Property Professional - Jan/Feb 2016 by Property Professional

PROPERTY

JAN/FEB 2016

PROFESSIONAL RE

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THE SOUTH AFRICAN PROPERTY INDUSTRY MAGAZINE

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MILLENNIAL BUYERS ON THE UP

GROWTH

2016

WHAT LIES AHEAD? RIS IN G I N T EREST R AT E S S TIL L-T I G HT I ND UST RY TRANSFORM AT I O N THE I M PAC T OF GR E E N

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2015/11/25 2:14 PM

LOCAL NEWS

Editor’s note A

new year – ah, a clean slate. Wait, what’s all that stuff following you? Same old, same old marketing ideas, unfinished client admin, and negativity about the next CPD cycle and the economic downturn. Hang on, this is the time to start over. If you know your marketing tactics need a refresh, research what others are doing differently. Turn to p36 for inspiration from the international property industry (hint: virtual reality is the next big thing). Muttering about the hassle of continued learning isn’t going to make it go away. And if it means the perception of the industry improves, then that can only be a good thing. As for the economy, our cover feature offers some interesting – and positive – insights on the 2016 market from industry players. Don’t miss this issue’s big read on p27. Lastly, remember, all work and no play makes for a stressful, less productive life. In the real estate business it can be difficult to break away and take time out but it’s important. No matter if you’ve made resolutions before and didn’t follow through, this is a new year. Let’s start it with optimism and expectation: here’s to selling houses in 2016!

PUBLISHED BY THE CREATIVE GROUP 6 Beach Road, Old Castle Brewery, Woodstock 7925 087 828 0423 facebook.com/PropertyProfessional twitter.com/Property_Prof

INTERNATIONAL NEWS

Catherine Davis

WHAT YOU NEED TO KNOW ABOUT AGENT-ATTORNEY RELATIONSHIPS

THE EXPERTS WEIGH IN ON ISSUES FACING THE REAL ESTATE INDUSTRY IN 2016 NEWSWORTHY Why real estate agencies and developers are forging symbiotic relationships

MOTIVATION How a coach can help you self-correct behaviour and define office roles

THE CREATIVE GROUP CEO: Shaun Minnie shaun.minnie@thecreativegroup.info Editor: Catherine Davis Content strategist: Bridget McNulty Managing editor: Kim Maxwell Chief copy editor: Yaron Blecher Designer: Megan Cooper Online editor: Andy Möller

ADVERTISING Sales and marketing manager: Michèle Jones michele.jones@thecreativegroup.info 084 246 8105 Advertising, production & subscriptions: Jackie Maritz jackie.maritz@thecreativegoup.info Printing: Paarl Media | Disclaimer: The publisher of this magazine gives no warranties, guarantees or assurances and makes no representation regarding any goods or services advertised within this edition. © Copyright The Creative Group. All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from the publisher. The publisher is not responsible for any unsolicited material.

LOCAL NEWS

LOCAL INDUSTRY NEWS BUYING PROPERTY IN A TRUST What do you tell your client when they ask which vehicle is best for purchasing property? As with most situations, decisions will differ depending on individual circumstances. There will be pros and cons to both, and estate agencies may also have different opinions. Carol Reynolds, Pam Golding Properties’ area principal for Durban Coastal, says that generally the group encourages residential property buyers to purchase a primary residence in their personal capacity. Why? When it’s time to sell, there’s a R2m capital gains tax exemption. But Reynolds says for second and third properties that can’t be construed as primary residences, buying in a trust makes the most financial sense. Trusts offer homeowners value in that they are well suited to asset protection and ring-fencing risk. Plus they can be passed on from generation to generation, bypassing estate duties. The trust can also be taxed in the hands of the beneficiaries, says Reynolds, which often results in a lower tax bracket for the parties, hence less tax liability. But be aware, property can’t be bought in the name of a trust that is yet to be formed – the trust has to exist at the date of sale (it doesn’t take longer than a couple of weeks to register generally). Bottom line, it’s best to get advice from an attorney or accountant before choosing the correct legal entity for a property purchase. SARS examines trusts with a fine toothcomb so they need to be managed diligently. Particularly when it comes to ensuring that the trust is not deemed to be an “alter ego”, that is, simply an extension of the self in a contrived legal entity. Reynolds says that most of the group’s sales transactions are concluded with individuals in their personal names, and trusts and companies account for a small percentage of sales. “Companies tend to be the preferred option for commercial property transactions, whereas trusts are used for both residential and commercial sales.”

PROPERTY PROFESSIONAL

HOW GREENER HOMES CAN SAVE MONEY In today’s real estate market, sustainable design can significantly increase the value of a property, so it’s good news that local homeowners can now build new green-certified sustainable homes. The non-profit Green Building Council South Africa (GBCSA) certified three local housing developments in a pilot phase, using the EDGE (Excellence in Design for Greater Efficiencies) online building tool. It’s now being rolled out for wider use. The EDGE certification process effectively greens a new building in practical ways, using energy-efficient materials and equipment. A developer or architect uses the EDGE system so homes can be green-certified, passing on the energy-saving benefits to the homeowner. The process involves two energy-saving steps: preliminary design certification, and as-built certification. EDGE introduces a minimum 20% saving on current national building regulation requirements, which is an attractive proposition for potential homeowners and tenants. Ravenswood in Boksburg is the first local residential development to secure EDGE green certification, with planned occupation in July 2016. The development has 188 two-bedroom and one-bathroom sectional title low-to-middle-income homes. International Housing Solutions (IHS) partnered with GBCSA and the International Finance Corporation (IFC) to provide equity finance for the project. IHS acquired the Ravenswood homes as rental stock for the affordable housing market. “According to IHS, the Ravenswood development is predicted to realise a saving of almost R600,000 a year by applying EDGE-certified energy efficiency measures,” says Graham Cruickshanks, EDGE technical manager. “This would translate into an anticipated saving of about R3,200 in utility costs for each unit.” GBCSA CEO Brian Wilkinson says the tool can now be used for new freestanding homes, flats or townhouses. “For a home occupier it provides an assurance that the building has been constructed with energy efficiency, water efficiency and material efficiency in mind. If I’m paying less for electricity and water, it means I have more disposable income.” Find the EDGE green building tool at gbcsa.org.za.

LOCAL NEWS

LANICE STEWARD HEADS UP IEASA

he Institute of Estate Agents of South Africa (IEASA) has elected Lanice Steward as president at its 78th annual general meeting. Steward is only the second woman to hold this position. Steward has served on the IEASA Board since January 2014 and was vice president prior to her recent appointment. Edgar Blomeyer is the new vice president. Blomeyer and Steward have worked together in a multi-stakeholders meeting with the Estate Agency Affairs Board over the past year and they are positive about the future of the profession. Says Steward: “I am confident that as a team we will be able to grow the institute and make our contribution, building on the proud legacy behind us.”

PROPERTY PROFESSIONAL

WHAT YOUR CLIENTS SHOULD KNOW ABOUT PEST CLEARANCE CERTIFICATES

When it comes to entomology certificates, there are discrepancies about what is and isn’t required. Dale Caswell of Express Fumigation and Electrical Services says that while not a legal stipulation, in the Western Cape and KwaZulu-Natal, an entomology clearance certificate is a customary requirement in a Deed of Sale. Generally banks require this clearance before transfer can take place. An entomology clearance inspection and any necessary treatments and/or tenting is usually at the seller’s expense and should usually be done before transfer. The entomology certificate should cover all wood-destroying insects – the species vary in different areas but common ones include woodborer beetles and white ants (termites). Buyers can stipulate on the Deed of Sale which insects they want treated if this isn’t clear. Treatment recommendations will vary for different types of wood-destroying insects – most commonly gassing for borer beetles and large-scale problems, and injecting below slab level for floors infested with white ants. After an initial inspection the inspector will inform the seller if evidence of infestation or live activity is found. If there are no live wood-destroying insects then, subject to certain conditions, a clearance certificate will be issued. If infestation is found, a quote and arrangements for fumigation will follow. During fumigation residents and all pets are required to vacate the property for 48 hours. In a block of flats, if a whole flat is being gassed, the flats above, below and on either side will need to be vacated too. Spot treatments can alleviate smaller problems. After fumigation it’s a good idea to vacuum ceilings, accessible basement areas and areas where evidence of borer was found, as any new evidence would mean they have resumed breeding. A seller could request a pest certificate before putting a residence on the market, but risks having to redo the certificate before transfer, as they are only valid for three months. By law, pest control companies have to be registered with the department of agriculture. Some choose to join the South African Pest Control Association too.

LOCAL NEWS

PARKTOWN’S FIRST NEW OFFICES IN 10 YEARS Parktown will soon have its first new office park development to be constructed in this Johannesburg node in 10 years. Abland is developing a 35,000m2 A-grade office park called Hill on Empire. It is situated in Parktown’s green belt on the corner of Empire and Hillside roads, surrounded by Wits University and other cultural landmarks. The first of four buildings being constructed in this secure R700m precinct will be ready for occupation in June 2016, with a subdivisible gross lettable area of 6,800m2. The office park development will be completed by 2019. Says Donald Majola, development manager at Abland: “The development coincides with a growing demand for new, quality office space in the node. The Parktown area hasn’t received a new product for 10 to 15 years, although many office buildings in the node have received revamps.” One of the contributing factors was Johannesburg’s new transport corridors. Hill on Empire will be at the crossroads of many transport systems, affording it exceptional accessibility. For instance, the site is closely located to the Rea Vaya Bus Rapid Transit stop and a Gautrain bus stop. Says Majola: “Hill on Empire will be comparable to the A-grade offices associated with Sandton and Rosebank, but will come at a more affordable cost of occupancy, and with exceptional ease of access for people who use both private and public transport.”

