markets, partly because of the growth in the country's leisure and tourism sectors and partly because of the boost we expect from the 2010 Soccer World Cup."

Lehman Brothers, one of the US's biggest investment banks and asset managers, has also recently entered the fray via a joint venture with JSE-listed Madison Property Fund Managers. Though the deal hasn't yet been officially announced, a large tract of land on the outskirts of Cape Town has apparently been bought for R500m to develop a mixed-use retail, office and residential precinct comprising bulk space of at least 100 000sq m.

Then there's Kuwaiti developer IFA Hotels & Resorts, which is expected to announce a major acquisition within weeks. It's not unlikely that IFA has its sights on AltX-listed golf estate developer Acc-Ross.

IFA's SA-listed arm already owns stakes in other golfing estates, including Zimbali Coastal Resort (near Ballito on the KwaZulu-Natal north coast) and the Cape Winelands estate Boschendal. IFA also recently entered the Namibian hospitality market in a R550m joint venture with Ohlthaver & List.

Other foreign players include Irish developer Howard Eurocape, which is ploughing R500m into the mixed-use Mandela Rhodes Place in Cape Town's CBD. Offshore private equity funds are also starting to tap into SA's commercial property market.

An Irish consortium recently appointed SA corporate finance outfit and designated AltX adviser Bridge Capital to place around R1bn in directly held office, retail and industrial buildings. Ron van der Bos, who together with Tobias Hegele and Jeremy Clark head Bridge Capital's property asset management division, says they've already bought stock worth R300m on behalf of that client. They're in the process of setting up a second fund for the same Irish client and are involved in talks with other British and European offshore consortiums to set up similar property investment funds.

The list goes on. But why the sudden surge in interest in SA's commercial and leisure property assets?

"It's simple. In global terms our market offers value. And with so much offshore money looking for a home, it was only a matter of time before foreign property investors would turn to SA,'' says Arnold Meyer, ex-Broll CEO and recently appointed MD of London & Regional's Africa operations.

Meyer says foreign players have different perspectives on extracting value and structuring transactions. "So foreign players such as London & Regional view SA as a long-term buy."

That does perhaps suggest why international investors are prepared to pay more for prime properties (think V&A Waterfront) than their SA counterparts.

Meyer won't confirm whether London & Regional is bidding for either Melrose Arch or Gold Reef Resorts, except to say that it's involved in "various discussions with various parties". Though London & Regional is a major player in emerging economies, including Poland and Russia, its 50% investment in the V&A Waterfront was its first acquisition outside Europe.

Meyer says SA, and Africa in general, offer double the growth potential over the next five years than any European property market. He says it's likely that London & Regional could have 20% of its assets in Africa within five years.

Craig Ewin, CEO of Old Mutual-managed SA Corporate Real Estate Fund, says there's no doubt that international property players are increasingly looking at emerging markets as the risk profiles of developing economies improve. Ewin says the general view is that international investors can no longer afford to ignore high growth opportunities in emerging economies.

Says Ewin: "South African real estate offers a huge value proposition. Investment Property Databank (IPD) performance figures show that SA's direct commercial property has outperformed all international markets over the past three and five years. Yet we still offer an average income yield that is 200 basis points higher than any other market included in the IPD benchmark."

Madison Property Fund Managers executive director Mike Flax holds a similar view. He says offshore developers regard SA as cheap compared with other emerging markets. "International investors believe SA is now where Poland was five years ago." Flax says in recent years foreign investors have poured billions into Poland's previously underdeveloped commercial property market, unlocking plenty of upside in the process. The same is bound to happen in SA.

Flax says the V&A Waterfront sale has been a major catalyst for further money flow into SA. "The world has suddenly been forced to stand up and take notice of SA."

But it's not only perceived value that's luring more foreign property players to SA's shores. Phillip da Silva, vice-president of operations for IFA Hotels & Resorts in Africa and the Indian Ocean, says SA's highly developed transport and tourism infrastructure is a major plus for international hotel and resort developers.

So too is security of tenure. For example, Da Silva says that SA is far more attractive than Zanzibar or Mozambique, where property investors can't obtain freehold title.

Van der Bos says that SA's well-developed legal and financial framework should also not be underestimated. Even the language factor plays a role. For example, Van der Bos says German investors feel more comfortable entering an English-speaking country such as SA than neighbouring Poland, where language is a barrier.

However, industry commentators agree that the one factor that could slow the offshore scramble for SA property is a growing shortage of investment stock. But that could prompt more overseas investors to go the indirect route via listed property loan stocks and property unit trusts.

Although some may bemoan the fact that SA's crown jewels are increasingly finding their way into foreign hands, Growthpoint Properties CEO Norbert Sasse says the pros of offshore participation far outweigh the cons. "Increased foreign competition for prime SA property assets will help put us on the map as a preferred global investment destination - which can only be positive for our real estate market." Sasse says some of these international players have the vision, money and skills to turn underutilised assets into world-class developments.

