Property Professional - Mar/Apr 2016 by Property Professional

MAR/APR 2016

PROPERTY

PROFESSIONAL THE SOUTH AFRICAN PROPERTY INDUSTRY MAGAZINE

CAN AFRICA STILL DELIVER BUSINESS PROPERTY GROWTH? IN T E RV IEW

ANDREW GOLDING On buyer sentiment and adapting to challenges PP Mar_Apr_Cover.indd 1

RACISM A N D IN DU ST RY T RA N SFO RMAT IO N

WHY IT’S AN OPPORTUNITY TO DRIVE CHANGE AGENTS, MEET THE NEW BUYING GENERATION 2016/02/26 11:42 AM

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2016/02/11 4:05 PM

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LOCAL NEWS

Editor’s note T

he #PennySparrow post, an interest rate hike, with more forecast, the about-to-be-debated Expropriation Bill … and it’s only March! But we’ve got it covered in this issue of Property Professional. Former agent, Penny Sparrow’s Facebook post had a ripple effect on the industry and the country. Read our in-depth feature on p21 about how industry leaders are dealing proactively with racism and tranformation – it’s not something to be swept under the carpet so make sure you sign the REBOSA anti-discrimination pledge. In our cover feature, Pam Golding Properties CEO Andrew Golding, views the racism debate as an opportunity to revisit transformation. Turn to p26 for what he says the industry, and PGP, is doing about it. Read Golding’s views on where the market is headed – he says it could be tough, but not ‘2008-tough’. Find video highlights of this interview on propertyprofessional.co.za Don’t miss two useful features: home loan trends in 2016 – what to tell your clients (p32). And learn about the millennial generation of property buyers, and how to get inside their heads (p35). Now let’s go and sell some houses.

INTERNATIONAL NEWS

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

PP Mar/Apr_EdsLetter+Contents.indd 1

HOW THE INDUSTRY CAN MANAGE CONVERSATIONS ABOUT RACISM

THE UNFLAPPABLE ANDREW GOLDING

HOME LOANS What your clients should know about the economy’s effect on approval

MEET THE NEXT GENERATION OF BUYERS

PROPERTY PROSPECTS ACROSS OUR BORDERS Is Africa still a good place for your business?

THE CREATIVE GROUP CEO: Shaun Minnie shaun.minnie@thecreativegroup.info Editor: Catherine Davis Content Strategist: Bridget McNulty Managing Editor: Kim Maxwell Art Directors: Mark Peddle, Leah de Jager and Lucia Viglietti 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 goods or services advertised within. Information correct at time of printing. © 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 unsolicited material.

2016/02/26 6:48 AM

LOCAL NEWS

LOCAL INDUSTRY NEWS LARGEST PRIVATESECTOR DEVELOPMENT IN KZN

Every few years Umhlanga – one of the biggest growth nodes in the country – alters its skyline in dramatic fashion. And 2015 was one of those years. Oceans Umhlanga is a R3,1bn collaboration between Vivian Reddy of Edison Power Group and Rob Alexander of Ducatus Property Group. To date it’s the single largest private-sector development in KwaZulu-Natal. The mixed-use development covers 90,000m2 of prime Umhlanga Village land. It has two residential towers of 460 apartments and a retail tower named Ocean Mall. Reddy has confirmed super-brands such as Burberry, Versace, Armani, Boss Orange and Paul Smith. Four architectural practices are on board – Elphick Proome, LYT, Ruben Reddy and Ravi Jhupsee Architects. The apartments have entry-level price tags of around R1,6m, soaring 28 storeys up to R60m for a double penthouse. Marketing and sales is by DevMark Global, whose local success stories include the record sell-out of The Pearls and Zimbali Suites. DevMark MD Piaras Alvarez has experience in Dubai, the Middle East and Asia. “We have learned how to market and sell in a way that’s more cost-effective than has typically been done in South Africa. We cover a wider gamut of functions than an estate agent, and we share our mandates with all other estate agencies,” he says. DevMark’s Oceans Umhlanga sales event is on 26 March.

AGENT SURVEY SUGGESTS RESIDENTIAL PROPERTY MARKET SLOWING Activity is slowing in the residential property market, concludes the 2015 Q4 FNB Estate Agent Survey – from the bank’s most recent sample of estate agents. FNB’s household and property sector analyst John Loos says the market remains “comfortable”, with some limits of activity as a result of stock supply constraints rather than from demand constraints. But it is to be expected that demand-side weakening will be playing an increasing role. As the residential property market is something of a leading sector of the economy, this activity rating possibly points to further economic growth weakening in the near term. The FNB Estate Agent Survey Residential Activity Rating polled a sample of estate agents, predominantly in South Africa’s major metro regions. A key question concerned their perceptions of residential market activity in their areas – a subjective question on a scale of one to 10, 10 being the strongest level of activity. The 2015 Residential Activity Indicator Q4 dropped to 6.02, down from a 6.73 high in 2015 Q1. While activity levels remained fairly solid, it was the indicator’s direction that is of concern. The Residential Activity Rating’s year-on-year growth rate slid from a 12.18% positive growth high in 2014 Q3, down to a -8.93% year-on-year decline by 2015 Q4. This decline is not of concern only from a residential property sector point of view. The worry is what it may signal as a near-term trend in South Africa’s economic growth performance, which is already weak. Real economic growth was only 1% year-on-year in 2015 Q3 – a rate insufficient to promote any significant job creation, being more likely to cause net job losses. Given those statistics, the risk of a recession remains high. In short, while the residential market is still some way off from being seen as weak, the direction of the Residential Activity Rating points to estate agents as a group experiencing mounting pressure to help sustain the South African economy’s growth.

PROPERTY PROFESSIONAL

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LOCAL NEWS

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COSMO MALL PEDESTRIAN BRIDGE: A NEW JOHANNESBURG LANDMARK

At 410m long, the new pedestrian walkway and bridge over Malibongwe Drive is strategically located at the entrance to bustling Cosmo City. It will give Cosmo City residents and visitors safe and easy pedestrian access to the new 22,000m2 Cosmo Mall, and represents a major private-sector investment in public infrastructure by the Bentel Group. Says Bentel Group executive chairman Aubrey Bentel: “An integral part of our brief to the professional team was to create a user-friendly bridge structure, with a gradual incline to make it suitable for wheelchair access. Its design was aimed at creating a landmark structure in the community that will inspire civic pride.” This multimillion-rand investment comes in just less than 18 months after the opening of the R270m Cosmo Mall in September 2014. The mall houses more than 70 retail stores, eateries and service outlets. “These are major investments into Cosmo City in terms of quality retail and public infrastructure. Not only has this created jobs, it has brought an exciting shopping and leisure destination right to the community’s doorstep,” says Bentel.

PROPERTY PROFESSIONAL

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LOCAL NEWS

SOS: LAWNS ON SHOW

POLA JOCUM HAS SOLD R2bn IN REAL ESTATE

amps Bay agent Pola Jocum has sold R2.043bn in real estate and some 346 properties during her 36-year property career, mostly in Camps Bay. That equates to an average of almost R6m per property, a feat few agents in the country can claim, says chairman of the Seeff group Samuel Seeff. Jocum has been with Seeff for 25 years. Operating in one of the most exclusive suburbs along the Atlantic Seaboard, Jocum says over three decades she’s been witness to a few booms and busts. “My philosophy remains that while I cannot change the market, I can control the marketing,” she says. “While the market may move sideways during an economic downturn, my approach has been that a deal is never dead,” says Jocum. On many occasions she has brought buyer and seller back to the negotiation table. She says technology has impacted the industry, influencing consumer behaviour. “The fundamentals remain the same. If you’re selling, pitch your price right and ensure your property offers good value. If you’re buying, pay no more than fair market value, unless you have your heart set on a particular home and are prepared to pay more and wait longer before you see some value growth.”