DINA SOUKOP WINS BUSINESS AWARD

MIXED USE FOR RAINBOW JUNCTION DEVELOPMENT Just 6km outside Pretoria is the site of the complex and an ice rink. multibillion-rand Rainbow Junction mixedRainbow Junction will comprise some use property development, with Rainbow Mall 165,000m2 retail space, 170,000m2 prime office shopping centre spread over 94,000m2 and the space, 120,000m2 residential space and 65,000m2 jewel in its crown. hotel and conferencing facilities. The R2.5bn mall is expected to be a cutting-edge Construction is planned to start in early 2016, at retail and leisure destination, with more than 250 an anticipated cost of about R12bn over the 10- to retail stores, restaurants, a state-of-the-art cinema 15-year development period. 06

PROPERTY PROFESSIONAL

ina Soukop of Soukop Property Group was recently named the Business Person of the Year at the 16th annual FNB Business Awards. The initiative, run by FNB and the Italian-South African Chamber of Trade and Industries, recognises and rewards those who have contributed to economic growth through their individual commercial achievements. Soukop has been involved in the real estate industry for the past 38 years, starting as a conveyancer before becoming an agent. “My husband and I launched the Soukop Property Group in 2007. With hindsight, it wasn’t the best time to open a new agency – the subsequent recession hit us hard. We had also bought a building in Florida Road, which burnt down in 2009, and we had to start all over again. My staff were incredibly loyal and stayed with me, something for which I will be forever grateful because no one can achieve success without a good team.” The secret to Soukop’s success? “I believe hard work and perseverance are what pay off. I’ve taken all the knocks and am still here today, stronger than ever. There were many times I nearly gave up because in the real estate business you are literally unemployed every day and it is up to you to make sure that you give the best – and honest – service to your clients to ensure they want to employ you.”

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2015/08/20 10:50 AM

A recent case between a developer and municipality raised – and answered – the question of who is liable for the rates of newly subdivided land. The legal case officially pitted EM and EM Engineering (Pty) Limited (a developer and property owner) against KwaDukuza Municipality and Others. The property owner/developer registered a general plan that subdivided the property (the mother property) into 91 subdivisions. A dispute arose between the developer and the municipality when the developer applied for a rates clearance certificate in order to transfer two subdivisions from the mother property to a third party. The developer contended that a rates clearance certificate is required only

occasion before any transfer of any individual subdivision would be allowed. Dylan Bradford, junior associate in the Commercial Department at Garlicke & Bousfield Inc, unbundled the reasoning behind the court’s judgment. The court held that • there had been no change of ownership by the creation of subdivisions through the registration of the general plan over the mother property. • that future transfers of the subdivisions from the mother property would be recorded in the Deeds Office in a dedicated register. Until such time that the subdivisions have been transferred to a new owner or a certificate of registered title has been issued in respect of the subdivisions, the subdivisions will be held by the same title deed as the mother property. • Section 118(1) of the Act prohibits the registration of transfer of property without the production of a rates clearance certificate with regard to

in respect of the two subdivisions of the mother property being transferred. But the municipality argued that on the basis that the two subdivisions still formed part of the mother property, the rates and charges payable (before a rates clearance certificate could be issued) are those relevant to the mother property as a whole. The developer submitted that if the municipality’s view was adopted, all rates and charges due in respect of the mother property should be paid on each

“that property”. • the reference to “that property” in section 118(1) of the Act refers to the subdivision concerned and not the mother property, which has by virtue of the registration of the general plan, been subdivided into multiple erven. As a result, the court held that a rates clearance certificate need only be issued in respect of the subdivision/s being transferred and not the mother property as a whole.

PROPERTY PROFESSIONAL

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WHO’S LIABLE FOR RATES OF NEWLY SUBDIVIDED LAND?

WHAT’S ON

What you need to know to stay plugged into the property industry in South Africa

BRIDGET MCNULTY

THE RISE OF PROPERTYSAVVY BUYERS AND SELLERS

JANUARY

With prospective buyers – and sellers – more clued-up about property than ever before, agents need to stay one step ahead

one are the days when someone approached an estate agent looking to buy or sell their property, hoing to be told all about interest rates or recent sales in the area and what kind of price to expect. With the wealth of information available not only from property portals but also online search engines, dedicated property advice websites, apps and satellite TV, buyers and sellers have access to more information than ever before. It’s much easier to research and keep up to date with the latest developments in property. Private Property, for example, has an Advice Centre filled with property-related tips and advice, as well as a Neighbourhoods section with area-specific stats and lifestyle information – which means that by the time agents meets a prospective buyer they may already know about sales and rental statistics in the area, average prices for the property type and have a sense of what it’s like to live in that neighbourhood from the local videos and photos online. While at first it might seem like a disadvantage to be working with such well-informed buyers, it actually presents an opportunity to find the ideal property for the buyer at the ideal price for the seller: a price based on reality and recent statistics, not on wishful thinking. It’s also an opportunity for estate agents to stand out by being even betterinformed about their areas, with knowledge that a client wouldn’t be able to find easily themselves – crime rates, infrastructure projects, new buildings and the quality of local schools. In short, it’s the perfect time for agents to fulfil the local expert role – in more depth than ever before.

WHAT SAPOA BREAKFAST – EDP UPDATE: PARTNERING FOR INCLUSIVE CITY DEVELOPMENT WHERE: The River Club Conference Centre, Cape Town CONTACT: wc.sapoa@sapoa.org.za

FEBRUARY

WHAT THE INSTITUTE OF ESTATE AGENTS SA WESTERN CAPE GOLF DAY WHERE: Bellville Golf Club CONTACT: janine@cape.ieasa.org.za

25-28

WHAT HOMEMAKERS EXPO WHERE: Ticketpro Dome, Johannesburg CONTACT: 086 111 HOME/4663

Add to your diary now!

THE ANNUAL SAPOA INTERNATIONAL CONVENTION AND PROPERTY EXHIBITION SAPOA will be celebrating

its 50th Anniversary in 2016. The convention will bring together the most influential local and international property professionals under one roof to share thought-provoking insights. 21-23 June 2016 at the Sandton Convention Centre

JANUARY/FEBRUARY 2016

ADVERTORIAL

What makes Chas Everitt different We’re a close team with international reach, family values and extraordinary vision. Take a look

Who Chas Everitt is A TEAM THAT WORKS TOGETHER Our success as an international property group is largely due to the fact that we all work as a team. From our Group CEO Berry Everitt to our experienced management team and excellent administrative team, we’re all here to support our highly motivated, trained and professional group of property consultants to do what they do best: sell property. We make sure our agents have the best technology and tools to achieve revolutionary results by working towards the greatest growth in market share. That’s our mission, and our everyday work. We’re a family business that really cares about every member of the team.

What does 2016 look like to you? The market may slow somewhat but we already have plans that will enable our group to keep accelerating – Berry Everitt, Group CEO, Chas Everitt International 10

PROPERTY PROFESSIONAL

ADVERTORIAL

I was looking for a company that was willing to embrace change and be ahead of its competitors – and that’s exactly what Chas Everitt is about

VALUES Strong and consistent family values that build respect, trust and confidence

– Jared Watney, Chas Everitt Randburg

What kind of agent are you? Tick all that apply:

We never stop caring about people and we never compromise our principles. That’s the Chas Everitt way – Charles and Tilla Everitt, founders, Chas Everitt International

Motivated Hard-working Ambitious Friendly Approachable Dedicated Talented Team player Self-directed Passionate If you scored 10 out of 10, give us a call! 0861 106 355 Keen to work for Chas Everitt? Email enquiries@everitt.co.za or your nearest Chas Everitt office.

JANUARY/FEBRUARY 2016

I N T E R N AT I O N A L N E W S

PROPERTY MOVEMENTS AROUND THE WORLD LEA JACOBS

apartments. Despite this, property developers are still building. Brisbane is in a similar position and it’s been noted that this city too, already has an oversupply. It appears Sydney is on slightly stronger ground, but even here, where there is a massive demand, it’s been estimated that there will be an oversupply of apartments from this year onwards. Although bankers may be getting a little twitchy, a survey conducted late last year by the New South Wales division of the Australian Property Institute found that people – including fund managers, financiers and property analysts – believed that the surge in prices would continue. Interestingly 44% thought that prices in Sydney would continue to grow for the next six months, while 33% expected the trend to continue for at least another year. The picture was a little darker for the Melbourne market, where only half of those polled expected the increase in prices to continue for another six months. A mere 6% of the respondents believed that the boom in Sydney and Melbourne would run for another two years.