But there's also no doubt that foreign interest will push SA property prices up. Flax says increased competition for SA property - both physical and listed - will result in higher prices and lower yields. "However, the positive spin-off is that the expertise that international players bring to SA can only sharpen the skills of our players."

Ewin agrees: "More international investors vying for SA property must affect prices. But if SA wants to play in the international environment, we can't bury our heads in the sand and think we're still going to control our own market."
 

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Discussion Starter · #6 · (Edited)
Anyone got a clue where this "large tract of land is" on the outskirts of the CBD?

_____________________________________________________________________


Lehman Brothers, one of the US's biggest investment banks and asset managers, has also recently entered the fray via a joint venture with JSE-listed Madison Property Fund Managers. Though the deal hasn't yet been officially announced, a large tract of land on the outskirts of Cape Town has apparently been bought for R500m to develop a mixed-use retail, office and residential precinct comprising bulk space of at least 100 000sq m.

Full Article: http://mickson.blogspot.com/2007/07/extreme-hype-oohhhh-this-is-going-to.html
 

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A country that's got a lot of bottle

The Telegraph - London


Max Davidson
Last Updated: 12:01am BST 12/05/2007


South Africa's future is looking brighter, says Max Davidson

Wine-tasting? Bird-watching? A round of golf? A chukka of polo? A ride in a gondola? You name it, South Africa has it. Was it really only twenty years ago that this was a pariah state?

Things are happening so quickly that it can be hard to keep up.

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Reminders of the old South Africa are not hard to find. From the waterfront cafes in Cape Town one can still see Robben Island, where Nelson Mandela was a prisoner for 27 years.

This is still, manifestly, a country where there is a yawning gulf between the Haves and Have-Nots. Apartheid may be history, but poverty afflicts black people disproportionately. You only have to look at the shanty towns next to Cape Town airport - "informal dwellings", as they are coyly referred to - to see how many social and economic challenges remain.

Crime is a running sore in some areas. But there is also an optimism in the air, a faith in sustainable economic growth, that you can almost smell.

Buy in the right area at the right time and you are laughing. An ex-city planner, 49-year-old Japie Hugo, is typical. The threebedroom house he bought for 775,000 rand (just under £60,000) in 1997, in the supertrendy Camps Bay suburb of Cape Town is now worth nearly nine million (just under £700,000). But perhaps the most intriguing thing about 21stcentury Cape Town is the renaissance of the central business district (CBD).

Areas that once used to be regarded as no-go areas at night are being coaxed back into life. There are well-lit pedestrian precincts, police patrols, teams of graffitti-busters, as a great city tries to put its house in order.

"We want to make the centre of the city the heartbeat of the whole region," says Andrew Boraine, CEO of the Cape Town Partnership, a joint publicprivate venture. "There need to be people living here, not just working here." And he is getting his wish. Some 3,000 new inner- city apartments have come on the market in the last six months, at an average price of 800,000 rand (about £60,000).

One of the most impressive properties, right in the heart of the city, is Mandela Rhodes Place, a sparkling one-billionrand (£76 million) development, incorporating everything from stylish high-rise apartments, with spectacular views of Table Mountain, to an inner-city winery.

"Property prices in the CBD are about to rise stratospherically," predicts Frank Gormley, CEO of Eurocape, the developer of Mandela Rhodes Place. Gormley is Irish and, like many of his compatriots, sees parallels between the Cape Town of today and the Dublin of twenty years ago. "This city is in the infancy of its renaissance. By the time of the 2010 Football World Cup, there will be no stopping it."

Just a developer's blarney or sound economic sense? Time will tell. But there are plenty of other developers in the Western Cape putting their money where their mouth is.

Half an hour to the west of Cape Town is the seriously overthe- top Century City, a new development which is trying to be all things to all people and, in places, making a good job of it.

As I wander through the vast shopping mall, then take a motorised gondola ride to an outsize apartment block called Knightsbridge, next to some pseudo-Italian waterside villas, I could be on the Strip at Las Vegas. But there are grace-notes amid the kitsch.

There is a large wetlands area, heaven for bird-watchers, and a well-designed purpose-built retirement village called Oasis, where units start at 470,000 rand (just over £35,000).

Another 25 miles to the west is Stellenbosch, an old university town and one of the prettiest parts of South Africa, with mile upon mile of vineyards surrounded by mountains. It is as tranquil as Century City is boisterous and there are some pukka new developments, none more pukka than Val de Vie, a winelands estate near the picture-postcard village of Franschhoek.

This is prime South African real estate. You can buy a 1,000 square metre plot for about £100,000, which is reasonable considering the calibre of the property.

The Val de Vie estate is owned by an old Huguenot family, and you can see French touches everywhere.

It is a lovely restful spot and only an hour from Cape Town. Deliciously unexpected are two full-size polo fields. Cowdray Park in the veldt, with a bottle or two of local wine at the end of the last chukka? It is a mouth-watering prospect - and it's symptomatic of a country where, after the lost years of apartheid, developers are daring to believe in a better future.