As an agent you know that first impressions count, and a beautiful and well-kept garden counts for a lot. With the current drought and water restrictions, it’s a challenge to get a lawn looking show-day ready. Donovan Payne of The Grass Company says that a lawn requires four basic ingredients: water, heat, nutrients and mowing. Without a balance of these, it’s difficult to maintain a healthy, green lawn. He has this advice for your clients: WATER In drought conditions, water less frequently, but give the lawn a deep soaking once a week to every 10 days. If watering from a municipal source is out of the question, try to add grey-water schemes to your home, so that household water can be used in your garden. HEAT Lawns do need heat to grow, but try to ensure soils are moist in extreme heat conditions. NUTRIENTS Lawns need to be fed every four to six weeks. Try to nourish your lawn with a balance of nitrogen, phosphorus and potassium

fertiliser (the N-P-K ratio appears as numbers). Get specialist advice on these nutrient ratios, and how and when to apply. In times of water scarcity, mushroom compost can be used as a dressing, since compost tends to hold onto water a bit longer than soil. A mixture of fine river sand and compost is a good combination to help with levelling a lawn. Don’t cover the blades of the grass when dressing the lawn; brush material into the mat of the grass and water well. Lawns love nitrogen and a LAN fertiliser will quickly green a lawn as an emergency fix. However it can easily burn it so use nitrogen with care and only if you are able to give it a good soaking. MOWING Every lawn type has an optimum height where it is happiest to be mown. Start at a high setting and work down until you find that height. Ensure the lawnmower blades are always kept sharp. Try to keep the lawn consistently at the correct height. The average cost for a new lawn is around R64/m2. Installation time depends on its size, with a 250m2 lawn taking four workmen about a day to complete. A new lawn can be mowed two weeks after installation and should start to look good after four to five mowings.

PROPERTY PROFESSIONAL

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LOCAL NEWS

TOP 10 SA SUBURBS WITH HIGHEST VALUES Lightstone has indentified the top 10 highest-valued suburbs in South Africa. They’re all in Cape Town, except for number 10, Westcliff in Johanneburg.

LLANDUDNO

R16,5m

STEENBERG GOLF ESTATE

R13m

CONSTANTIA

HIGGOVALE

R12,05m

R10,25m

6 CONSTANTIA

CLIFTON

HEIGHTS

R10,15m

7 OWNER-OCCUPIERS AND ‘SEMIGRATION’ CAN PROTECT DEVELOPERS Property developers have specific buyer segments that they target when looking to sell: the local or foreign investors and the owner-occupiers. Most of the time these buyers are targeted equally. But as the South African economy looks increasingly uncertain some developers are looking more to the owner-occupier segment to offer more long-term security than that of the investor market. Investing can take a back seat in a tough economy. Owner-occupiers who are buying to live, will always be looking to spend on a home as a primary need. Says Jacques van Embden, MD of Blok urban

property developers: “We sell all our property off plan, so there is the obvious attraction to the market of avoiding transfer duties. But we have always focused on owner-occupiers for reasons including occupancy and the associated benefits that it brings to a building and its residents. We’re realising that this business model seems to be protecting us from the downturn some of the property market is seeing.” This is not to say that the investor market has completely shut down. According to Van Embden the trend of “semigration” has picked up significantly, with many people from around South Africa choosing to relocate to Cape Town but still commute elsewhere for work. People are also still buying to let, and prime areas such as Cape Town and Sandton offer relatively low risk considering how strong rental markets remain.

R9,65m

DE ZALZE

WATERFRONT

GOLF ESTATE

R8,35m

R9,35m

9 WITTEBOOMEN

R8,225m

10 WESTCLIFF

R8,15m

Lightstone notes that the highestvalued suburb was chosen by considering the median value, which is preferred over the mean value, as it eliminates extreme values. The median gives a good representation of the value of a suburb as a whole.

MARCH/APRIL 2016

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LOCAL NEWS

Camps Bay: Location, location, location The adage “location, location, location” could have been written for Camps Bay. As an investment, according to agents in the area, you can’t go wrong. Most of them struggle to keep up with demand. Here’s why: In 1979, the average price of a house in the suburb was just R33,000. By 1997, an agent broke the R4m barrier with a record R4.75m sale, and then resold the same property again in 2007 for R14m. That equates to a growth jump of almost three times the original price in only 10 years. Camps Bay has also now reached an average sales price of R10m, some 54% more than it had been five years ago.

BRIDGET MCNULTY

INNOVATIVE SOCIAL MEDIA STRATEGIES

Making your brand stand out above the rest sometimes requires more than online engagement

n a world so filled with “noise” – from phone calls to e-mails, websites to Facebook, Twitter, Instagram and more – it can be difficult to make your voice heard. That’s why more businesses, particularly online companies, are developing innovative social media strategies to differentiate them from other brands. The importance of social media in daily interactions cannot be overestimated. In fact, for many consumers it’s a necessity. Social media allows one-on-one interaction between brands and customers, which means companies can get meaningful insight into their lives, likes and dislikes. Complaints can be responded to quickly and effectively. When executed correctly, social media can also significantly increase brand recognition and loyalty. That is, if your customers can hear you. A recent experiment by Private Property took social media out of the online-only world by flying a giant branded banner over South Africa’s popular holiday spots. December is a quiet month in the property industry, so Private Property took their brand to where they knew their browsers would be: on holiday. From Cape Town to Durban and (in January) Johannesburg, their #searchthesky competition engaged the public and generated online excitement around the campaign. The concept was simple: entrants had to take a photograph of the Private Property banner and upload it to social media (Facebook, Twitter or Instagram) with the hashtag #searchthesky, for a chance to win a R2,500 gift voucher. And the response, in this quiet property month? Phenomenal. Hundreds of entries, huge engagement numbers and a social media reach of hundreds of thousands. For agents, the take-home from this experiment is that innovative social media marketing allows you to reach a wide audience quickly and fairly cheaply. From competitions to short videos and relevant photos, unique campaigns on social media show that you’re in touch with current trends and technology. That translates into a whole new audience to listen while you offer your services – and your properties.

PROPERTY PROFESSIONAL

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

MARCH

17 29-31

WHAT

2016 SA REIT CONFERENCE

WHERE: The Maslow, Sandton CONTACT: sareit.com/conference.php

WHAT THE URBAN DESIGN CONFERENCE: RE-IMAGINE URBANISM DEBATE SERIES WHERE: Freedom Park, Tshwane CONTACT: reimagineurbanism.co.za

APRIL

6-7 11-13 13-15

WHAT EAST AFRICA PROPERTY INVESTMENT SUMMIT

MAY

3-4 9-11 30-31

WHAT GLOBAL REAL ESTATE INSTITUTE BRITISH GRI 2016 WHERE: London CONTACT: globalrealestate.org/British2016

WHAT AFRICAN CONSTRUCTION AND TOTALLY CONCRETE EXPO 2016 WHERE: Gallagher Convention Centre, Johannesburg CONTACT: totallyconcrete.co.za

WHAT GLOBAL REAL ESTATE INSTITUTE EAST AFRICA GRI 2016 WHERE: Nairobi CONTACT: globalrealestate.org/eastafrica2016

WHERE: Radisson Blu Nairobi, Kenya CONTACT: eapisummit.com

WHAT INTERNATIONAL PROPERTY SHOW WHERE: Dubai World Trade Centre CONTACT: http://bit.ly/20G7jta

WHAT SAPOA INTRODUCTION TO COMMERCIAL PROPERTY TRAINING WHERE: Wits Professional Development Hub Building, Braamfontein CONTACT: http://bit.ly/1PxG6pD

Add to your diary now!

SAPOA 50TH ANNIVERSARY CONVENTION AND PROPERTY EXHIBITION SAPOA will be celebrating its

50th anniversary in 2016. This annual convention will bring together inﬂuential local and international property professionals under one roof to share thought-provoking insights. sapoaconvention.co.za 21-23 June 2016 at the Sandton Convention Centre

MARCH/APRIL 2016

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ADVERTORIAL

What Chas Everitt Offers Franchisees If you’re considering expanding your business, we have what it takes to make you successful

A MESSAGE FROM BERRY EVERITT, GROUP CEO, CHAS EVERITT INTERNATIONAL “It’s time to bring on the big guns. As the market tightens this year, property owners who want to sell within a reasonable timeframe and achieve their asking prices are going to need the help of the very best estate agents the industry has to oﬀer. What is more, they need to become more discerning and ensure that those agents have the backing of a large real estate group – such as Chas Everitt International. I say this with all humility, because there are some very ﬁne agents working solo or in smaller companies, but the time has come when – no matter how much experience or know-how that agent has – they are simply not able to compete with those who have all the resources of a group such as ours at their disposal.”

Quite simply, Chas Everitt agents are able to cut through all the clutter and help our clients make better decisions, better sales and better purchases – Berry Everitt, Group CEO, Chas Everitt International 12

DID YOU KNOW? The latest survey of homebuyers and sellers conducted by the National Association of Realtors in the US suggests that demand for estate agency services is actually increasing, with 89% of the sellers that were polled in 2015 having sold through an agent, compared to 88% of sellers in 2014.