Find more industry news at propertyprofessional.co.za

PROPERTY PROFESSIONAL

RENTAL PRICES IN LONDON AT AN ALL-TIME HIGH

t was reported at the beginning of November last year that London rentals were a record 108% higher than those in the rest of the UK. Rent in the capital had increased by 7.7% year-on-year and the average price for a rental property was £1,560 a month. While the idea of paying more than R30,000 a month for a rental property may seem out of most South Africans’ league, there is a little good news: the average price of a rental home in other parts of the UK is a far more reasonable £749 a month (about R16,000). At this stage the cheapest place to rent property is in Scotland where, according to a report by the BBC, the average price is £539. However there is a stock shortage in that country and as such, rents have been increasing rapidly. A rental property will now cost 9% more than it would have in 2014. In England, the cheapest area in which to rent is in the northeast, where cities such as Newcastle upon Tyne and Sutherland are located. There, the average is £536 a month. The most expensive place to live outside London is in the southeast, where the average price of rental property in areas such as Oxford and Maidstone, in Kent county, is about £944 a month. This is a popular choice for those who work in the capital, and it’s easy to understand the area’s appeal. Surrounded by gorgeous English countryside, it’s also a fairly short commute to London.

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COULD THE AUSTRALIAN PROPERTY MARKET BE IN TROUBLE? The US investment bank Morgan Stanley maintains that Australia’s housing boom has peaked. The bank cites a drop in immigration levels, tighter controls by banks and “frothy” prices as reasons for the slowdown, all of which have intensified the risk of a recession. Alarm bells have been ringing for much of the past year, and Morgan Stanley is among a growing number of investment banks to have shown concern over rocketing property prices in the country. There is also growing unease with regard to the home-building boom that Australia is experiencing, which prompted Nigel Stapledon, the head of real estate research at the University of New South Wales, to comment that there is a “tsunami of home supply” coming. He raises a good point. It’s been estimated that, as things stand, cities such as Melbourne already have an oversupply of dwellings, particularly inner-city

I N T E R N AT I O N A L N E W S

US student loans vs home ownership raduates in the United States who have a mountain of student-loan debt can relax, as it should not affect their chances of owning a home. Benjamin Franklin, one of the founding fathers of the US, once stated: “An investment in knowledge pays the best interest.” The words may still apply today, but unfortunately, as any parent who has a child attending a tertiary educational institution will tell you, there is a downside: investing in knowledge costs a tremendous amount of money. Few parents can shoulder the burden alone, and it would be safe to say that most students in the developed world have student loans to repay when they graduate. It is a common misconception that American students are delaying the decision to buy a home

because they are being weighed down by student loans. The average student in the US has accrued between $39,000 and $42,000 (about R560,000 and R603,000 at the time of writing) of debt by the time they finish their studies. This, however, doesn’t appear to affect their ability to secure a bond, although much depends on the type of degree they’ve earned. According to an article on PropertyWire, the chance of a married couple with no student debt owning a home is about 69.8% provided at least one of them has a bachelor’s degree. If the same couple has $30,000 in student debt, their homeownership chances drop slightly, to 67.7%. Interestingly, research conducted by Zillow.com, an online real estate database company, has found that those who racked up student debt but did not graduate are the least likely to own their own homes − a mere 40%. “The income advantage of getting a degree pays off in terms of being able to buy a home in the long run. Student debt isn’t the evildoer it’s made out to be, at least not when it comes to home ownership,” said Zillow’s chief economist Dr Svenja Gudell.

£1,560

$39,000 TO $42,000

Student loans not a dealbreaker

$30,000 IN DEBT DROPS CHANCES ONLY SLIGHTLY

PROPERTY IN NUMBERS

Average monthly rental for a London property

Average American student’s debt at the end of his or her studies

JANUARY/FEBRUARY 2016

Property Professional Online ANDY MÖLLER

PROPERTYPROFESSIONAL.CO.ZA Log on to the definitive South African real estate industry guide to news, trends, analysis and commentary, plus stay up to date with who’s doing what in property. It’s accessible wherever you are – at your computer or on your tablet or smartphone – and whenever you want it. South Africa’s top property journalists contribute to this dynamic must-read magazine and website.

PROPERTY PROFESSIONAL

PRESSED FOR TIME? • Follow us on Facebook at facebook.com/ PropertyProfessional • And Twitter at twitter.com Property_Prof • Keep an eye out right here for when we launch our newsletter.

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TOOLS OF THE TRADE

GOODIES AND GADGETS FOR WHEN YOUâ&#x20AC;&#x2122;RE ON THE GO RYAN SCOTT

Get more done and stay ahead of the game with these powerful tools, gadgets and services

YOU NEED IT BECAUSE Your hectic schedule needs to be organised. A disorganised life can lead to missing out on business opportunities. More than just an app, Evernote has become the go-to brand for optimal organisation and becomes indispensable for many once they sign up. THE NITTY GRITTY Record and save all the digital elements of your life and have access to your information across multiple platforms whenever you have an internet connection. Syncing to all devices is easy. The 16â&#x20AC;&#x192;

PROPERTY PROFESSIONAL

most basic version of the app is free but limited to the amount of data you can use in the apps, whereas the enhanced versions are charged at an annual fee. X-FACTOR Automatically added geo-tags can make a big difference in tagging your notes and documents to the area they are relevant to. A simple feature well-suited to agents. Plus version R199/year, Premium version R399/year and Business version R96/user/month. Apple App Store and Google Play

IMAGES: ISTOCK AND SUPPLIED

EVERNOTE APP

APPLE WATCH (42MM) YOU NEED IT BECAUSE Who wants a watch that only tells time? The Apple Watch 42mm Space Black will make a statement and keep you connected with just a glance at the wrist. If you have never used Apple’s operating system, you’re in for a treat. If you’re already a fan, take it to another level. The technology is discreet, sophisticated and intuitive. THE NITTY GRITTY The system is used in the same way you would communicate with your smartphone but instead it’s via your wrist. Message alerts come through subtly from your sources of choice – CNN, Twitter, email or any other app, via a vibration pulse that “taps” you. To read any form of message or email, just raise your wrist and reply instantly by dictating, or using a preset template for those repetitive responses you seem to type out all day. X-FACTOR Siri, your personal assistant. Put her to work and watch a novelty turn into valuable assistance. To access, simply raise your wrist and ask: “Siri, what is R5.5m in euros?” or “Siri, where is Takumi restaurant?” R18,499; iStore

SAMSUNG GALAXY TAB S2 YOU NEED IT BECAUSE A powerful image can be the initial hook that turns into a sale. To have all the tools of drawing in a potential buyer with strong presentation assistance can make all the difference. It’s not just about the visuals either. It’s reading- and web-surfing-friendly too. THE NITTY GRITTY The camera has a full 8MB capability, and images are filed in 32GB/64GB capacity of storage. The tablet operates off 3GB of RAM and the 4,000mAH battery will last more than six hours. But if you are vigilant you can get a day’s worth of power. Two size options are the larger 9.7in, or the 8in screen, with a ratio of 4:3. The metal frame looks classy, but adding a slim cover for on-the-move daily efforts is advised. X-FACTOR The S2 is the thinnest tablet available (256g weight and 5.6mm depth) if Samsung’s claims are true. From R8,499; samsung.com JANUARY/FEBRUARY 2016

SOUTH AFRICAN

THE STRAIGHT AND NARROW ANDRÉ FIORE

What you need to know about the agent-attorney relationship

WHAT CAN GO WRONG?

Quite a bit can go wrong. Once funds have been transferred to the attorney’s trust account by a buyer, a dishonest conveyancer can misappropriate the money before or after transfer. In cases where it happens before transfer the buyer ends up without money or a property. In those where it happens after transfer, the seller is the loser – no payment and no property – the latter having already been transferred to the buyer. While there are attorneys who are crooked from the outset, there are also many instances where conveyancers don’t plan to steal funds. Instead they “borrow” money from their trust funds for other purposes, with the intention to pay it back. But sometimes this doesn’t happen, and a buyer or seller is left out of pocket. One warning sign that this could be happening is when the conveyancer starts making excuses about how long the transfer is taking. Misappropriation of funds is not the only area that the Law Society of South IMAGES: ISTOCK

ith fraudulent claims running into the hundreds of millions against attorneys in South Africa over the last couple of years, and a notable percentage of those due to fraud by conveyancers, it’s worth a quick look at which attorneys you as an agency are dealing with and the regulations regarding these relationships. The Annual Report for the Attorneys Fidelity Fund paints a sad picture. Figures for 2014 show R256,638,827 in claims against attorneys in South Africa, with 39% of the total number of claims notified being conveyancing claims, the value of which amounts to some R124m – 48% of the total value of notified claims. Comparative figures for total claims is R186,060,722 in 2013 and R298,044,329 in 2012. While these figures still reflect a small percentage of all conveyancing work, and in many cases it wasn’t the conveyancer but other staff who were responsible for the losses, it is still worth serious consideration.