What's the score?

Why buy


The South African economy recorded a five per cent growth last year
Residential land prices rose by 14.4 per cent last year
The perfectly opposite seasons (South Africa enjoys its summer while we in the Northern Hemisphere are shivering in our winter) and the minimal time difference make South Africa a popular tourist, second home and retirement destination
There are 7.39 million foreign tourists to a country with a population of 47 million
Why not

Some investors feel the best profits have already been made
Concerns remain over the political situation in neighbouring Zimbabwe
Caution has spread across the property market this summer following the hike in interest rates and possible further increases before the end of the year. As a result, investors are looking to the development market with a long-term view
Fair trade? The daily earnings of a vineyardworker in the Western Cape is about £7.50
Invest? 8/10

Make mine a wine

Stellenbosch was settled in 1679 by the Dutch, who found the region's cool climate and fertile soil ideal for wine-making.

Although South Africa is well behind the major producers such as France and Spain it is winning a reputation for sound, solid wines.

Decanter magazine described one year's vintage as including 'big, burly reds'.

The Stellenbosch Wine Route gives the weary house hunter the chance to unwind with a tour of 44 cellars which produce a wide variety of red and white wines.

Most of the cellars offer cellar tours as well as lunches in their shaded gardens with a bottle of wine.

The route takes you along several winding country roads through vine-covered hills and valleys, dotted with white-washed homesteads.

Wine appellations to look out for: Constantia, Darling, Helderberg, Paar and Walker Bay
Top producers: Thelema, Devon Hill, Jordan, and De Trafford

Try these...

£100,000



Winelands Lifestyle Estate

Upmarket polo estate, Val de Vie Estate, in beautiful winelands of Western Cape Price 1,000 sq m plots from £100,000
Contact 0027 83794 0404

£35,000



Retirement village with a difference

Purpose-built units in Oasis Village, in luxury development Century City, west of Cape Town Price From £35,000
Contact Rabie, 0027 21 551 3354, www.rabie.co.za

£140,000



Inner city chic

Stylish modern apartments in Mandela Rhodes Place, in heart of Cape Town CBD Price From £140,000 to £505,000
Contact 0353 1667 0099, www.christiesestates.com
 

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Discussion Starter · #8 ·
the two new towers on the corner of strand street along with the golden acre upgrade and train station upgrade is really going to make a difference since they would improve the area and atmosphere along with all the great things the Mandela Rhodes place has done, then on the other end of adderley street, you have the convention tower and cticc expansion, media city construction, monte carlo building upgrade..so you really have the entire adderley street being transformed, with each project playing its part.
 

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Discussion Starter · #9 ·
Seeff starts commercial arm to cope with huge demand

The commercial and industrial property market is buoyant at present, and a number of complexes are being developed all over the Peninsula, and the Cape Town CBD in particular.

To keep up with demand, Ian Slot, MD of Seeff Atlantic Seaboard, CBD and City Bowl, has launched a revamped and revitalised Seeff commercial arm.

The Seeff CBD commercial arm is headed by Chris Snijman, who says development in the CBD is going to be phenomenal - from the Green Point development and the stadium, through to the upgraded V&A Waterfront, past Somerset Hospital and the addition to the International Convention Centre, linking up with the new development at the Foreshore and the harbour.

"Some commercial sectors are particularly popular," he says. "There is a huge demand for hotels, and also for restaurants and restaurant sites. These must be in good positions. The commercial field is not building to 2010 as such - it is long-term for future development. Investors spending millions of rand on a hotel need to see it surviving beyond 2010."

He says the hotel buyers are mostly foreigners and that business is driving the growth in industrial parks.
 

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Error in the British article

The caption describing the development mentioned as the Oasis retirement development in Century City. However the picture above is of the Island Club, completed in 2005, which is the largest residential development in Century City which also includes the four-star Protea Hotel within the complex. The Oasis retirement development on the other hand is a 10-storey block that was just recently completed.
 

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Discussion Starter · #11 ·
Cape Town will soon resemble a construction site

Cape Town will soon resemble a massive construction site as work begins on projects worth R10-billion, most of which are expected to be completed before 2010.

Public transport is the big winner, with the city, the province and national government spending R6,5-billion. This includes the taxi and bus recapitalisation programmes.

Work will be spread over the next three years, and some of the projects have already started.

The airport is undergoing a R1,3-billion facelift with the building of a new terminal. Another R410-million will be spent on the rail link between the airport and the CBD.

'This will be the lasting legacy of hosting the event'
Work on the Klipfontein Corridor is set to start in the next few months, with R190-million spent on reconfiguring the road to accommodate permanent bus and bicycle lanes.

Final touches are being made to the public transport lane on the N2, which will open within weeks. A similar lane will be created on the N1.

Construction of viaducts over the N1, which will ease traffic congestion at the Koeberg interchange, will start in January.

Work on the railways has already begun, with Metrorail committing R1,2-billion to upgrading infrastructure, refurbishing coaches and buying new trains.