So how can you make the most of this demand? The reality is that the majority of independent agents and agencies just don’t have the means to deliver everything that consumers have come to expect from professional agents. Particularly when it comes to three key areas, which only a few large groups currently have the infrastructure, budget and commitment to provide for their agents:

1. MARKETING RESOURCES 2. TECHNOLOGY 3. TOP-QUALITY TRAINING

We believe ongoing learning and training is an essential part of being able to deliver memorable customer service

GIVE US A CALL! For more information on joining Chas Everitt as a Franchisee or Licensee, contact Gerhard Kotze at 011 801 2500 or 082 447 5698, or email gerhard.kotze@everitt.co.za

PROPERTY PROFESSIONAL

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ADVERTORIAL

Don’t ask us, ask our franchisees: “After many years of being an independent real estate company and always being concerned about taking on additional expenses when joining a franchise, I must say that I am pleasantly surprised at the many cost-saving opportunities we now enjoy as part of the Chas Everitt brand. Converting to Chas Everitt was the best business decision we ever made. We are very proud to be part of the Chas Everitt family and I am confident that we will take our business to the next level.” – Chantelle Grard, Franchisee: Chas Everitt Mossel Bay

“The Chas Everitt International emphasis on personal service was a big factor in my decision. Although it is a group with a formidable presence in the local as well as international market, people don’t get lost in a corporate maze. It is a perfect fit with my own family-oriented approach to business. The conversion to Chas Everitt has been a fantastic move in many ways! ” – Rose McFall, Franchisee: Chas Everitt Somerset West

What else does Chas Everitt offer franchisees? • An international group with reach in more than 52 countries: that means foreign currency earnings and foreign buyers looking for property in South Africa • Ongoing franchise support and business development • Superior agent and management IT systems • Innovative advertising and marketing • Focused luxury training and offerings • Recruitment assistance programmes • Strong public relations

OUR MARKETING RESOURCES ARE IMPRESSIVE Our agents have access to a myriad of property marketing products, services and platforms, including a comprehensive line-up of property portals and websites that enable them to reach a huge national and international audience of potential buyers. This has been further enhanced by our recent aﬃliation to the Leading Real Estate Companies of the World©: a truly global network of member companies with an international referral network worth literally billions of US dollars a year.

OUR TECHNOLOGY IS CUTTING EDGE Our group continues to invest heavily in IT to ensure that agents have access to the latest and best real-estate technologies and online marketing platforms, and also to the most accurate and useful market information. This is of great value to both sellers and buyers who often feel overwhelmed by the sheer volume of data (online and in the media) relating to property prices and market trends. Quite simply, Chas Everitt agents are able to cut through all the clutter and help our clients make better decisions, better sales and better purchases.

• Practical agent management and support staff training • Effective referral programmes • Recognition at a franchise, estate agent and administration level • Incentive programmes for franchisee and estate agent • Strong referral network • Networking and franchise synergy programmes • A growing brand • Supportive franchisee teams that share with one another

MARCH/APRIL 2016

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

PROPERTY MOVEMENTS AROUND THE WORLD LEA JACOBS

HEDGING THEIR BETS The economic fallout in China may benefit the international property market as wealthy Chinese buyers look for safer havens. It doesn’t take a crystal ball to see that the domestic real estate market in China is going to take a bit of a hammering this year. Increasing interest rates in the US, coupled with the economic slowdown, doesn’t bode well for the country’s real estate prospects, but according to the latest report from the Knight Frank Prime Cities Forecast, it won’t be only the Chinese market that feels the heat. The report notes that prices for luxury property in major cities are expected to slow by nearly half this year – from 3% in 2015 to 1.7% in 2016. “We’re moving into a different environment, where you won’t see the level of wealth creation in

China that you’ve seen in recent years,” says Liam Bailey, global head of research at Knight Frank. The report predicts that price growth in Shanghai is expected to fall by more than half, from 10% in 2015 to 4% in 2016. Hong Kong is expected to take the biggest knock and it is estimated that house prices will drop by 5%. Neighbouring countries favoured by wealthy Chinese investors are also going to bear the brunt of the fallout, and it is expected that property prices in Singapore will drop by 3.3% this year. However it’s not all doom and gloom. Bailey says as economic uncertainty within China takes hold, the desire to diversify outside the country has increased in both the wealthy and middle-class segments, which could bode well for certain sectors of the international market.

Find more industry news at propertyprofessional.co.za

TIME TO DITCH LONDON?

igh prices and lower yields have seen the London property market falling out of favour with investors, according to a report released by PricewaterhouseCoopers and the Urban Land Institute. The survey, which polled 500 developers, investors and property managers across Europe, saw the city slipping five places into 15th position. It’s the first time since 2012 that the city hasn’t made it into the top 10. Although this doesn’t mean that investors are completely disregarding the London market (it attracted ¤47bn worth of capital in Q3 2015), one investor who took part in the survey remarked that suddenly everybody was beginning to want to sell. The theory is that smart Americans are taking their chips off the table and are now looking to mainland Europe, in particular parts of Germany and southern Europe, to deploy capital in 2016. The big test for London is how much of this stock will be mopped up. It will be interesting to see how events pan out, considering that the number of homeowners selling up and moving out of the British capital increased by twothirds during 2015. But one thing is clear: no one is ever going to write off the London market completely. A slight softening of demand may mute prices somewhat, but considering that the average price of a home in the city is around £500,000, it’s highly unlikely that prices will ever fall dramatically enough to bring London in line with the rest of the UK or, indeed, other cities around Europe.

PROPERTY PROFESSIONAL

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Has the US interest rate hike affected the real estate industry ? It appears the Americans have far more to worry about than a pesky rate increase

US PROPERTY COULD BE OVERVALUED BY 25% TO 60%

PROPERTY IN NUMBERS

he 0.25% US rate hike, the first in nearly a decade, doesn’t appear to have had much of an impact on Amercian homeowners.Although, as always, the increase will affect first-time buyers and those who are already over-indebted. In a poll conducted in November 2015, only 6% of respondents indicated that they were concerned about a pending increase. What worried more buyers was increasing house prices, with 26% noting this issue. What US buyers appear to fear more is another price bubble. And there’s plenty of evidence that this concern is justified. An analyst quoted in Fortune

expected decrease in Hong Kong house prices

€47bn

Magazine estimates that US property is over-valued by 25% to 60%. He cites the San Francisco Bay Area as an example. Here, the price of an average property is $1.45m and the average salary is $180,000 a year. He notes that the average person who simply wants to put a roof over their head can only aﬀord a property at $778,000, nearly 50% below the average. What is driving prices to these new heights? Is it another subprime lending scheme, or perhaps international investors pouring money into the US bond markets? The short answer is no to both. This time round, price increases are linked to Americans who are investing in second, third and fourth homes, hoping for investment and capital gains.

capital attracted by the London property market in Q3 2015

$1.45m

average property price in San Francisco Bay area

MARCH/APRIL 2016

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TOOLS OF THE TRADE

GOODIES AND GADGETS FOR WHEN YOU’RE ON THE GO RYAN SCOTT

Look the part, make a good first impression and stay ahead of the crowd with these four classy accessories

TAKE CHARGE MACBOOK COVER YOU NEED IT BECAUSE You’ve got meetings to make, calls to take and on-the-minute social media notifications to check, and your phone laptop battery takes strain. The power bank allows you to fully charge your phone or tablet on the move. THE NITTY GRITTY The quality local design uses genuine leather, yet is robust enough to protect your computer when you’re on the move. It has a built-in USB charger. Take Charge bags are compatible with all modern smartphones from the iPhone 5 upward and any micro-USB port devices. X-FACTOR The slim battery design has been cleverly placed in a secret slip-pocket inside the bag. R1,799; take-charge.co.za

GIORGIO ARMANI (HER) AND DOLCE & GABBANA (HIM) YOU NEED IT BECAUSE For women, oversized eyewear is back in fashion, and tortoiseshell frames are always in. The men’s Dolce & Gabbana sunglasses are subtle and sophisticated. THE NITTY GRITTY Perfect for casual styling, the Armani sunglasses are a safe style investment. This model comes with a square full frame and monochrome dark lenses. The pilot-shape frames of the D&G sunglasses gives an iconic silhouette with the sartorial 45° edge cut. X-FACTOR The logo on the arm is subtle but unmistakably Armani. Find D&G frames in matt black, gun-metal grey or 18k-gold metal plating. R2,930; Giorgio Armani, R3,630; Dolce & Gabbana Luxottica 021 486 6100