PROPERTY PROFESSIONAL

SOUTH AFRICAN

Africa watches with eagle eyes. The relationship between attorney and agent is also subject to a number of very strict guidelines imposed by this society. DANGLING A CARROT

The most important of these, and the biggest threat – according to some perspectives – is the purchasing of work by attorneys. While many a company woos clients with an ever-expanding selection of gifts and treats, these practices are frowned upon by the law society. While another business may pull out all the stops, conveyancers who offer agents or principals incentives and commission to pass on work, including cash payments, vouchers, all-paid holidays or paying their advertising fees or rent, face harsh discipline in court. Comments Bruce Forrest of Meumann White Attorneys: “An attorney is a professional who, like a doctor, needs to adhere to a strict code of conduct. We are officers of the court; we need to be honest beyond doubt, and we need to ensure that the high moral standards and independence of the profession is upheld. Without this we would, or could, have a country or a society where no law was upheld, where values didn’t exist and where justice could never be sought or found. The difference between an attorney and a commercial operation such as a bank or a broker is that those are businesses. Ours is a profession.” This explains why the relationship between attorneys and agents has to be regulated. Conveyancers should be able to offer unbiased opinions and service to the parties involved in the contract they are conveyancing. “If an attorney is beholden to the agent who passed on the work and is paying that person commission, then that attorney is not acting impartially when facilitating the transfer. It would be all too natural to get the transfer through regardless, and at some stage the interests of the seller or buyer could be severely compromised,” says Forrest. WHEN IT WORKS

The flip side is that having a friendly conveyancer is a great advantage for a real estate agent. Sellers’ and buyers’ questions about the legal aspects of a sale can often be challenging, and instead of having to refer that person back to their attorney, an agent can swiftly call a conveyancer for an answer, thus expediting the sales process and improving their own professional offering. Added to this is the risk to agents of having clients dealing with fraudulent conveyancers. No agents wants their client to be in this situation, not only because it reflects badly on the agency but because their commission too may be part of the funds that go astray. Agents should choose attorneys who are reputable and well-known. They should never accept any form of incentive for work, and should maintain a clean and professional relationship with the attorneys. If in any doubt, check the attorney’s Fidelity Fund Certificate (these need to be renewed every year), or advise clients to perform background checks if they choose an unknown conveyancer. If it proves difficult to check the certification, contact the law society in the relevant province, which should have access to their certification.

The Attorneys Fidelity Fund • The Attorneys Fidelity Fund seeks to reimburse legitimate victims of theft of money from trust funds held by attorneys within the borders of South Africa in a fair, economical and expeditious manner, and to promote integrity, trust and high moral principles within the profession. • The Fund is a fund of last resort, meaning that a client should have followed all other legal recovery processes prior to taking the matter to the Fund. • The Fund should be notified within three months of a consumer becoming aware of misappropriated funds, whether or not at this stage the amounts can be quantified or the misappropriation proven. • The Fund is dedicated to instituting proper criminal proceedings against attorneys who are guilty of theft. This is in addition to the guilty party being struck off the roll by the Law Society of South Africa. • The average turnaround time for a claim is about 30 months. For many people that means their cash flow will be severely compromised during this time, and it may even jeopardise the ownership of the property.

JANUARY/FEBRUARY 2016

NEWSWORTHY

CEMENTING PARTNERSHIPS IN DEVELOPMENTS DAVID A STEYNBERG

How well suited is a traditional real estate practice to the new development game? Here’s how to forge symbiotic relationships with developers

he role of the real estate agent has had to change with the times. The days of only listing in the weekend papers are obsolete, as is the practice of estate agencies being roped in to market a new residential development once construction is well under way. Today real estate agencies are increasingly being called on by developers to consult on new builds, market them and of course, act as dealmakers between developers and buyers. Purchasers have more market information and data at their disposal than they have ever had, and don’t only make purchasing decisions based on price and the appearance of the units. Today’s buyers are street-smart: they study the price growth in the suburb, the volume of sales over the past year or two, crime statistics from the local police station, the

PROPERTY PROFESSIONAL

transport infrastructure and public facilities, and weigh up these factors against the home’s amenities, rates and taxes or levies, as well as its market price. DEVELOPING AGENTS

Developers would be ill-advised to develop a project without the input and expertise of the foot soldiers on the ground. Enter the developing agent. “In the early days we purely did the marketing and sales for developers,” says Peet Strauss, development manager for Pam Golding Properties in Gauteng. “The developer would approach us with his designed scheme and ask us to do the sales. This evolved very quickly into a much broader marketing assistance to the developer whereby we take on a more consultative and advisory role.

NEWSWORTHY

Five years ago we identified that the new developments sector will certainly grow again and that many homebuyers were looking to own a brand-new home within a security estate - Glen Fisher, projects director, Seeff Sandton Projects

“This enabled us to ensure the developers were creating the correct product for the market. Over the past 13 years our involvement at Melrose Arch has shown that it is beneficial to get involved as early as possible in a project to ensure its success.” CHANGING THE GAME

Some agencies have changed the game altogether, not content with only advising and marketing, but are flexing their development arm too. “Our agency bought the developments licence from Seeff property services with knowledge and experience at hand in the new developments arena,” says Glen Fisher, projects director for Seeff Sandton Projects. “The aim is procuring the land, obtaining zoning and subdivisions, and guiding the developers to the correct product in the right location, at the price the market will pay and the banks will provide end-user finance for.” Fisher procures stock on behalf of and from developers, and employs development-specialist agents and staff to market and sell the new developments. “Five years ago we identified that the developments sector will certainly grow again and that many homebuyers were looking to own a brand-new home within a security estate. Their families are safer and more secure there,” he says, noting that the growth in development sales means the company’s developments division is expanding. “I believe that generally estate agencies are not equipped and geared up to enter into the new-developments space, and that residential agents will not be able to carry themselves financially from the time of the sale to the final registration of the properties,” says Fisher. “The agency needs to prove to developers that they can do a better and faster job in concluding sales, otherwise the developers will market and sell the units themselves.” Some don’t believe developers should even be marketing their own projects. Harry Nicolaides, CEO of Century 21 South Africa, says developers should concentrate and handle the construction and completion phases, while the estate agency concentrates on the marketing and sales of units, and the administration of the sale agreements until successful transfer. “At Century 21 we believe that the developer has its specialist function and the estate agency has theirs, and the two are different specialities,” says Nicolaides. “Another core function and value that the estate agency brings is the procurement of bond finance for the buyers. This is another specialist function that the estate agent is geared to handle better than a developer would.” More relevant than ever is that estate agencies impart knowledge on developers’ reputations and their financial ability to build and deliver the finished products on time, says Nicolaides.

Due diligence critical on developer and development A due diligence process should be done on the developer to establish if the company has the knowledge and experience in developments. If not, then more guidance and assistance is necessary from the estate agency. This is according to Harry Nicolaides, CEO of Century 21 South Africa. “The due diligence will also reveal if it has the financial resources to undertake the development and if it is the legal owner of the land,” he says. “This will determine if it is just a speculator.” Glen Fisher, projects director for Seeff Sandton Projects, says complete market research needs to be performed on the new development to prove that the product, pricing and position in the market are correct so that the agency can deliver the sales in time for the developers to proceed with construction. “One needs to research the developer’s history and success, and ensure that it is financially sound and does not have other developments and companies that could pose a risk to the relationship that you are entering into,” he says. The due diligence on the actual development is imperative, and serves to confirm whether there is a market demand for the type of property on offer at that point in time, if the asking prices will be market-related at that point in time, and if the land has the correct approvals and zoning for the type of development envisaged. “With these in check and satisfactory to us, and with the results of the due diligence on the developer being satisfactory, only then would Century 21 undertake to tender for the business,” Nicolaides says. “Anything to the contrary may have a serious negative effect on the viability of the development and may cause a serious delay on the proposed time for handing over finished units.”

JANUARY/FEBRUARY 2016

NEWSWORTHY

SUITABLE PARTNERSHIPS

While there is no consensus on agencies becoming developers in their own right, there is agreement that estate agencies are well suited to partnering with developers. “Estate agents are obviously suited for a developer’s business as they provide invaluable advice on the current market conditions for a specific area at that point in time (market demand and pricing) which may affect the viability of the development,” says Nicolaides, noting their database of potential purchases on hand, marketing skills and extensive knowledge regarding the legal issues involved in the sale and purchase of property. “In any case, agents are registered with the Estate Agency Affairs Board and no party without a Fidelity Fund Certificate may sell property, whether it is a development or not. A developer may build a fantastic development, but if the marketing is handled incorrectly, or if the sale agreements are not administered correctly, resulting in delays or cancelled sale agreements, it could have dire financial consequences for the developer.” Developers too need to consider the merits of the estate agency they employ to help them position the project and market to the correct pool of buyers, says Strauss. But how does an agency with no track record on new developments get its break? This is where the difficulty lies. “It is a simple strategy of demonstrating our experience and illustrating the value we can add in refining design and effectiveness of a scheme, and assisting in resolving any development issues,” says Strauss. “Much of what we do is about personal relationships, where integrity, knowledge and honesty assist in building trust with our clients. Once a developer sees that it can trust in what you say and do, it becomes easier. Repeat business is a big part of our strategy.” MUTUAL BENEFITS

PROPERTY PROFESSIONAL

Hyde Park Terrace: a case in point “We consulted with the developer on its current stock in the market and the marketing approach it took,” says Glen Fisher, projects director for Seeff Sandton Projects. “We presented the Seeff developments way of performing market research, packaging or repackaging the product and market position. “We then convinced the developer that the product, pricing and marketing performed was incorrect and we presented a new package and pricing. By consulting with our architects and builders, we created a new, fresh product with a more modern design and market-related pricing that banks will approve for end-user finance. “We then presented the developers with a marketing campaign for the new product and the roll-out period from going to market and concluding sales and timeframes to deliver the new off-plan homes. We signed a new mandate with the developer and went to market accordingly. “Sales and construction of the newly packaged product is under way.”