An additional 4,5km of rail is being constructed in Khayelitsha, at a cost of more than R400-million.

The N2 Gateway project will see a further injection of R750-million.

The Conradie Hospital site, already sold for R90-million, will be developed into 1 500 affordable housing units.

The bulk of the money will be set aside for a primary healthcare upgrade, while R5-million will be used for a low-cost housing development.

Cape Town station will get a much needed R95-million upgrade, and work is already under way on the R3-billion Green Point Stadium.

A total of R11-million will be spent on fan parks across the province.

The successful Cape Town International Convention Centre will be extended to the Customs House at a cost of R800-million.

Negotiations with the department of public works are in the final stages, says deputy director general in the department of the premier, Laurine Platzky.

Plans for a hotel next to the extension are also being considered.

Private sector investment includes a R1,2-billion upgrade of the Waterfront. And a massive gap housing project between Macassar and the Strand is in the pipeline.

Construction of six new hotels is expected to start within months.

The Klipfontein Corridor will be the spine of public transport in the city, running from Gugulethu, through Athlone and ending in Mowbray.

Once complete, commuters will be able to use rapid transit buses, which will travel in dedicated public-transport lanes. There will also be dedicated bicycles lanes.

The city council's 2010 spokesperson, Pieter Cronje, said: "By harnessing the funds made available nationally for 2010-related facilities, including a new stadium, transport and other upgrades, the city expects post-2010 Cape Town to be a more desirable destination for leisure and business travellers, investors, and of course, its residents.

"This will be the lasting legacy of hosting the event."

Once the infrastructure is in place, the government will focus on getting more people to use public transport, which the authorities say will be safer, cleaner, more comfortable and cheaper than using private vehicles.

Premier Ebrahim Rasool said the massive infrastructure programme was an "opportunity to accelerate key development investments that can be used in the fight against poverty and underdevelopment.

"For ordinary citizens this investment should result in employment in the construction, leisure, transport, tourism and service sectors."
 

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potentially huge results!

Developers await decision on inclusionary housing policy

(Building) CAPE TOWN (July 27) - After months of waiting, South African developers will soon be hearing the final outcome on the national housing department’s policy on inclusionary housing.

The proposed final draft of the government’s policy on inclusionary housing is currently being negotiated between the housing department, commercial property association SAPOA (South African Property Owners Association) and other industry stakeholders, and its results are imminent.

Inclusionary housing refers to government ordinances that require a given share of new construction and development to be made available to low and lower-middle income groups. Taking the form of a mandatory or voluntary ordinance, many cities internationally subscribe to inclusionary housing policies and include countries throughout Europe, the UK, the USA, Canada, Australia, Malaysia and China.

Two approaches have now been proposed for South Africa — namely a voluntary, proactive deal-driven approach that would generally be applied to state-owned land, and a town-planning compliant approach to private land at the level where developers engage with municipalities for re-zoning applications.

Erwin Rode of property valuers and economists Rode & Associates welcomes the two-pronged approach, “particularly compared to the fixed percentage which the government had been adamant about implementing a year ago, and which had caused an uproar among developers throughout South Africa.”

The government was originally looking at imposing a fixed 20% to 30% of units to be set aside for inclusionary housing.

The discussions surrounding the new policy date back to the Housing Indaba held in Cape Town in September 2005, which included representation from the government, banks, property developers and the private sector in general, and during which it was agreed that a policy had to be formulated to accelerate the delivery of housing in order to address the massive backlog in both the rental and ownership markets.

Affordable housing has been defined as the range between the cost of an RDP house (at around R50 000) to the top of the “affordable housing range” (defined at around R300 000). Rental housing is in turn seen to be in the range of R500 to R2 500 per month.

Regarding the on-selling of inclusionary housing to ensure that owners from the same income brackets continue to qualify for the property, it has also been proposed that units resold during the first ten years after construction may only be sold at the original price plus construction inflation. Only after 10 years from date of development would a unit be available for sale at market-related prices.

Outlining how the two approaches would work — voluntary versus the town-planning compliant policy — housing director-general Itumeleng Kotsoane explained that the voluntary approach would be applied to state-owned land, currently belonging to parastatals and government agencies, which would be set aside for housing developments and made available to developers on condition that the developer set aside a percentage for low-income housing.

In the case of the town-planning approach to privately owned land, Kotsoane noted that the policy would be applied in cases where a developer wanted to change the zoning of land from, say, agricultural to residential, in which case the developer would be required to implement inclusionary housing in the new scheme.

Various incentives are also currently being discussed in the form of tax benefits; however, the exact nature of these incentives is yet to be announced.

Rode says government should tread carefully to avoid unintentionally turning off the new-supply tap. The effect might be prices of existing houses shooting through the roof. “After all, no developer will commit to a deal with the authorities knowing full well that his project will not sell,” says Rode.”




Submitted: 27 Jul 2007
 

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potentially huge results!

Developers await decision on inclusionary housing policy

(Building) CAPE TOWN (July 27) - After months of waiting, South African developers will soon be hearing the final outcome on the national housing department’s policy on inclusionary housing.