PROPERTY PROFESSIONAL

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SOUTH AFRICAN

RRACISM RACISM CI M CONVERSATIONS ABOUT

ANNE SCHAUFFER

The property industry was jittery enough going into 2016. Then a little Durban bird tweeted the unthinkable, and thanks to her tenuous link with the property world, the industry was thrust under a spotlight. Penny Sparrow’s actions are inexcusable. But inadvertently she may have jumpstarted some essential – if uncomfortable – conversations about managing racism

anuary 2016 is not a month South Africans will easily forget. The lid blew oﬀ the pressure cooker and everybody was stunned, outraged, even bewildered, by what emerged. Our fracture lines deepened, or became more visible. The rainbow faded, all thanks to a single person’s racist tweet – a former estate agent who did not understand social media as being a global soap box, and who did not foresee the consequences of this irresponsible uttering. Penny Sparrow has a great deal to answer for, but ironically, most would agree, she’s inadvertently sparked something long overdue. Whether within the property

industry or outside it, many have been stopped in their tracks and moved towards some brutally honest introspection and authentic conversations – by choice, and at the encouragement of principals in the industry. The property industry responded as one to the racist tweet and stressed zero tolerance in words and deeds. In his emotive letter to Real Estate Business Owners of South Africa (REBOSA) members, chief executive Jan le Roux acknowledged that the real estate industry had been tarnished. “These public comments are not only damaging and highly insulting, but have invoked painful memories for many South Africans,” he wrote. MARCH/APRIL 2016

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SOUTH AFRICAN

DISCRIMINATION STOPS WITH ME

Le Roux described a roll-out of communication strategies, calling on the industry to sign the new REBOSA Equality Pledge: Discrimination Stops With Me – a list of commitments designed to remove racism and discrimination from the property trade. He clarified: “As the power of our industry has unlimited reach, we have a unique opportunity to drive change, bring people together and spread the message of respect and understanding.” As Le Roux pointed out, the social attitudes and behaviour of agents are constantly under the microscope. They need to understand this responsibility and respect all people they interact with. One of the biggest challenges is to sustain momentum to effectively flip the incident, viewing it as a catalyst for authentic change. Amanda Cuba, Z Capital Properties board member and 45% shareholder in RE/MAX Southern Africa, agrees on the value of introspection. However she cautions against “expending our energy solely on the fact that somebody made a racist slur”. Cuba suggests we should rather talk about “how we behave on a day-to-day basis towards one another – whether it’s towards a client who walks into the office, or the man in the street. We need to spend more time having the positive instead of negative conversations”. And conversations are critical, because by their very nature, they involve listening. Authentic, sensitive interaction between people of different colours and cultures is key to discovering each others’ realities. As an estate agent, respect for a client is non-negotiable. And respect is a good starting point, if we are to build a non-racial country, however long that may take.

JAN LE ROUX REBOSA

“The social attitudes and behaviour of agents are constantly under the microscope. We need to understand this responsibility and respect all people that we interact with” Jan le Roux, REBOSA

the natural social order – a God-given, naturally assigned right to your beliefs, values, practices, wants and needs.” In contrast, she adds that “those regarded as inferior, live the reality of being second-class citizens, taught and expected to be of service, to lower their expectations and to accept their lower station in life”. One thing is certain, racial attitudes cannot be ﬂipped like a light switch. There are so many obstacles, so many painful memories, and according to Williams, so many entrenched stereotypes. “As a nation, we still carry a deep concern about the real nature of race relations, and continue to be alarmed by these public eruptions. “We have to begin to take responsibility for the whole problem, not only the ways in which we are individually impacted. We must have the renewed energy to continue to address racism and the psychosocial and material consequences associated not only with oppression, poverty, inequality and marginalisation, but with dominance and privilege.” HOW TO SQUASH IT

DEFINING RACISM

Rejane Williams of the Wits Centre for Diversity Studies believes many South Africans are confused about what constitutes a racist or racism. She deﬁnes a racist as “somebody who believes, ideologically, that black people or any people of a diﬀerent race are inferior”. “If you consider yourself superior, you live with a sense of entitlement,” she adds. “You’ve learned to live with dominance, privilege, greater self-esteem and expectations, as if this is 22

The Centre for Diversity Studies advocates a curriculum that encompasses diversity literacy as part of the school, tertiary and workplace education so that, as a nation, we become better able to deal with issues of race and related concerns. Combating racism can take many forms, including punishment for those who act in a racist manner, and initiatives to prevent it from happening in the ﬁrst place. Most importantly, perhaps, we should each take personal

responsibility for contributing to authentic and positive nation-building. ANTI-DISCRIMINATION DIRECTIVES

Of recent events, CEO of the Estate Agency Affairs Board (EAAB) Bryan Chaplog says: “There’s little doubt the EAAB has a substantial role to play in dealing severely with acts of racism within its regulated sector, and of implementing appropriate supporting initiatives that will prevent racism from occurring within the sector in the first place.” The EAAB put out an extensive, hardhitting directive to the industry – and the country – detailing its resolve to institute appropriate strategies and programmes aimed at eliminating racism within the sector. Andrew Golding, CEO of Pam Golding Property Group, is a founding signatory to the REBOSA Pledge, which clearly states the zerotolerance approach to discrimination at each of its offices nationally and internationally. “The Pam Golding Property Group is fundamentally committed to transformation at every level of the business. We acknowledge that the task will not be complete until the business is completely transformed at every level,” says Golding. Trish Luthuli, new business executive for

PROPERTY PROFESSIONAL

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SOUTH AFRICAN

Contacts The REBOSA Pledge www.rebosa.co.za/pledge/ The EAAB’S full statement www.eaab.org.za/ Rejane Williams www.wits.ac.za/wicds/

BRYAN CHAPLOG EAAB

“The inclusion in the proposed Property Practitioner’s Bill of a provision entirely outlawing racism and discrimination within the regulated sector is certainly within the realms of possibility”

the group in Gauteng, agrees. “Racism aﬀects all South Africans who are committed to the creation of positive and healthy communities. It is not a real-estate issue, it is a human issue.” NO ROOM FOR RACISM

Also a signatory to the REBOSA charter is Seeff chairman Samuel Seeff . “The Seeff values are integrity, passion, experience, excellence, creativity and family, and we live this not only as individuals, but as an organisation. There is no room for anyone who is racist or not committed to our brand, our clients, to South Africa and all its people,” he says. Seeff says the brand has always been committed to transformation and inclusion, and that the company was one of the first to support that in the industry. “We are always looking at ways to attract more BEE candidates, but it’s always been a challenge. There are huge opportunities in property, but most people are discouraged by the commission-driven nature of the industry. While many previously disadvantaged candidates have entered the profession and are successful, just as many have unfortunately failed, realising this is not a profession for wage-earners. “One of the biggest industry challenges is in attracting young people, especially graduates,

for whom it could be a rewarding career. “Young people, too, are often under the impression that estate agents earn huge commissions for very little eﬀort. Yet according to REBOSA, about 90% of estate agents (all new entrants) fail within the ﬁrst year because they are not suited to the profession; nor do they grasp what it takes to succeed. Having said this, learnerships are helping real estate businesses attract more BEE candidates.” TRADING WITH CONDITIONS

RE/MAX Southern Africa’s property journey began only after 1994 – the American brand refused to allow a single franchise on South African soil until such time as free and fair elections were held. As CEO Adrian Goslett says, “Our history is tied very tightly to a transformation period in South Africa. From an ethos perspective, our brand pitched itself at serving markets from R30,000 to R30m – clichéd, perhaps, but we are ‘the brand for the people’. We wanted to appeal to everybody, and because we operated everywhere, our transformation happened naturally over a 20-year period. We seek out individuals of any background, who have the right attitude and are willing to be in the real estate industry – individuals who are looking

for a brand to assist them, and whose values align with ours.” Goslett feels the change in shareholding and BEE partners took place not because it was legislated or “the right thing to do” but because they found the perfect partners. “Amanda and Yolanda saw value in what we had to offer and this appreciation was reciprocated,” he says. Racism is the proverbial elephant in South Africa’s room, one that Penny Sparrow set off on a stampede, trumpeting loudly. Our captains of industry are taking a stand and are calling – insisting – that we listen to the trumpet, self-interrogate and act on new knowledge gained. Each of us has great reach, therefore power, to effect change. Goslett summarises the challenge: “Home ownership is a facilitator to so much more than just bricks and mortar – access to education finance, capital growth, pride, self-worth – things that many of us take for granted, but that are afforded to so few,” he says. “You have the awesome opportunity to positively impact and improve the lives of so many people every single day. Many of us were fortunate enough to start the journey further down the road than others, but how we’ve responded since then through our personal choices, has shaped us. What choices will you make in 2016?” MARCH/APRIL 2016

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REBOSA is calling on all estate agents to

TAKE THE REBOSA EQUALITY PLEDGE TODAY REBOSA has a zero tolerance approach to all forms of discrimination in the real estate industry and in society.