IMAGES: ISTOCK AND SUPPLIED

Relationships, having ears on the ground, being active in the specific market and tendering for new business is all part of the game. “With developers we have already built a relationship with, we do not often tender as they are aware of our value-add and the benefits we can bring to the partnership,” says Strauss. “For newer developers we do compete in a tender process.” The agency needs to do its homework too, and cannot partner on a project just because it has no other prospects. “The developer must also have a sound track record and pose a minimum risk to the agency,” says Fisher. “The agency should perform market research on the development and product going to market with regards to right location, price and timing entering into the market. The agency should have choice of the product and not take it on in desperation to have stock on its books.” Likewise, Century 21 only gets involved in developments where it’s a certainty that the product offering is market-related, that the developer has the financial resources to complete and deliver the finished product on time, where the developer is the legal owner of the land and where the agency is satisfied that the developer has the skill and experience to develop the project. “We do not deal with speculative projects where the development will occur only once the developer has tested the market with presales,” says Nicolaides. “Dealing with speculative projects and speculative developers is a very costly marketing exercise for estate agencies with no guaranteed results and may harm the reputation of the agency if the development does not get off the ground.”

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COVER STORY

2016: WHAT LIES AHEAD? GARTH THEUNISSEN AND CATHERINE DAVIS

The industry sees nuances in economists’ gloomy residential market forecasts. They’ve got their eye on the Property Practitioners’ Bill and they’re watching the trends that will shape South Africa’s real estate landscape this year

JANUARY/FEBRUARY 2016

COVER STORY

the market

They say Wall Street predicted nine of the last three recessions. Whoever came up with that quote may well have had South African property economists in mind. Notable names in the property economics game have been warning for several years that the residential market was due for a correction, at least in real terms. FNB’s Property Barometer would suggest that this correction has already begun. Although South African house prices surged 280.9% in nominal terms between January 2001 and July 2015, FNB’s data shows that the average real house price (that is, nominal price growth minus inflation) is almost 19% lower than the high achieved in December 2007. This has prompted property economist Erwin Rode to suggest that investors would be better off renting than buying, unless they were able to execute a 100% cash purchase. Considering that roughly 80% of buyers still rely on mortgage finance to buy their homes, cash purchases aren’t really an option for most. While FNB property economist John Loos has never been a fan of the rentrather-than-buy argument – he says it doesn’t consider moving costs and the hassle factor – even he concedes that the residential property market is due for a downward real price correction over the next five to 10 years. However estate agents aren’t entirely convinced. 28

PROPERTY PROFESSIONAL

“They’ve been saying this ever since I can remember,” says Berry Everitt, group CEO of Chas Everitt International Property Group. “You can’t base your decision on the average for the market as a whole. Each suburb has its own drivers – there are those that will do very well and others not.” Everitt says properties near active metropolitan areas such as Sandton’s and Cape Town’s CBDs will continue to deliver positive growth in 2016. Lifestyle estates such as those in the Cape Winelands or along South Africa’s spectacular coastline will also continue to attract buyers, many of them foreign. “Everyone has a different take on exactly what the SA property market will do in 2016 in response to two interest rate increases in the past 12 months and declining economic growth,” he says. “We were due for a somewhat slower year. But I don’t believe that the businesses that make up our group will suffer any serious negative effects over the next 12 months. After all, when you’re going at 200km an hour and you slow down to 180km hour, you’re still going at a very good pace.” THE LIFESTYLE FACTOR Pam Golding’s statistics for the past 12 months show that 37% of all transfers in the R2m price range were in estates, while for homes priced around the R4.5m mark the figure is almost 60%.

BERRY EVERITT

ON CONSUMER DEMANDS “Superior business support structures and marketing platforms are increasingly important in light of the fact that property consumers are demanding ever-higher levels of service, expertise and exposure. It takes significant financial, marketing and training resources to provide these.”

COVER STORY

Says CEO Andrew Golding: “With municipal tariffs such as rates, electricity and water receiving increasing attention, we anticipate the trend towards the containment of such costs and conservation of our precious natural resources will further stimulate the growing demand for convenient sectional title living and use of energy-saving features. Although generally smaller in size, but not necessarily cheaper, sectional title offers low overheads and improved security.” With inflation within the target range and a sluggish economy struggling to regain impetus while the country experiences the worst drought in decades, the Monetary Policy Committee’s decision in November 2015 to further increase the repo rate by another 25bps was ill-timed, says Golding. A stable rate would have helped boost business and consumer confidence at a time when it is needed most. THE DRAG OF ECONOMIC HEADWINDS “A stable repo rate would have sent a positive signal to South Africa’s housing market, which despite ongoing economic headwinds, continues to experience sustained demand, which in many key nodes and metros exceeds the supply, resulting in ongoing stock shortages. “Our outlook into 2016 is that the current supply-and-demand environment will continue to prevail, notwithstanding the weakness in the economy,” says Golding. Samuel Seeff, chairman of Seeff Properties, remains cautiously optimistic that residential property growth will at least match inflation and may even marginally outstrip inflation in the foreseeable future. He concedes that economic headwinds could be a drag on the market. “The economy will remain under pressure for at least the next two to three years,” he says. Nonetheless, Seeff believes that still-tight stock levels should keep the market nicely balanced this year, in turn keeping price growth at least on par and perhaps slightly above inflation. “The volume of distressed properties that characterised the market and certainly impacted sales volumes and price growth for much of the 2008-2014 period has now been cleared, and given the conservative lending by the banks, we do not expect this to become a major issue into next year.”

SIMON BRAY

ON MARKETING “The one big thing we are expecting to see is collaboration. Real estate agents, print publications and digital platforms have finally realised the synergies they can bring to each other, synergies that result in a stronger, healthier real estate market. For many years these different property players have viewed each other with suspicion and competed for consumer engagement. However those consumers are looking for a complete solution. Digital, print and agency each offer unique value to the property seller/buyer and we expect to see significant cooperation and collaboration opportunities in the areas of property marketing, mandate acquisition, lead handling and data services next year.”

JANUARY/FEBRUARY 2016

COVER STORY

TONY CLARKE

ON DIGITAL DISRUPTION “I firmly believe that an app can’t sell a property – and the role of an estate agent in the industry will remain of great importance. Technology has in fact – according to trends in the USA – validated what the agent is saying: that going the DIY route to sell your home is not easy and not recommended. This can be seen by a staggering 20% drop in private sellers in the USA this year.”

Seeff’s advice is to buy in blue-chip locations such as Cape Town’s Atlantic Seaboard and Southern Suburbs, as well as Johannesburg suburbs in close proximity to the Sandton CBD, often referred to as the richest square mile in Africa. “These areas tend to be recession-proof,” he says, adding that the Atlantic Seaboard suburbs of Clifton, Camps Bay, Bantry Bay and Fresnaye even outperform Johannesburg’s elite suburb of Sandhurst by 30%-40%. Of course, not everyone can afford to buy a home in Clifton or Bantry Bay. But Golding points out that there are good investment opportunities in all segments of the property market. Herschel Jawitz, chief executive of Jawitz Properties, says that the lowerto-middle price segments – R750,000 to R3m – will remain the sweet spot of the market from an activity point of view, driven by first-time buyers and young professionals. He goes on to say that while there are still more buyers in the market than sellers, the number of buyers has slowed, and 2016 will introduce a shift from what has been a very good sellers’ market over the last few years to a more balanced market between buyers and sellers. “For the most part buyers have factored in that interest rates will increase in 2016 and as such the impact of these increases may have a marginal effect on buyer demand. If interest rates do increase by 1% or more over the next 12 months, you may see more distressed sellers coming onto the market, especially at the lower end of the market,” says Jawitz. A PRICE CORRECTION IS DUE Tony Clarke, managing director of Rawson Property Group, says 2016 will still be about the right-sizing of the property market, since the boom of the early 2000s. “From a price growth standpoint, I tend to agree with the banks and other property commentators who are forecasting that house price growth will remain in single digits in 2016. I expect to see house prices increase by a nominal rate of about 8% (which is 2.3% in real terms). 30

PROPERTY PROFESSIONAL

SAMUEL SEEFF

ON INVESTMENT VALUE “Property is seen as one of the top stores of wealth. This is why we see high-net-worth individuals putting their money into blue-chip areas such as the Atlantic Seaboard, and paying ever-higher prices – more R20mplus properties have sold this year compared to last year, and at higher prices, ranging to R111m in Clifton. South Africa’s top 10 suburbs now boast an average sales price of R10m, and the national average house price also breached the R1m price mark this year.”