Rode says government should tread carefully to avoid unintentionally turning off the new-supply tap. The effect might be prices of existing houses shooting through the roof. “After all, no developer will commit to a deal with the authorities knowing full well that his project will not sell,” says Rode.”
Submitted: 27 Jul 2007
Rode is right. This new regulation will only have the effect of depressing the property market and deterring foreign investment which would lower GDP growth and confidence in the SA economy as a whole as this amounts to heavy handed political interterence in the economy by the ANC which seems to be looking after it's own elite interests and the 2009 election by making populist promises. Social engineering does not work now as it did not work under apartheid.
 

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This is bad news

Land restrictions remain on table after release of cabinet report

Property still open to foreign buyers
July 25, 2007

By Roy Cokayne

Pretoria - The threat of restrictions on the foreign ownership of land receded yesterday, but the issue remains on the government's agenda.

A cabinet meeting in Pretoria received and noted the report by the panel of experts on the development of policy on regulation of foreign land ownership.

The report follows the hefty increase in property prices in recent years, which was blamed on land purchases by foreigners.

Pam Golding Property's website is indicative of how residential property is out of the reach of ordinary South Africans in certain areas. Among its sales listings for Clifton is a beach house in for R38.5 million and a four-bedroom apartment for R34 million.

The panel considered the following key recommendations:

n Long-term leasing of land as opposed to outright sale;

n A possible moratorium on sale of land to foreigners;

n The identification of instances where a prohibition on foreign ownership of land could be justified, such as national key points, water catchment areas, land along border lines and international borders; and

n Special ministerial approval in cases where certain categories of land were considered for disposal, such as land earmarked for land reform, restitution or integrated human settlement.

The cabinet statement says it has approved the publication of the report for public comment subject to the inclusion of a comparative analysis of how other countries managed this complex policy matter.

"The final policy will be approved by cabinet after the public has commented on the report," says the statement.

Erwin Rode, chief executive of property services company Rode & Associates, believes the threat of foreign land ownership restrictions is receding. He has the impression that the government is backtracking on the imposition of restrictions.

"The fact that they haven't come up with any hard evidence of foreigners somehow influencing our [property] prices will make it difficult for government to do anything but make a gesture," he said.

John Loos, a property strategist at First National Bank Commercial Banking, said there was "nothing too concrete" on what the policy would be. He did not ultimately believe the recommendations would be draconian.



"They are taking a long time, and the longer it takes the more I'm encouraged, because the more sensible the policy will possibly be. There are concerns about foreign land ownership but the government is also aware of the potential benefits of foreign investment," Loos said.

"There have been suggestions that foreign land ownership has been driving up property prices," he continued.

"The reality is that the economy has been performing strongly and the middle class growing, which has been the main driver of property inflation."

Loos said in support of this statement that property inflation was widespread, even in townships where there was very little foreign interest.

In February the state-appointed panel called for an immediate moratorium on land transactions by non-South Africans, despite preliminary findings indicating extremely low levels of foreign ownership.


Attraction of local equities is fading

Johannesburg - Equities were losing their appeal to foreign investors, Old Mutual Investment Group South Africa (Omigsa) said yesterday.

Peter Brooke, head of macro strategy at Omigsa, said that based on historic price:earnings ratios of US shares and local shares, South Africa might get fewer foreign inflows in the next three years.

Price:earnings ratios reflect corporate prospects, with a high ratio showing a very optimistic outlook on earnings. Foreigners invested R130 billion in South African financial assets last year, with about R72 billion going into JSE-listed shares.

This year investors from abroad have made net purchases of about R50 billion, compared with R55 billion for the same period last year. But Brooke said the real return from all asset classes would be "considerably lower than those seen in the past four years".

Bonds, which have responded to the deterioration in inflation, are expected to yield only 8 percent. Property is forecast to earn about 10 percent, while equities are expected to be the best performer, with returns of up to 13 percent a year over the next three to five years.
 

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Boom time builds up to beyond 2010
30 Jul 2007 - Inet Bridge -

Intro
Government and private sector infrastructure investments are expected to secure the boom in the construction and building industries

By Don Robertson

Government and private sector infrastructure investments are expected to secure the boom in the construction and building industries until well after the 2010 soccer World Cup, according to industry leaders.

They said the government's decision to go ahead with a R400-billion infrastructure programme, an even bigger commitment by the private sector and economic growth rates well above 5% a year would buoy the industries and drive the economy.

Brian Bruce, chief executive of Murray & Roberts, predicted the boom would continue long after 2010 and well "into the teens of the 21st century".

He cautioned, however, that there might be some ups and downs in the industry during this period.

But, despite this caution, construction companies are flocking to list on the JSE's alternate exchange, which facilitates listing of small companies.

Since AltX was established almost three years ago, 14 of the 50 companies listed are related to the building and construction sector with interests in home improvements, heavy construction and building materials and fixtures.