DISCRIMINATION

STOPS WITH ME

Go online to www.rebosa.co.za and show your support by taking the ONLINE PLEDGE and saying “NO” to discrimination.

WWW.REBOSA.CO.ZA REAL ESTATE BUSINESS OWNERS OF SOUTH AFRICA

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ACCESS TO INFORMATION Access to information is a make or break for first-time buyers. This is why the Nedbank Home Loan offering goes beyond the financing aspect of owning a home. Nedbank has a step-by-step Buyer’s Guide to empower first-time homebuyers and anyone who is considering buying a new home. This forms part of the bank’s client-centered approach to deliver a choice of distinctive experiences and innovative solutions enabling clients to apply for home finance in a seamless and convenient manner. The guide is available to everyone in a video and booklet format on www.nedbank.co.za/ homeloans, and includes: • The avenues potential buyers can use to find their home. • The types of ownership you can buy into. • Understanding the expenses that come with owning a new home. Nedbank has a range of affordability calculators that help buyers work out how much they can afford. • Your credit health check, and what banks look for before lending. • Finding the best application channel: Nedbank has a selection of channels, including the innovative online application that gives bond approval within hours.

“You need to consider the location, financing and cost associated with owning a home; as well as choosing the right banking partner who will walk the journey with you”

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MONTHLY ONGOING COSTS LOAN INSTALLMENT: Determine how much you will be required to pay monthly. RATES AND TAXES: Take into consideration the cost of rates and taxes for property. If you buy a sectional title you will also be required to pay levies. INSURANCE: Budget for HOC, or homeowners’ comprehensive and household contents insurance. If you insure your property with Nedbank you will pay less for your service fees than if you insured it with an external insurer. Visit www.nedbank.co.za/homeloans to get detailed information on home ownership.

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THE

UNFLAPPABLE

ANDREW GOLDING CATHERINE DAVIS

The chief executive of one of Southern Africa’s leading independent property concerns, Andrew Golding says the residential property industry isn’t simple – it’s nuanced, requires skill and definitely focus. He has that focus

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ndrew Golding comes downstairs from his office in the grand Bishopscourt building that is the Pam Golding Properties head office. He’s expecting an interview, but only a face-to-face chat … then he sees video cameras and lights set up. “Oh? Is this a video interview?” he asks. Somehow he hadn’t got the memo from his team that Property Professional would be filming the session. Many people in that position would feel surprised and a little on the backfoot. They might want to dress differently, shave specially, comb their hair ... Golding doesn’t even request a rehearsal. And no matter what he’s asked during the interview, his replies are measured, his delivery is calm. Ever the consummate professional, Golding simply says: “Good thing I wore a tie today. Where do you want me to sit?”

Andrew Golding on record ON TRANSFORMATION AND RACISM

If you could make one change to the Property Charter what would it be? The background to the Property Charter was well intentioned, both from the originators of the charter and the signatories. But in practice, that’s where the rubber hits road. It’s certainly helpful as a compass, but in terms of its practicability I’m not sure … One of the challenges of the charter is that it puts an umbrella over the entire property industry, which is completely impractical. The residential and the commercial property industries are chalk and cheese. What is applicable to the commercial industry, particularly the asset management of it, is so far

One of the challenges of the charter is that it puts an umbrella over the entire property industry, which is completely impractical. The residential and the commercial property industries are chalk and cheese away from a single residential agent who may operate his or her own business, that the relevance is questionable. The bulk of residential agents in this country are single operators – one- or two-man bands – so to expect them to be fifty-percentempowered, for example, is clearly not practical. With the benefit of hindsight, there should have been a different charter for the residential property industry. I would like to see a charter that takes into account the specifics of the residential property industry. But there’s no getting away from transformation. What is the approach at Pam Golding Properties? The recognition of the need for transformation as an imperative, from a moral, social and economic point of view, has been inculcated into our organisation. Some years ago we embarked on an empowerment franchise initiative, which was not successful because of the global economic downturn in 2007/2008. Perhaps it would have worked if it weren’t for that. Subsequently we have looked to raise the consciousness of transformation and empowerment at every level in the 300-plus offices we have. But there are structural challenges: the way agents operate, the attractiveness of the industry when there are other options, the hurdles

310+

Pam Golding Properties ofﬁces in Southern Africa and operating internationally, including the UK, Portugal, Spain, France, Germany, Mauritius, Namibia, Zimbabwe, Botswana, Swaziland, Zambia, Kenya, Mozambique, Uganda, Nigeria and The Seychelles.

in the regulatory requirements, the curriculum ... Transformation has been slow. We’d like to be leaders in this arena, and so unashamedly, when there is an opportunity to place a transformation candidate in a position, we are proceeding with that strategy. With this backdrop, how do you feel about racism accusations pointed at the industry off the back of the Penny Sparrow post? The specific incident was unfortunate, and the racism issue is a real one in the minds of many consumers. But a lot of positives have come out of it, as the industry has had to take a long, hard look at itself. To label all estate agents as racist is not correct, and companies such as Pam Golding Properties have come out unequivocally indicating that we won’t tolerate discrimination, and we’re prepared to nail our colours to the mast. REBOSA has initiated an anti-discrimination pledge – every agent who works for a company affiliated to REBOSA is encouraged to sign it, and we expect a full complement of signatures. It’s important to keep the momentum going on the gains that have been made, but there’s still a way to go. ON MARKET PROSPECTS FOR THE YEAR

Lightstone released February 2016 data predicting that homeowners will lose wealth for the ﬁrst time since 2011. Never mind increased municipal rates, interest rates and a poor exchange rate … Are we facing another 2007/2008 scenario? The jury’s out on exactly where the market is going. There are two scenarios: a worsening market where house price growth is going to slow to below inﬂation and where, in line with current economic weakness, the market deteriorates. And the converse, which is that there is sufficient supply and demand, and so activity will continue MARCH/APRIL 2016

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Secrets to success

Watch Andrew Golding on video sharing his thoughts about his business, industry transformation and the property market. propertyprofessional.co.za

to be strong despite the current economic trends. As far as interest rates are concerned, we’re still way off the levels the South African market was able to withstand easily decades ago. My sense is that we’re not anywhere near a 2007/2008 scenario. On the balance of probability, as a business, we are being more cautious than exuberantly optimistic. We feel that the market will be more difficult, but not aggressively so. A slightly tougher, slightly tighter market all round, but not a terrible year. But buyer sentiment is dropping – the public is feeling uncertain. Agents will pick up on this. How do you lead and motivate your staff in these tougher times? We’ve been around for 40 years and we’ve seen a number of market cycles, so this feels quite familiar. There are a number of market conditions that one needs to adapt to – a buyer’s market is different from a seller’s market, and as a consequence the tactics and methodologies employed need to take into account the current conditions. What we’re seeing now is two separate markets. We’re seeing a Cape Town or Western Cape market characterised by a shortage of stock and an oversupply of buyers. And in other parts of the country, we’re starting to see stock come in more readily. It boils down to ensuring that the service you provide is appropriate to clients in their environment. Professional and honest advice should be given to both buyer and seller about 28

the probability of a successful transaction, which is our core business. ON BEING AN ESTATE AGENT IN 2016

What is the biggest challenge facing property leaders today? And what’s the next big thing? Government regulations will be a challenge. The Property Practitioner’s Bill is an extremely important piece of legislation as it will govern how we operate going into the future. We’re all trying to get to grips with the digital marketing environment. It’s a new platform – we need to understand how we can be efficient, how we can offer a superior service to buyers and sellers, and how we can differentiate ourselves from our competition. In addition, the client base is changing, so the difference between baby boomers and millennials is vital to understand. Will estate agents have a role to play in 10 years time? The future role of the estate agent is something the industry needs to think about. Other industries have been and are being disrupted. The jury’s out on whether or not with an asset like a home, which is so important and so big in people’s lives, they are going to be prepared to have no intermediary in these transactions. So far that hasn’t proved to be the case. What is the case is that the role of the estate agent is changing. Technology has fundamentally altered the way people search for homes; it’s going

“We’ve been fortunate in the incredible founder that we had. Pam unquestionably formed the bedrock of the organisation, through her personality, skill and values. As a consequence we’ve attracted like-minded people and that is our biggest strength. They identify with that set of values and that service ethic. That’s what has sustained our position in the market. “We’re extremely ambitious. Africa still represents a major opportunity for us – we’re now in 10 countries, and will add Tanzania to the list this year. Ultimately we hope to add Nigeria, Ghana and Angola, as three of the larger markets in Africa. We’ll probably add more to those as and when it’s appropriate. We can then set up a genuine Pan-African network, which has all sorts of complementary opportunities within it. “There isn’t necessarily a set of ambitions cast in stone – there’s always a moving target. We thought this time last year we would be open in Nigeria, and for various reasons we’re not quite there yet. It’s still very much a part of our plans, but circumstances and market conditions change, and different people come along and present new opportunities.”

to alter the real estate industry in ways we haven’t imagined. Agents will have to re-evaluate the value they add to a transaction and to find ways of justifying their existence. You’ve surely made one or two mistakes over the years. How do you deal with them? We’ve certainly made mistakes in the organisation over the past 40 years. But we learn from them. One thing we won’t do again is to diversify from our core business. In the run up to 2007/2008 – when it seemed like the market would remain strong forever – we diversified into business activities which were far from the sale of residential property at the top end of the market. Those activities weren’t as successful, and took our eye off the ball. The residential property industry isn’t simple – it’s nuanced, and requires skill, and definitely focus.