Clarke quotes Absa’s forecast for headline consumer price inflation – that it is set to average about 5.7% in 2016, and it is imperative that it stays below the 6% mark because there will be further interest-rate increases next year. “In 2016 we will definitely be continuing in a seller’s market with stock shortages, although influenced by region. I also believe we will see first-time buyers struggling to access mortgages without sizable deposits and find many homeowners choosing to renovate rather than upscale,” says Clarke. Equally realistic, Myles Wakefield, CEO of Wakefields Real Estate, says that all signs point to a levelling off of the property market. “But it’s certainly not all doom and gloom for 2016. As an industry we can all see that sales volumes are down a little, stock shortages are easing – it stands to reason that the increased cost of living, slight change in the interest rate, and general uncertainty around local and global issues, will make consumers cautious. Looking at the small interest rate hike, we do need to look at the bigger picture – the South African Reserve Bank has committed to containing inflation, and it’s critical to the economy that the bank sticks to its mandate and thereby retains global credibility. Increasing the repo rate is one of the tools to ensure that they don’t waver on that. So although it may make consumers uneasy, in some respects it’s a good sign,” he says.

COVER STORY

the industry

The proliferation of new legislation and the complexities around the continuing professional development programme (CPD) roll-out have all contributed to a tough year for the industry. “I’m looking forward to working more closely with the Estate Agency Affairs Board (EAAB) and the Department of Human Settlements in 2016,” says Clarke. “I’ve been greatly encouraged by the hard work done by REBOSA to get various property groups and associations talking to each other. I believe that we are all looking in the right direction when it comes to the South African property industry – I can only see good things ahead.” Golding is keeping a watch on ongoing industry transformation and on the new Property Practitioners’ Bill that he says will become a factor to consider in 2016. Jawitz says this bill and the Property Charter will have a fundamental impact on the industry, creating both opportunities and significant challenges. Says Clarke: “The Property Practitioners’ Bill as it stands is draconian and does not speak towards transformation. I believe industry heads should be consulted on this topic and be given the chance to assist with a rewrite.” Golding hopes the CPD programme will improve both in terms of content and logistics, and that the e-learning component will make a significant difference to agents. So it’s good news that REBOSA has been invited to participate in the discussions in respect of CPD topics and content for the

JAN LE ROUX

ON CPD CONTENT “REBOSA has been invited to participate in the discussions in respect of CPD topics and content for the next three-year cycle. We have formed a panel of industry experts to make recommendations and motivate for content and material that will benefit estate agents going forward.” JANUARY/FEBRUARY 2016

COVER STORY

next three-year cycle. Says REBOSA CEO Jan le Roux: “We have formed a panel of industry experts to make recommendations and motivate for content and material that will benefit estate agents going forward.” About 80% of sales are made by 20% of agents, says Wakefield. “Estate agencies are, to a large extent, in the business of attracting estate agents – experienced agents. The compulsory qualifications are helpful in improving the public’s image of agents, but the journey from being an intern to a fully fledged estate agent is a time-consuming, expensive process for both the agent and the agency – and qualifications don’t guarantee a great salesperson or sales so the competition between brands for successful agents is fierce. “On the flipside, with qualifications needed, competition fierce, and digital expertise essential, only the best agents succeed – there’s no room for average. And that, in itself, is good for the image of estate agents.”

MYLES WAKEFIELD ON THE DIGITAL SPACE

“There’s little doubt that the digital environment is impacting more and more on our industry – and like everywhere worldwide, if you’re not up there, you’re nowhere. Marketing spend is increasingly moving to digital, or at least, is mirroring our spend elsewhere. But in South Africa currently, no matter how sophisticated the digital arena, that face-to-face contact still plays a significant role – it’s that interpersonal skill which separates the great agent from the average.”

residential property trends

The industry agrees that the demand for secure estate living is a trend that’s not going away as buyers will continue to prioritise security in South Africa. These homes are also likely to see better than average price growth. “This trend goes hand in hand with the demand from families for a lifestyle within easy reach of good educational facilities and access to all amenities in a ‘countrified’ environment with sport and leisure activities on hand, but still in proximity to commercial nodes,” says Golding. Growing urbanisation and densification, and an increasing emphasis on energy saving and sustainability, are two other trends that Golding expects to take off in 2016. Pockets of strength in the residential property market will remain in the metro areas as a steady influx of people seeking economic opportunities means there will be a continued demand for housing, according to Golding. Furthermore, cities are becoming more concentrated thanks to a lack of land within metro areas and growing congestion – a trend that will continue. Coupled with this is an increased emphasis on “work, live, play” which is also impacting on the demand for urban living in vibrant and trendy hubs. Golding flags the rising costs of water and electricity together with increased environmental awareness of the need to conserve natural resources as triggers for many homeowners installing a host of green features. Increasingly such features will be incorporated as a matter of course in new developments, catering for the growing impetus towards sustainability and self-sufficiency. 32

PROPERTY PROFESSIONAL

CHRIS TYSON

ON DOWNSIZING V STOCK “Even though more property will come onto the market due to people downsizing, we predict that there will still be a property shortage as those people will be buying again. We predict a surge in developments, especially in high-growth areas such as Umhlanga in KZN, due to growth of the region and the impact of the Commonwealth Games.”

‘J UST CHANGE THE AGREEMENT’? TAKE CARE When concluding an agreement for a property to change hands, our law requires it to be reduced to writing and signed by the parties. Underscoring these formalities are further legal prescripts dictating that the parties must have reached agreement, must have capacity to contract, and the like. Due to these strict formality requirements, immovable property sale agreements often include so-called non-variation clauses, confirming that no variation or amendment of the agreement will be valid unless reduced to writing and signed by them. In the recent judgment of Jacobs v Southey the court was asked by a seller to undo registration of transfer. The facts were that the purchaser, struggling to get a bond for the full purchase price, agreed orally with the seller to a reduced purchase price. This the seller accepted and allowed transfer. The seller then argued in

court that the agreement was invalid as the condition regarding the mortgage bond in the written sale agreement, was not met. The purchaser in turn asked the court for rectification of the agreement to reflect the parties’ true intention to lower the purchase price, to which the seller raised the existence of the non-variation clause in the agreement. The court ultimately allowed rectification. The moral of the story? Take care when concluding an agreement for the sale or purchase of property and ensure that every aspect of the agreement is adequately reflected in the document so as to avoid disputes and costs associated with delays and litigation. It is advisable to appoint an expert property professional upfront to assist you concluding the transaction. Contact us on www.stbb.co.za.

PRIDE EXPERIENCE EXCELLENCE

MORE THAN JUST THE PAPER WORK

AGENT DEVELOPMENT

HOW TO MAKE 2016 YOUR MOST SUCCESSFUL YEAR YET IT’S THE BEGINNING OF A NEW YEAR; TIME TO DUST OFF THE NEW YEAR’S RESOLUTIONS AND SET CONCRETE GOALS FOR THE YEAR AHEAD. WE ASKED PRIVATE PROPERTY FOR INSIGHTS AND INSPIRATION

PROPERTY PROFESSIONAL

AGENT DEVELOPMENT

Three ways for agents to make 2016 a success

1 2 3

Be an expert on your neighbourhood. This insider knowledge will differentiate you from your competitors.

Be mobile: with mobile sources attracting more than 50% of traffic to property websites, make sure your website is mobile-phone/ tablet/notebook friendly, or use a friendly property portal such as Private Property.

Get better connected. In addition to your phone, email and website, it’s a good idea to be active on social media or to consider writing a blog.

How can estate agents improve their communication? PRIVATE PROPERTY’S AGENT NEWSLETTER AND ADVICE CENTRE Full of useful news, advice and tips for estate agents. Make sure you’ve signed up to stay ahead of the curve.

Gold-standard service YOUR GOAL FOR THE NEW YEAR SHOULD BE TO attain a standard of being knowledgeable, supportive and 100% accessible to clients at every step in buying or selling a property. Why? Because gold-standard service will lead to more sales and mandates, since satisfied clients will gladly refer an outstanding agent to their family and friends.

A few New Year’s resolutions to choose from TAKE TIME OUT TO RELAX Being an estate agent is tough. Having personal time to de-stress and relax will help you perform better when you’re at work. COMMUNICATE BETTER The number one complaint against estate agents is communication, or rather the lack of it. Pay attention and listen actively, responding to what is being said. Have your own input but stay on topic. TAKE ADVANTAGE OF RESOURCES Find out which speakers are appearing at local venues - these events act as learning and networking opportunities. Have a look at the training and educational resources available on Private Property to improve your skills and knowledge. MANAGE YOUR TIME Time management and balancing between work and your personal life is crucial to your success. It’s equally important to realise that schedules don’t always work out as planned. When organising your year, leave time slots available to catch up on any activities that may be falling behind.

BECOME EVEN MORE OF A LOCAL EXPERT Check out Private Property’s Neighbourhoods section for location-specific property and lifestyle information to share with prospective buyers.

LOOK OUT FOR Private Property’s 2016 events, talks and seminars for the industry.

Find more really useful training and industry advice on propertyprofessional.co.za – click on ‘Tools of the trade’ in the top navbar.