Among the bigger groups are Esor, Sanyati Holdings, Afrimat and the Raubex Group. The total market capitalisation of these companies this week was R20.6-billion, according to an AltX spokesman.

And Stefanutti & Bressan, with annual turnover of R1.7-billion, plans to list on the JSEs' main board on Friday after raising up to R465-million by placing 35 million shares. A limited offer of a further 11.5 million shares will be offered to vendors.

The company believes that revenues will grow to R2.5-billion in 2008. In the year to February, the group earned a net profit of R67.2-million, after the cost of BEE involvement, and expects this to grow to R115-million in 2008.

The group has a 15% BEE involvement through Mowana Investments.

Chairman and co-founder of Stefanutti & Bressan, Gino Stefanutti, said the construction industry was experiencing unprecedented growth and that there was "a positive picture of long-term growth for the industry".

Last month, the FNB Civil Construction Confidence Index, compiled by the Bureau for Economic Research recorded another increase.

Cees Bruggemans, chief economist at First National Bank, said that the figure reflected "very favourable business conditions". It is reported that the industry had grown by 13% a year since 2003.

The SA Federation of Civil Engineering Contractors noted that the number of people in the construction industry had risen to 114 000 in the first quarter of this year .

But, the FNB Index found , a shortage of skilled labour was affecting construction activities and impinging on completion times. Training would have to be accelerated to contain construction costs as a result of higher wages .

Power generation, with Eskom looking at another nuclear power station, will also help keep activity high. Power generation infrastructure development will begin in earnest next year and this is a 25-year project.

Transport, water and sanitation, schools and hospitals will need to keep pace with the macro- economic growth, said Bruce.

The attractiveness of the building and construction sector has attracted an unsolicited bid for building materials supplier Iliad Africa from a consortium led by Absa Capital. Talks are continuing.

Last week Iliad said it had acquired the Gauteng-based, R220-million-a-year Thorpe Timbers . Recently, the group bought USM Building Supplies and Lumber City in Lephalale (Ellisras). The combined acquisitions should add R350-million to revenues.


South Ocean, the Johannesburg-based manufacturer of building wires, has spent R10-million on the first phase of its expansion plans by purchasing new machinery that will increase its capacity by 10%.

The company, which was listed in February, has begun the second phase of expansion at a cost of R30-million for new machinery, buildings and working capital, which will add 15% to capacity.

The company recently acquired Radiant Lighting for R485-million, which expands its operations into decorative lighting, lamps and bulbs and electrical products.

Black empowerment group Afrimat announced two weeks ago that it had purchased two quarries and a concrete block-and-brick factory in KwaZulu-Natal, its second acquisition since listing in November. This brings its number of quarries to 22 and brick factories to nine.
 

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A good article on this topic

Property24.com

'don't Ban Foreign Buyers' - 2007/08/02

With the resurgence of the foreign property ownership debate, the commission has tabled a draft policy that restricts ownership under certain conditions. Property experts believe the reasons are largely invalid.

Tony Clarke, the new MD at Rawson Properties, has added his voice to many others in the SA property sector who believe that ownership of property should continue to be open to all foreigners and especially those investing in other spheres of the economy.

"For obvious reasons," said Clarke, "this has become a highly emotive issue but the reasons advanced so far for banning or limiting foreign property ownership are largely invalid."

The argument that foreign buyers push up the average prices of SA residential land, said Clarke, remains totally unproven and he doubts if it is true.

"Consider the facts," he said, "firstly, foreigners have in the last six years been responsible for less than 1% of the value of SA residential purchases – how can so small a figure affect the overall price? Secondly, foreigners buy mainly at the top end of the market so have little or no effect on middle and lower bracket prices. Thirdly, our experience has been that these foreign buyers negotiate as hard, if not harder, than locals and refuse to overpay. Fourth, foreign buying has slowed down after the record figures recorded during the 2004/2005 summer season. This is probably due to a stronger rand and South Africa's property price growth that took place over that period."

Clarke's statements were supported by the Rawson research team which said that the average price of homes sold to non-South Africans in 2005 was R2 million. In 2006 it was R2,5 million and in 2007, so far, it has been R2,7 million, i.e. all very definitely in the top bracket.

Clarke said that in courting foreign capital investment SA businessmen have always been able to play the free enterprise card strongly, to sell South Africa on the basis that it is a society which respects the freedom of the individual and allows businesses the opportunities to grow.

"To restrict foreign ownership would send out the wrong message to the very people we want to attract," said Clarke. "Foreign property transactions also boost the economy during the buying and selling process, as various taxes become payable, i.e. Capital Gains Tax and Transfer Duty.

The boom in property prices, he added, was due to factors already widely publicised by, for example, the latest Absa Residential Property Market Review: the growth of the middle class, fairly low interest rates and a drastic shortage of land zoned for new development, coupled to rising construction costs.

"If the state wants lower house prices," he says, "they must widen the urban fringe and zone far more land for residential use. The shortage of suitable land is a large contributor to raising property prices."