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SELLER’S PROMISES TO OTHERS BINDING ON HOME BUYER? It can come as a nasty surprise for a buyer to learn, when moving into his newly acquired home, that the seller had entered into a valid agreement with third parties granting certain rights over the property, such as a servitude of right of way. Is the new owner bound to such an agreement? This was the scenario in West Dune Properties 296 v Baront Investments, the dispute arising after the property was sold but before the servitude was registered. The Court confirmed that the seller’s agreement with the third parties could not bind the purchaser because he had no knowledge thereof at the time of

acquiring his property. Accordingly no order obliging him to register the servitude could be issued. The judgment affirms that where one seeks to have title to rights with regard to land, it is necessary to consult with specialist property attorneys to secure registration thereof. It also reminds one of the vital requirement that sellers must include important information relating to the property in a sale agreement. For specialist property law advice, contact us at www.stbb.co.za or on info@stbb.co.za.

WHEN IT COMES TO HOME OWNERSHIP, LET OUR FAMILY LOOK OUT FOR YOURS

MORE THAN JUST THE PAPER WORK

AGENT DEVELOPMENT

PROFESSIONAL SOCIAL MEDIA MOST CUSTOMERS EXPECT THEIR ESTATE AGENTS TO BE AVAILABLE ON SOCIAL MEDIA. BUT WHAT ARE THE ESSENTIAL ACCOUNTS YOU NEED, AND WHAT ARE THE PITFALLS TO BE AWARE OF? WE ASKED PRIVATE PROPERTY FOR SOME TIPS

Why should estate agents be active on social media? Having a presence on social media allows agents to engage with customers in an environment where customers are very active. It allows them to answer queries and respond to complaints quickly and effectively. Because these interactions are played out in a public environment, an agent can enhance their reputation and acquire new customers if they handle queries on social media well. It also offers an additional avenue to market your business but it needs to be subtle, since blatant promotional or commercial posts will put off your audience. Follow the 80:20 split for the best results: 80% of your posts should be entertaining or informative; 20% can be commercial.

How often do social media accounts need to be updated? Ideally, Facebook and Twitter should be updated once or twice a day; LinkedIn less often – maybe once a week. Whether to update personally or use a service depends on the agent’s expertise and budget. If an agent is savvy on social media then they should update their accounts themselves – they may have unique experiences and insights into their own industry, while an agency might not. On the other hand, agencies understand various social media networks and how best to engage.

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AGENT DEVELOPMENT

What are the essential social media accounts all agents should have?

Facebook: The largest social network, good for sharing pictures and video.

LinkedIn: Your online CV. Allows clients to share your real estate experience and business style through recommendations.

Twitter: Good for sharing newsworthy items and participating in conversations around property.

This is the most important social media service for agents LinkedIn is strictly a professional social network, so there is no “noise” (unrelated postings) as with other networks. It allows an agent to communicate with the industry and potential clients in a businesslike way.

What are some social-media-savvy dos and don’ts? DO: • Tailor your posts to your customers, not your own interests • Share useful information • Be visual: post pictures and videos for higher engagement • Respond to negative posts quickly and positively • Entertain and inform more than you try to sell

DON’T: • Post too often (spam your customers) • Ignore queries from your audience • Post anything that could be offensive to anyone • Use poor grammar and spelling • Venture onto social media platforms without a strategy

ways to improve your LinkedIn profile:

Your photo: Make sure it’s a recent, professional photograph. No pets or selfies! Your experience: Provide as much detail as possible about your professional experience, particularly the areas in which you specialise. Your keywords and skills: Carefully choose five to 10 keywords that are relevant to your brand and reflect your expertise.

Your links: Choose your three links carefully – one to your agency’s website, one to your Facebook business page (if you have one) and one to your profile on Private Property. Your endorsements: Write a recommendation for someone you’ve worked with, and ask if they can do the same for you. Your shares: By sharing relevant industry-related articles once a week, you show that you are up to date with the property industry.

DID YOU KNOW? A study by Sprout Social’s Consumer Engagement Index evaluated which industries receive the most engagement from social media users. Their findings revealed that the real estate industry was second overall when it came to inbound engagement relative to audience size. That means people are searching for estate agents on social media. Will they find you? Find out more: sproutsocial.com

MARCH/APRIL 2016

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FINANCE

HOW THE AILING ECONOMY WILL AFFECT HOME LOAN APPROVALS GARTH THEUNISSEN

What you and your clients need to know about home loan approvals in 2016

t’s no longer a moot point whether or not house prices will be negatively affected by the current economic malaise in South Africa. The consensus, albeit a reluctant one for some, is that weak economic growth, coupled with accelerating inflation, will inevitably result in a correction in real house prices this year, and possibly beyond. Absa is the latest to join the chorus, with property analyst Jacques du Toit forecasting nominal house price growth of about 5% in

2016. Given that the Reserve Bank was already forecasting an average inflation rate for 2016 of 6.1% as far back as July last year – long before the rand’s dramatic crash in January 2016 – it’s fair to expect that house prices will suffer a decline in real terms (once inflation is factored in) during the course of the year. Says John Loos, FNB’s respected property economist: “The housing market cannot defy economic gravity forever. We’ve reached a point where the long-term property

super-cycle is due for a correction that could last a number of years.” INCREASING INTEREST RATES

With interest rates already expected to rise further, beyond the 50-basis-point increase on January 28, Loos says consumers will find it harder to qualify for home loans as banks tighten their lending criteria and increase their scrutiny on consumer affordability. This is especially so when one considers that more

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FINANCE

than half of South Africa’s 19-million creditactive consumers have impaired credit records. “If you look at the last two rate-hiking cycles, you see cumulative increases of around four to five percentage points,” says Loos. “Consumers need to factor in rate hikes of that magnitude when they assess their long-term home loan affordability. If South Africa suffers a credit rating downgrade, then the hiking cycle could be even more severe.” Erwin Rode of Rode & Associates says it’s a foregone conclusion that interest rates will continue to rise, the only question being how fast and by how much. He also cautions that the prospect of higher interest rates will result in fewer home loans being approved. However he highlights another unwelcome reality for home buyers to consider – negative equity. This refers to a situation where a buyer agrees to a particular purchase price with a seller, only to see an economic downturn send the market value of the home below the purchase price. Rode says in an environment of heightened risk aversion, banks may well factor such scenarios into their decisionmaking before granting home loans. BANKS LESS KEEN ON LENDING

“The bleak economic picture means banks are going to ﬁnd it more diﬃcult to discover value in a property when confronted with a mortgage application,” says Rode. “Fewer mortgage applications will be approved in the year ahead and that will impact negatively on prices.” Says Shaun Rademeyer, CEO of BetterLife Home Loans: “In the current economic climate, SA banks will face higher capitalreserve requirements. They will therefore

want to ensure that they take on quality business and will no doubt become more particular when assessing new credit and loan applications.” FINDING THE POSITIVES

While it’s difficult to find positives in this scenario, Rode points out that nominal house prices (before being adjusted for the effects of inflation) have declined only three times in the past 49 years. Absa’s House Price Index, which began in 1966, indicates that those declines were -7.69% in 1985, -3.97% in 1986 and -0.36% in 2009. The remaining 46 years all experienced positive nominal house price growth. “It would take a pretty hefty economic catastrophe for nominal house prices to decline,” says Rode. But don’t get mislead by this small bubble of optimism. Loos cautions that because house price indices are based on actual transactions, they don’t factor in the true extent of the declines that residential property markets can suffer in a recessionary economic environment. “Extremely weak property markets such as less glamorous suburbs or dodgy CBD areas will entirely exit the index, because in a recessionary environment there will be no transactions in those areas,” says Loos. “So consumers shouldn’t be lulled into a false sense of security by the overall house price index. Properties in specific areas can still easily experience nominal house price decline. And when things are so bad that one cannot sell in particular areas, it won’t even be captured in the overall index, which gives a skewed picture of what’s really going on.”