JANUARY/FEBRUARY 2016

I N T E R N AT I O N A L

SIX INTERNATIONAL REAL ESTATE TRENDS FOR 2016 JESSIE WALKER AND CATHERINE DAVIS

What’s hot and what’s not? Take a look at our global trend watch for the year

a property online, and is the ideal platform to attract busy and out-of-town buyers. We see this becoming an essential part of every property listing in the near future.” The value isn’t mere speculation. Redfin in the US reported towards the end of last year that listings using their Redfin 3D Walkthrough tour “sell an average of 10 days faster and for $5,100 more than comparable homes”. And US rental giant apartments.com stated in a recent release that since they’ve started using 3-D tours on property listings they’ve had 4,8m tour views, and site users spend triple the time engaging with those property listings that offer a 3-D tour.

IMAGES: ISTOCK

NEXT-GEN VIRTUAL WALK-THROUGHS

Imagine having a show house that’s open 24/7 and buyers from across the country – make that the globe – can walk through it at their leisure. A pretty pipe dream? Not any more. The advent of 3-D technology means anyone anywhere can now “walk through” a property at any time of day. In the US, real estate agents have been using this technology for about a year already. The Altman Brothers, who specialise in luxury real estate in Beverly Hills and Los Angeles, are fans. “We’re definitely winning more listings with this technology. Our prospective clients are absolutely stunned!” enthuses Josh Altman. “It provides the most realistic sense of actually walking through

The good news is that this tech has hit South African shores. “We use that same exciting blend of cutting-edge camera technology and advanced software to scan existing spaces to create a seamless, immersive and fun experience,” explains Erika Bornman of 3Dscann South Africa. Bornman believes the development is exciting because this complete 3-D representation of a space is future-proof. Everyone’s talking about the rapid rise of virtual reality (VR), and with 3Dscann’s models you’ll be ready to go when VR gets hot in South Africa too. “We’ve already converted some of our models, and anyone with a VR headset can walk through them. It’s like being in your own video game, except you’re navigating real-world spaces.” NOTICE THE MILLENNIALS

There’s more to the millennial generation (those born between 1980 and 2004) than an obsession with smartphones and a mind-set of working to live. And it’s important to understand this age group because they are having major effects on today’s real estate market, according to the Goldman Sachs Global Investment Research 2015. Many millennials have postponed home ownership in favour of renting, but as they enter their peak homebuying years (25-45 years old), a reluctance to enter the housing market could change. This cohort’s sheer size globally (they’re the biggest generation in US history) could lead to a surge in home sales. Add to that the fact that job creation favours millennials, their economic

opportunities are strong, and they will start families, which increases the desire to settle down. Move over, baby boomers – there’s a new economic force in town. OFFICE SPACES: BAROMETERS OF CHANGE

According to the PwC Emerging Trends in Real Estate 2016 report, the office property sector offers a direct insight into how technology disruption, generational transfer and workflow reorganisation can impact real estate. The researchers say space per worker has been steadily declining, but it hasn’t been just a drive to cut costs. New office-space design should be attractive to the workers companies hope to attract. American sustainable building consultancy Paladino says 69% of millennials (there they are again) believe attendance at the office on a regular basis is unnecessary. They want flexibility and to use technology instead. With more employees taking their work to common spaces – to coffee shops or co-working spaces – property

It provides the most realistic sense of actually walking through a property online, and is the ideal platform to attract busy and out-of-town buyers - Josh Altman of luxury realtor The Altman Brothers, on 3-D walk-throughs

JANUARY/FEBRUARY 2016

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managers have to change their thinking about offices. Millennials also want to take their work outdoors, so properties with outdoor common areas are going to be more popular with this group. Providing patios and seating areas will really set office and residential properties apart. HONEST AGENTS

In places where economists and real estate analysts predict that home prices will level off in early 2016, agents should focus on consistent selling throughout the year instead of sporadically landing that big deal. Agents focused on the needs of their clients over big commissions should have the highest earnings by the end of the year. With comparative shopping, demographics and other data about a potential neighbourhood just a click away, agents should also put honesty first – any false data can be easily discovered with Google and a few mouse clicks or taps of a finger. PARKING FOR CHANGE

For years the search has been about how to provide enough parking. That trend is changing now to how do you profitably repurpose the parking you have? According to the PwC Emerging Trends in Real Estate 2016 report, tenants who once required a set number of parking spaces per employee, are reducing their demand as workers expand their use of alternative commuting methods. Mass transit, bicycles, ride sharing, and walking are becoming more popular ways to get to and from work.

This changed spatial planning and new shared mobility means building owners will need to incorporate sustainability and find alternative ways to generate revenue from resources currently devoted to parking. “Already the City of Johannesburg is urging developers to reduce parking bays in retail centres and offices,” says Lisa Seftel, executive director of the City of Johannesburg’s transport department. “We’re saying build three bays per 100 instead of six. Or create parking structures in buildings that in time could be repurposed for retail/other purposes when quality public transport is available in that area.”

According to the PwC Emerging Trends in Real Estate 2016 report, tenants who once required a set number of parking spaces per employee, are reducing their demand as workers expand their use of alternative commuting methods

JANUARY/FEBRUARY 2016

INSIDE INFO

WHAT BUYERS WISH AGENTS KNEW KATE CALNAN

THE QUESTION TO FOUR RECENT RESIDENTIAL BUYERS

What do you wish agents knew about presenting and negotiating an offer THEIR ANSWERS KELLY LARTER, BEREA, DURBAN My husband and I had got divorced and we were selling our house. It was a pretty tough time, and we wanted to sell our house as quickly as possible and move on with our own lives. And our estate agent knew that, of course. Our first two offers were very low, and neither accepted our counteroffers. When our agent came to present the third offer, which was still low, I could see he was getting a little impatient with us. It felt like he wanted us to accept the offer so he could move on to selling the next house. And I was right… As my ex and I were discussing a reasonable counteroffer, our agent blurted out, “Surely you just want this whole thing done and dusted, after the divorce and all!” I was furious, and I couldn’t help wondering if he had told the potential buyers our sob story and that we were desperate to sell, hence the low offers. 40

PROPERTY PROFESSIONAL

ZODWA NTULI, SANDTON, JOHANNESBURG When my first apartment was on the market, my agent came to present me with a really low offer. I was insulted, and told him I wouldn’t even counteroffer – I just let the offer expire. The agent agreed, and we waited another two months before the next offer came in. It was very stressful, and the offer I had on another property subject to me selling my apartment fell through. Subsequently, when selling a different property with a different agent, I had a similar experience with a very low offer. This time, though, the agent asked me to entertain the offer and go back with a counteroffer. At first I fobbed her off, thinking it was agent spin. But she asked me, “What have you got to lose by seeing if you can get a low offer up to an acceptable level?” She said she always advised clients to counter a lowball offer, even if the counter is your asking price, because, she said, it shows you’re serious about your price and you expect them to come back with a more serious offer. I countered with R12,000 less than the asking price, and the buyer countered with R20,000 less, and we had a deal!

RICARDO SMIT, MILNERTON, CAPE TOWN I wish all agents would advise clients not to focus exclusively on price. I lost a property I really wanted because there was a deadlock on the price. The buyer who got the flat offered the same as I did, but included in the offer that he could move in immediately and pay occupational rent, and this suited the sellers. I could have done the same but I didn’t know that kind of detail went into offers. LESLEY ENGELS, HOUT BAY, CAPE TOWN My partner and I had our hearts set on a twobedroom stone cottage in the Valley, but we knew we couldn’t offer full asking price so we tried to play it cool. We were clear about the maintenance work that needed to be done, and that the garden hadn’t been looked after, so our offer would be below the asking price because we’d taken all this into account – that’s what we told the seller’s agent. However, I heard our agent, who was taking us around show houses, tell the sellers that we loved it to bits and that we could already picture ourselves soaking in the ball-and-claw bath, and having sundowners on their deck! I think she thought we were in the garden, out of earshot. I was so cross because I felt they would be yanking our heartstrings during the negotiations.

I was furious, and I couldn’t help wondering if he had told the potential buyers our sob story and that we were desperate to sell, hence the low offers Kelly Larter, Berea, Durban

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TO P T I P S DION WALTERS

architects wish all estate agents knew

1 UNDERSTAND THE LAW

Get a handle on the statutory constraints so you can advise buyers effectively. You do not need an architect for this – just do the homework. In order of priority: • Title deed Read it. Don’t propose departures from this document unless you are looking for long-term headaches. • Zoning scheme Understand the relevant issues – not just coverage, setbacks and height, but also rulings on outbuildings, street access and parking. • Local authorities Do not underestimate the influence of ratepayers’ associations, homeowners’ associations, body corporates and other relevant civic associations.

2 DON’T UNDERESTIMATE THE

DESIGN PROCESS

When it comes to alterations and new builds, architects can take up to a year designing and getting approvals before spending another year supervising construction. This is the reality of the process, and it requires a professional team and a realistic budget. Usually “great flow” is a result of careful planning and design. Review the property plan and consider if it can be improved with an alteration. Very often buyers will not have this vision and will walk away from a potential opportunity.

PROPERTY PROFESSIONAL

Agents are great when it comes to identifying the emotional attributes of a property, such as the “touch and feel” of materials, or the “flow of space” that will encourage a sale. By backing that up with sound technical advice, they could convince a more informed buyer

3 CONSIDER FLEXIBILITY

Assess the building for its ability to be flexible. Building work consumes energy, and saving existing building work benefits the environment and the budget. Consider whether a building can be changed to better suit the buyer’s requirements or the environment it is in. Some buildings are so badly planned and built that they are unchangeable and require demolition. If this is the case, be sure to inform potential buyers.