Clarke added that the National Credit Act is already slowing down house sales and this is likely to continue – but, he added, house prices, particularly in the middle and upper brackets, continue to appreciate very satisfactorily.

This approach echoes the sentiments voiced in a report compiled by the Group Economics department of Standard Bank on the foreign ownership issue last year.

"The report," says Clarke, "makes it clear not only that most countries in the world are not averse to foreign ownership but also that if moratoriums are imposed they are likely to deter foreign direct investment and the influx of skilled workers – these we need badly – and could also impact negatively on tourism because foreigners with local property come here far more frequently than those without it.

"Obviously," added Clarke, "special rules could apply to areas subject to land reform, agricultural property and environmentally sensitive areas."

Clearly most countries have regulations in place to guide foreign ownership, but few place an outright moratorium on foreigners wanting to buy property in their country.

"The report shows that Australia, for example, allows foreigners to buy up to 50% of any multi-unit project and will allow sales of vacant land provided that construction begins within a year. Foreigners can buy commercial property up to about R200 million in value and are welcome to purchase established property provided that an additional 50% is spent over and above the purchase price on improvements or extensions. They are particularly encouraged to form partnerships with Australian nationals.

"In France, there are no restrictions on foreign ownership but, in what is still a semi-socialist country, there are still some stringent tax laws, e.g. if the property is company owned a 3% tax on its total value is levied annually.

"In the US a similar easy-going system prevails except where there could be a security risk and certain states in the US limit the amount of land a foreigner can buy. Our colleagues at the National Association of Realtors in the US confirmed this.

"In Singapore, which has a drastic property shortage, foreigners can still buy property provided they will live and work there.

"In Chile, there are no restrictions except as regards foreigners buying close to national borders.

"Indonesia allows foreigners who are contributing to the GDP (i.e. not just holidaying) to own property or to enter into renewable 65 year lease agreements."

Seven reasons are given why a country might consider restrictions on foreign ownership. These, he said, include protecting the local lifestyle, preventing foreign economic domination, controlling immigration, conserving local food supplies, enhancing national security, preventing foreign speculation and controlling direct foreign speculation.

"At this stage," says Clarke, "the whole matter therefore boils down to whether we really want to be an investment-friendly country or not. We cannot on the one hand say, "Yes, we welcome your money for this factory, plant or business" and on the other hand say "but SA is for South Africans so you will be subject to draconian residential rulings not dissimilar from those imposed on migrant labour in the hey-day of apartheid"."

Pointing to Ireland, Clarke said that few countries had proved more successful in attracting FDI, but he said this had been accompanied by large-scale foreign property buying.

"People moved their investments and businesses to Ireland because it offered cheaper labour, greater tax concessions and a better, less congested lifestyle – and for five years they had phenomenal growth. Could not the same occur in SA – without destroying the local cultures?"
 

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Discussion Starter · #17 ·
City launches Property Developers’ Forum

Cape Town city centreThe City of Cape Town has initiated a new Property Developers’ Forum to deal with issues that hamper development in Cape Town and ensure that systems are streamlined and effectively integrated.

More than 120 property professionals attended the August meeting, and raised concerns about the shortage of skilled personnel in the property development sector, and noted an urgent need to streamline building approval and land use processes.

Other concerns included the capacity of the City’s engineering services, the integration of various legal processes, the standardisation of regulations, the payment of development contributions, advertising and notification processes, and liaison with other spheres of government.

Development in Cape Town takes place against an entirely different backdrop compared to other cities, noted Councillor Marian Nieuwoudt (Mayoral Committee member for Planning and Environment) ahead of the launch. “It is the beauty, biodiversity, mountains, oceans and vistas that make Cape Town an international icon. If we cross that sustainability threshold for short-term financial and economic gains, we may compromise the one thing that makes us so sought after.”

Cape Town is rapidly growing into a global city and the pace of development has increased in the wake of South Africa hosting the FIFA World Cup in 2010. The City is therefore committed to guiding this development in a sustainable way, while still enabling people to make a profit and invest in city development, with as little bureaucracy as possible.

The Forum further established six inter-departmental City Task Teams to consider the specific issues raised by property professionals, such as communication of the City’s new district model.

The next Forum event is scheduled for 9 November 2007, which is also linked to World Town Planning Day. Watch your local press, or visit www.capetown.gov.za, for confirmation of the date nearer the time.
 

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Discussion Starter · #18 ·
R13m for Clifton property

Aug 22 2007 03:19 PM

Property24 reporter

Cape Town - A British buyer has forked out R13m for a 270m² plot on First Beach, Clifton.

The plot houses a small bungalow in knock-down condition.

The property, sold by its up-country South African owner to a British buyer, is to be used for a mix of investment and part-time residential purposes.

The existing structure is to be demolished and rebuilt to its current scale - keeping within the strict council guidelines which govern size and construction materials used on the Clifton beachfront.

Basil Moraitis of Pam Golding Properties says the property is literally the furthest point on the Clifton coastline, enjoying full and uninterrupted views of the entire bay.