The housing market cannot defy economic gravity forever. We’ve reached a point where the long-term property super-cycle is due for a correction that could last a number of years John Loos, FNB property economist

MARCH/APRIL 2016

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FINANCE

Shaun Rademeyer, BetterLife Home Loans CEO, has this advice for clients:

It would take a pretty hefty economic catastrophe for nominal house prices to decline Erwin Rode, Rode & Associates

WHAT THIS MEANS FOR YOUR CLIENTS

For home loan applicants, this means being even more aware of the old property investment adage of “location, location, location” when purchasing. In a weak economic environment a bank will be more reluctant to grant a loan to purchase a home in a poor area, since it would have little prospect of selling that property to recover costs in the event of a borrower defaulting. Ooba CEO Rhys Dyer says banks’ reluctance to approve loans will also be impacted by the fact that South Africa’s home-loans market is still overwhelmingly driven by first-time buyers. No less than 54% of Ooba applications are currently from first-time homebuyers, of which just more than half are for loans equal to 100% of the property’s value. Dyer says Ooba approves only 37% of home loan applications for mortgages with a 100% loan-to-value ratio. Across the board Ooba’s overall rate of approval for home loans has dropped from 76% in the first quarter of 2015 to 72% at present. Dyer says current approval rates are only sitting at 55% across all banks in South Africa. “This is driven almost exclusively by a greater percentage of affordability declines, where consumers sign an offer to purchase on a property that they simply cannot afford,” says Dyer. “We have already started to see the impact of interest rate increases as well as general increases in the cost of living.”

1. Do a proper income and expenditure budget, so that you are fully aware of the state of your personal finances. 2. Get pre-approval from a reputable mortgage provider, which will also help establish what type of deposit you will need to put down. 3. Once you know what you can afford, try to establish whether houses in that price range meet your desires and requirements. 4. If the property you are considering is out of your price range, carefully re-evaluate your monthly expenses to assess where you may be able to save extra to afford a bigger home loan. If not, play it safe in a realistic price bracket.

Timothy Akinnusi, Nedbank’s head of home loan sales and client value management, suggests this buyer’s checklist: • Check your rating online. It’s free. • Home ownership is more expensive than renting, so you will have to adjust your budget. • Pay up all store accounts. Only pay cash and buy when there is a sale. • Don’t take on any new debt. • Trim your expenditure wherever possible, even if it means downsizing your car. • Save a little every month so that you won’t get into financial difficulty if interest rates increase. • Maintain your home properly. “Saving” on maintenance now will cost you a lot in the long run.

MARCH/APRIL 2016

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NEWSWORTHY

MILLENNIALS: YOUR NEW GENERATION OF BUYERS NICOLA JENVEY

Otherwise known as Generation Y, millennials are approaching everything differently. And whether it’s about their values, their seamless reliance on technology or the way they explore property, they are not their parents

hey are Generation Y, young adults born between 1980 and 2000, who are changing the way the world functions and how markets operate. They are doing it through their spending habits, technosavvy approach and a global view that is signiﬁcantly more questioning than that of the generations who preceded them. According to a report titled Millennials by Goldman Sachs Global Investment Research, the US has 92-million millennials, the biggest generation in US history. A growing number of these adults aged 18 to 35 years are choosing to live at home with their parents. The percentage of 18 to 31-year-olds married and living in their own household has dropped 36

more than 50% since the 1960s. The millennials are proliﬁc technology users, generally considered the most connected generation for their embrace of technology and social media across their lives. This includes their approach to purchasing property – millennials now constitute the bulk of the world’s ﬁrst-time homeowners. GENERATION Y IS HUGE

The National Association of Realtors Home Buyer and Seller Generational Report 2015 cited Generation Y as the largest group of American homebuyers, far outstripping the Baby Boomers. First National Bank data reﬂects that

PROPERTY PROFESSIONAL

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Within this demographic there exists a culture of ‘don’t call me; I’ll find you’. Once they have done their research, they will seek out a trusted advisor to assist in the buying process RE/MAX Southern Africa CEO and regional director Adrian Goslett

44% of South African buyers are less than 40 years old, putting a significant percentage of buyers into the millennial category. Acutt Property Group MD Jonathan Acutt unashamedly fits the demographic profile of the millennials with whom he often deals as customers. A typical day involves waking to his cellphone alarm, spending 15 minutes toggling between his Facebook and Twitter accounts, listening to a music-streaming app via Bluetooth connectivity while dressing, checking his digital calendar and cross-referencing his work computer over breakfast. He’ll listen to audio books or music videos via YouTube while driving to work, having already corresponded with colleagues via WhatsApp on urgent issues, gathered information via various local and international websites and then shared it to his Facebook and Twitter accounts as well as his team via WhatsApp. He’ll end the day reading information via his Business Insider app, stream Netflix on television and view Pinterest posts on making his new home more fashionable. Acutt says millennials are an interesting generation in that they are the first to grow up with several key technologies already in existence – cellphones, smartphones, personal computers and the internet – and now also have access to apps that simplify their lives. It’s no wonder most millennials’ days revolve around that technology. “To anyone born before this generation, this may seem shocking. Some might almost pity these individuals. However, when you look deeper, you see a world of superfast information and integration that, once set up, requires little thought to remember and more focus on what they can do with their time,” he says. SELLING IT DIFFERENTLY

Into that environment is the change that makes for a different selling philosophy for estate agents. Statistics from estate agencies’ websites reflect that 90% of buyers begin their property search online via smartphones or tablets. South African internet penetration is approaching 20%, with the mass market embracing digital tools on their phones and mobile operators cutting data costs and rolling out networks. Seeff Dolphin Coast sales director Tim Johnson says having searched online for property, millennials use social media platforms to ask questions and gather information about neighbourhoods, property trends and prices long before they encounter agents. “Within this demographic there exists a culture of ‘don’t call me; I’ll find you’. Once they have done their research, they will seek out a trusted advisor to assist in the buying process,” adds RE/MAX Southern Africa CEO and

Mortgage before marriage?

A more accessible job market, marrying at an older age and exorbitant costs of weddings means that many new homebuyers are putting a mortgage before marriage. • Approximately one in four married millennials (24% of US adults aged 18-34) purchased their first home with their current spouse before marriage, compared to 14% of those more than 45 years old, according to a Coldwell Banker Real Estate LLC Marriage and Home-buying survey in April 2013. • Four in five (80%) Americans believe it’s okay for adult children to live with their parents if they are saving to buy their own home, according to a Coldwell Banker Real Estate LLC survey of August 2013 titled Boomerang Kids Study. • Millennials are more likely to postpone marriage, choosing to live together instead. And one residence costs less than two. According to the American Community Survey, between 1990 and 2008, while millennials were moving into adulthood, cohabiting US couple households increased to 6.2m, nearly doubling 1990 figures.

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NEWSWORTHY

regional director Adrian Goslett. Given that mobile broadband subscriptions now outnumber fixed line applications eight to one, and that South Africa experienced a 1,000% hike in mobile users between 2011 and 2012, Goslett says these trends are not surprising. “Catering to these devices with a mobile-tailored website is essential for real estate brands to effectively communicate with the millennial generation,” he says. However Gosslett also believes responsive agency websites, rather than apps, are a more convenient way for clients to find information related to their property requirements. “Millennials use technology at the outset, but at some point will look to a trusted advisor to interpret the information acquired,” he says.

in that area. Johnson says that access to finance remains a key issue for first-time homeowners, so typically millennial buyers are dual-income households to slightly boost their buying power. While the younger ones have student loans impacting on their ability to access finance, those acquiring property are entering the market at between R1m and R2,5m.

RENT TO BUY?