4 UNDERSTAND THERMAL PERFORMANCE

A building needs to respond to its climatic region with correct insulation and heatgain protection to avoid high electrical consumption. Views are great, but large south-facing single-glazing panels will mean high electricity bills or fireplace dependence. Likewise, west facades need sun protection. Agents should assess a property’s insulation, and the most important aspect is to find out what is in the ceiling. A simple R-value table in the SANS 204 Energy Efficiency in Buildings publication will tell you about the minimum spec required for the region, which is translated into either polystyrene board or fibreglass blanket thickness. Having the correct information on hand can assist a sale in today’s market, where buyers are more concerned than ever about electricity consumption.

5 UNDERSTAND GLAZING PERFORMANCE

Glazing orientation, size and type affects insulation, and this has a major impact on comfort and livability. Performance singleglazing and double-glazing units have become the norm in all our projects, as they provide insulation in winter and prevent heat gain in summer. The UV filters even protect furniture. These components are not big wow factors on show day, but informed buyers will appreciate an agent who has considered glazing and is able to offer solutions for potential problems. There are four basic rules: beware large south glazing for heat loss; beware large west glazing for heat gain; beware not enough north-facing glazing; and make sure east light enters a kitchen.

Dion Walters [Pr. Arch] has been practising architecture for 16 years as a director of Bomax Architects. The firm is dedicated to designing innovative, contemporary solutions for residential and commercial clients who expect passion and flair in their homes or commercial buildings. bomax.co.za

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LIFE HACKS JILL CORFIELD

How to keep in touch with clients for the long haul

etting referrals is golden. A client who considers you their real estate agent for life is a client you don’t have to spend money on trying to find. People recommend those they know and trust, but earning that trust involves some effort. Here’s how…

KNOW THE PRODUCT AND AREA THOROUGHLY

It’s essential you have an exhaustive knowledge of the area of operation – rather like a taxi driver. You should know the schools in an area and what the various school fees are. Know the different churches nearby, as well as the shops, offices, doctors, dentists and vets. You should have an equally thorough knowledge of other properties on offer, being aware of “the good, the bad and the ugly”.

IMAGE: SUPPLIED

KNOW THE LOCAL BYLAWS AND TOWN-PLANNING RESTRICTIONS

Often buyers will want to buy a property, intending to make certain alterations to the original purchase, such as adding an extra storey, a swimming pool or garage, or to use it as a business space. It is essential you understand local restrictions, subdivision rules, local bylaws and zoning requirements. You need to know the difference between commercial rights (where a property has been officially rezoned into commercial space) and “consent to use”, which is not necessarily transferrable from one owner to the next.

The average property changes hands every five to seven years. That’s why it’s important agents stay in clients’ lives well after the first transaction

DELIVER ON YOUR PROMISES

When consumers use the services of an estate agent, they have high expectations that the “middleman” will know things and be able to do things that they are not able to do themselves. (Otherwise there would be no point in engaging the services of an estate agent and they might as well buy or sell privately.) Agents who say they will find out information or say they will do things but do not follow through should realise that this is the quickest way to destroy the relationship. Always tell the truth, always pay attention and listen carefully. Give constant feedback right from the start until the day the property is transferred.

UNDERSTAND THE ESTATE AGENCY AFFAIRS BOARD’S CODE OF CONDUCT

In addition to being controlled by the Estate Agency Affairs Act, agents have to follow the EAAB Code of Conduct, which is based on a fair code of ethics. One of the main clauses states that an agent must not wilfully or negligently fail to perform any work or duties with such degree of care and skill as might reasonably be expected of an estate agent. Agents who always adhere to this code by putting their buyers and sellers first, before their own needs, will always survive and thrive in this competitive industry.

Agents who say they will find out information or say they will do things but do not follow through should realise that this is the quickest way to destroy the relationship Jill Corfield began in the real estate profession 39 years ago as a rookie agent. She crossed over into full-time property education in 1984. Corfield is a director and past chairman of the Durban region of the Institute of Estate Agents and is serving a second term as a member of the Estate Agency Affairs Board. Corfield School of Real Estate, 031 303 3736

JANUARY/FEBRUARY 2016

M O T I VA T I O N JANINE EVERSON

Coaching out your best

ou might be wondering how somebody in a small franchised estate agent team, or an entrepreneurial property developer could benefit from a coach. Well, regardless of the business, a coach can help you explore important questions, such as how can I contribute, what is my role, how do I overcome challenges and what is my style of leadership? Hard questions we should all be asking ourselves occasionally. A coach is not there to give you direct advice or to rescue you. A coach is there to listen really carefully and to focus on you – your thoughts, how your emotions play out and how your patterns of behaviour may or may not be helping you. A coach then helps you see how your behaviour and habits contribute to the challenges you are facing in the office. Finally, a good coach will work with you to develop new capabilities to notice your own – previously unconscious – patterns of behaviour and habits, to self-correct and to eventually come up with action plans and solutions to your problems without the coach needing to be there. We call this “selfgenerating”. You should end up feeling more capable, fulfilled, confident and successful too.

SIX TIPS TO BECOMING A BETTER, HAPPIER EMPLOYEE

BECOME A LEADER

It may not sound like it, but the more leadership capacity you develop, the less you will need to do. Start by making your requests clearer and as specific as possible, and do it with a posture of confidence.

A good coach will help you to notice your unconscious patterns of behaviour and habits, to self-correct and to think up action plans and solutions. You may even discover leadership strengths you weren’t aware of

WE ALL LEAD DIFFERENTLY. OWN THIS

Discover your unique “something”. You were not hired because you resembled a previous leader but because your particular skills and talents are what are required for the job. Regardless of your sex, within each of us we have masculine and feminine types of energy that we tap into. Depending on what you are trying to accomplish, you will utilise either your masculine or feminine energy (doing v being, aggression v surrender, analytical v intuitive, rushing v nurturing, concrete v abstract, and so on). HOW TO DO IT

Ask yourself which energies are the most easily accessible to you. Which do you struggle to connect with? Which do people around you seem to respond to best? Become curious and you’ll see how it can impact your leadership style and choices.

CLAIM YOUR SPACE

LET GO INSIDE AND OUTSIDE OF WORK

If you have been given an area of responsibility, accept it. If you are surprised by a leadership role, that uncertainty could make you feel it is undeserved. By claiming your space you will have a sense of belonging. And the people around you will also know that you belong. The dynamics around roles for men and women have changed dramatically over the past few years, so working effectively is often about playing to each other’s strengths. If you tend to hang on to a particular task or role, ask

yourself what might happen if you just let go a little bit. In particular, start noticing what you are not so good at, or what you enjoy the least. Look around to see what might open up if you didn’t insist on such extremely high standards, or who might be the opposite to you and actually enjoy doing it, or who has the potential to develop into that space (forget the traditional male/female gender roles here). Very often people try to hold on too much. This can result in everything suffering through overcommitment.

SEEK OUT AND USE MENTORS

Your support structure will be stronger when it’s linked to a mentor. That is someone who has gone through what you are about to go through. If you’re in a leadership position and don’t have a mentor, you are missing out on a valuable support network. But even those who are not in appointed leadership roles need mentors. It’s a good time to seek out a mentor – formally or informally – at any time when you are facing lots of new challenges and situations. The first five years in the working world can be incredibly challenging, for instance. Learning the ropes,

It may not sound like it, but the more leadership capacity you develop, the less you will need to do JANUARY/FEBRUARY 2016

and getting to understand the ins and outs of a complex industry such as the property field is an ideal time to build a network of support. HOW TO DO IT

Look around. Whom do you admire? Who looks or feels like you would like to look and feel? Who seems on top of their game? Who seems most knowledgeable? Make a list, no matter how out of reach that person might seem to you. Once you have a shortlist of one to three people, consider how you might approach them to ask if they would be willing to mentor you. It is a fact that many successful people are only too happy to share their tips and secrets of success. A mentor also gets a lot out of a mentoring relationship, so don’t hesitate to ask somebody. At worst they could say no – but even then, they will remember you. NOT EVERYBODY CAN BE THE BOSS

Sometimes leadership is not about being the boss at all. In a small entrepreneurial environment in particular, everybody should be a leader in his or her own right. Sure, there might be some areas requiring direction, but a small office needs people to be able to think for themselves, to roll up their sleeves and do things together or separately. Take a look around and see what it is that you can get working on. Which areas can you take the lead in, show initiative and add value? A small office team thrives and grows when each individual behaves as if they are their own boss. And like all good leaders, those individuals can then start looking out for those around them. This can create a really vibrant, supportive, dynamic office environment of leaders all aiming for the same overall goals. 48

PROPERTY PROFESSIONAL

By claiming your space you will have a sense of belonging. And the people around you will also know that you belong

Janine Everson is a director at the Centre for Coaching. This training institution at the University of Cape Town’s Graduate School of Business uses coaching as a tool to develop a transformational culture shift and to implement powerful leadership in business. centreforcoaching.co.za

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