Area manager for the Atlantic Seaboard, Laurie Wener, says despite the winter months being traditionally quieter for property sales, especially on the beachfront, the group has seen a steady flow of top-end properties changing hands in the Clifton area.

These have included an apartment at Eventide on the sea side of Victoria Road, which was sold to a local buyer this month (August) for R17m - R1m more than its listed price.

"Despite the very cold and wet winter we have been experiencing, the appeal of property in Clifton has been steady throughout," says Wener.

Clifton has achieved world-class status and is one of the most sought-after stretches of real estate in all of Africa. The limited supply of homes on the market, coupled with the ongoing high demand from buyers, makes it an ideal investment area as well as a stunning residential location."
 

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Discussion Starter · #19 ·
South African record for Clifton land

A vacant plot in Cape Town's Clifton area has been sold for R11,25-million - believed to be the highest price per square metre ever paid for undeveloped property in South Africa.

The 449 square metre erf realised more than R25 000 per square, Lew Geffen Sotheby's International Realty, Atlantic Seaboard, MD Rob Stefanutto confirmed on Monday.

The stand is situated on Clifton's famous second beach.

"As one of the very last areas of undeveloped land in this most desirable location in the country, the sale generated significant interest from potential buyers both locally and internationally," he said.

While the plot was ultimately bought by an American investor, former South African Formula One world champion Jody Schekter, among others, was believed to have made an offer.

The record price achieved for the stand followed the sale earlier in the year by Lew Geffen Sotheby's of a Clifton apartment for R34-million, believed to be the most expensive of its kind in South Africa, Stefanutto said.

All the properties in the area are wooden bungalows - many of which were originally constructed after World War One as fishermen's cottages or for returning servicemen.

Any new development must conform to the regulations imposed by the Clifton bungalow owners' association. - Sapa

Quickwire

Published on the Web by IOL on 2007-11-12 13:41:41
© Independent Online 2005. All rights reserved. IOL publishes this article in good faith but is not liable for any loss or damage caused by reliance on the information it contains.
 

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Discussion Starter · #20 ·
House prices rocket to a new high

By Tom Hood

Fewer houses are being sold in the greater Cape Town area but the average price soared to a new record of more than R2,3-million in October, according to estate agents' sales.

A total of 477 houses were sold last month, down 38 percent on the 662 sold in October 2006. But the average price has rocketed by 28 percent from the year-ago figure of R1 808 000.

The price also rose 7 percent from R2 157 000 in September.

These figures are revealed in a statistical analysis of agents' sales by an independent company, Cape Property Services, and published in the latest Residential Property Price Ranger (RPPR).

Absa, the country's largest supplier of home loans, confirmed that prices were still rising but at a slower pace.

Cape Town sales for October were 44 percent below the 688 total for May as the effects of higher interest rates as well as stricter lending by banks since June stopped many families from buying a house.

In the last six months, 3 252 houses were sold in Cape Town for a total of R6,9-billion. Sales of houses, flats and plots were worth a combined R10,5-billion.

House prices increased in seven of 13 areas - mainly upmarket suburbs - and decreased in six others.

Constantiaberg reported the greatest value of house sales - R195m for the month, up from R182m in September and R166m a year ago. The average house price of R3 605 000 was 14 percent more than the R3 152 000 for September and 41 percent above the price of R2 558 000 for October last year.

Big business was also reported from the Southern Suburbs where R182m of sales were achieved, up from R162m in September and R163m a year ago. House prices there averaged R2 726 000, a rise of 4 percent on September's R2 622 000 and 23 percent on the year-ago average of R2 096 000.

Most house sales took place on the West Coast, including Parklands, where an average house cost R1 469 000, up 14 percent from R1 286 000 in September and 39% higher than the R1 054 000 average a year ago.

Ninety-one houses were sold against 86 in September and 109 a year ago.

Despite higher house sales, prices dropped 15% on the Atlantic Seaboard to average R5 960 000 from R6 882 000 in September. A year ago the average house price was R5 425 000, about 10 percent lower than now.

The suburb had a dramatic increase in flat sales, with 139 notching up an average price of R2 438 000, which was 19 percent below September's R2 909 000, when 52 flats were sold.

In the City Bowl, house prices showed a 45 percent drop to average R2 442 000 after September's R3 549 000. But prices were 7 percent up on the R2 276 000 average for September 2006.

Two other seaside suburbs showed higher prices, rising 6 percent in a month to R1 654 000 in False Bay and 44 percent to R4 641 000 in Hout Bay. In a year, prices have risen 15 percent in False Bay and 50 percent in Hout Bay.

The average time to sell a house varied from area to area last month, from 122 days in Hout Bay and 94 in the Boland to 33 in the Parow/Goodwood area and 44 in the Southern Suburbs.

Sales of sectional title property rose 34 percent to 357 from September's 267 - largely because of an upsurge on the Atlantic Seaboard - but were 21 percent below the 453 sold in May.
 
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