In line with international trends where children are either leaving home later, returning to their parents homes – the term is boomerang kids – or renting for longer periods before acquiring property, Goslett says the average age of South African firsttime buyers is slowly increasing. In April 2015 the figure was 32-years-old, increasing to 34 by December 2015. Absa statistics released in December 2015 reflected the average nominal values for middlesegment properties at R887,000 (small homes of 80m 2 to 140m 2), R1,274m (medium homes of 141m2 to 220m2) and R1,982m (large homes of 221m2 to 400m2). Absa Homeloans property analyst Jacques du Toit says year-on-year growth in this sector was markedly lower in 2015. After experiencing nominal price growths of 10% in 2013 and 9,3% in 2014, South African residential values increased about 6% last year. He forecasts slow economic growth in 2016, hindered by rising inflation, higher interest rates and continued financial pressure on consumers. This will likely translate into subdued housing supply and demand with a nominal house price growth of about 5% and real house deflation over the next 12 months. “The upshot might then be that millennials will hang on the sidelines to assess whether conditions improve before jumping into the market this year,” Johnson concludes.

BOOMERANG KIDS

Millennials are generally not focusing on family, wealth creation and settling down. They may swap home practicality for something trendy, tech-smart and stylish with a proximity to where they work. Goslett says an advantage of buying over renting is that it implements forced saving. Bond repayments ensure homeowners have an asset, considering that South Africans generally have a poor savings culture. Acutt says while property has shown consistent growth over the past century, millennials like to be mobile and not tied down to a specific area or suburb. Hence, he believes millennials can purchase a property for which they qualified, but rent out that investment and offset the rental income earned against the rented property in which they reside. That way they can afford to live in the neighbourhood they desire without having to purchase

Dealing with millennial buyers and sellers

DO • Reply immediately to their e-mail or SMS query about a property. • E-mail or SMS a link to potential properties. • Share articles potential buyers may find interesting – they will appreciate it and may share it on their social media profiles. • Point them to websites for more property-related information. • Send pre-appointment reminders and post-appointment thanks. DON’T • Say “this is just the way things are in property” but instead provide reasons so millennials can make educated decisions. • Take a long time to provide feedback. • Stick to normal marketing avenues.

Property search apps

• Private Property • Lightstone Property Pro app • 3Dscann South Africa virtual reality videos • Gumtree

Fibre frenzy

The Absa Homeowner Insights report reflects that young, independent singles consider fibre optic networks and properties offering high-speed internet access to their neighbourhoods to be more important than whether the property has a pool or staff accommodation. Will fibre optic networks soon be seen as an essential utility similar to electricity and water? Fibrehoods have shown accelerated property price growth in developed countries with the US reflecting a 3% increase based on the neighbourhood’s fibre optic networks. While local statistics are scarce, early indications suggest that the roll-out of connected fibrehoods such as Parkhurst has affected the area’s marketability and prices positively.

PROPERTY PROFESSIONAL

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Leapfrog Property Group Providing Better Service to more South Africans The Leapfrog Property Group family is growing with new franchises opening in Soweto, Middleburg, Witbank, Richards Bay, The Parks in Johannesburg and Tyger Hills in Cape Town. “We are delighted to welcome these new franchisees into the fold as we continually strive to provide the Leapfrog brand of excellent service to more buyers, sellers and tenants around South Africa”, says Bruce Swain, MD of Leapfrog Property Group. Greg and Sharon Mattison will be heading up the Richards Bay office. Sharon has over a decade’s experience in property and Greg has a solid background in asset finance. “We’ve long had a vision of opening up a real estate franchise together and Leapfrog is so personable and offers such good support that they were the obvious choice for us”, explains Greg Mattison. He goes on to mention that the Leapfrog brand is corporate yet approachable and will do well in Richards Bay. Lee Clarke has long been a real estate star at Leapfrog Gordon’s Bay whose knowledge and service excellence earned him high accolades within the company. Clarke is now taking the next step as Principal of

Move on Move up

www.leapfrog.co.za

Leapfrog Tyger Hills. “Tyger Hills is a high density, upmarket area, which although it’s cosmopolitan and trendy, is tipped towards a majority demographic. Never one to back down from a challenge I look forward to introducing the Leapfrog culture to a new audience as I embark on this next step in my property career”, says Clarke. “Based on Leapfrog’s focus on training, expert advice and professional conduct we are confident that these six new franchises will not only do the Leapfrog name proud but will provide invaluable service to their respective communities”, says Swain. Seen from left to right: Lee Clarke, Natasha Green, Sharon and Greg Mattison

Greg & Sharon Mattison

To join South Africa’s most exciting real estate group contact: Deon van Zyl 082 858 7222 deon.vanzyl@leapfrog.co.za

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

ARE INVESTMENT PROSPECTS IN AFRICA STILL ON THE UP? GEORGINA GUEDES

Africa is being touted as a frontier of opportunity for real estate investors, but the commodity and oil slump is putting the pressure on some nations’ economies. Can Africa still deliver property market growth?

here is no doubt that the entire African business landscape, and notably the real estate market, has been significantly impacted by the commodity downturn in the past six to eight months. Despite this, investors and real estate agents remain optimistic about the opportunities for returns on the continent. “The sharp drop in commodity prices has had a massive impact on countries that are relying on more than 80% of their foreign exchange inflows from commodities,” says Gerhard Zeelie, Standard Bank’s head of real estate finance for the rest of Africa. He explains that the economies in some of these countries, such as Nigeria, are in fact quite diversified. But the reduction in foreign exchange inflows are heavily impacting on the availability of foreign currency in these economies. “That has had a major impact on the exchange rates, except in countries where

the exchange rate is protected or controlled, which has resulted in massive rental increases for tenants that are paying dollar-linked rentals,” says Zeelie. This then results in property investors experiencing diﬃculty in accessing foreign currency to repay debt and make distributions to shareholders. “As a result of these issues, we have seen a very unpredictable regulatory regime which further exacerbated the situation,” Zeelie says. However this turmoil has not, in his view, dampened Africa’s prospects as a land of massive growth opportunity. But it has made investors more aware of the risks involved. “Investors and tenants are now more aware of the risks relating to currency devaluation and foreign liquidity shortages,” he says. As an upshot of this development, Zeelie explains that countries and nodes should oﬀer strong growth potential and land development costs should be low enough to satisfy less aggressive feasibility scenarios.

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

Research unit to support African real estate development

GROWTH POTENTIAL REMAINS

Thomas Reilly, who heads up the African real estate business for the Investec Asset Management, Growthpoint and International Finance Corporation joint venture, believes that while the commodities market decline has definitely had an effect on Africa, there is still growth potential on the continent. “In the developing world there is an aggressive hunt for yields. The economic headwinds aren’t only being experienced in Africa but in all the emerging markets, and the yields off a lower base are still attractive,” he says. “For property the timing is reasonably good – better than it has been in the last two or three years – because there have been corrections in tenant demand and rental prices so purchase prices are attractive right now.” Of course it depends on the location of the investment. Reilly explains that for example, Lagos, Nigeria, has a great deal of new real estate supply coming on to the market, creating an oversupply, but this is certainly not true continent-wide. “In Accra, Ghana, this is less of a problem – supply and demand are more balanced. Typically if you fund supply, the market will catch up. It’s cyclical.” He lists Maputo, Mozambique as another over-supplied city. “But overall, the Mozambique market is good, Kenya is strong and the Ivory Coast is a new emerging market that’s catching attention,” says Reilly. According to Zeelie, countries with strong GDP that also offer good growth prospects remain popular. These include Nigeria, Kenya, Tanzania and Mozambique. “The impact of the commodity downturn is varied across different countries,” he says. “In some instances the impact on economic growth is not that severe, but the impact on foreign currency flows is negative.”

The Department of Construction Economics and Management at UCT has partnered with Nedbank Corporate and Investment Banking (NCIB) to form the UCT-Nedbank Urban Real Estate Research Unit. The unit will develop an interdisciplinary research platform to identify issues and solutions to urban real estate investment, finance, economics and management problems in Africa. The aim is to develop a research alliance between UCT, industry and communities to collaborate with public and private sector partners, with the aim of ensuring a community- and industryaligned agenda. “This engaged research aims to ensure that the property sector plays its role in fostering the needs of investors and other stakeholders,” says the unit’s director, associate professor Francois Viruly. “There is a growing understanding that the performance of the built environment is not merely the outcome of economic growth, but has a critical role to play in creating the physical and social environment from which economies are able to prosper.” According to Viruly there are huge risks in letting the African realestate sector boom take place without accompanying research and understanding of the impacts of property development. “A great example of this was the 2008 global financial crisis, which clearly demonstrated the social risks of an unmanaged property boom,” he says.

For property the timing is reasonably good – better than it has been in the last two or three years – because there have been corrections in tenant demand and rental prices so purchase prices are attractive right now - Thomas Reilly, head of African real estate business for Investec Asset Management, Growthpoint and International Finance Corporation joint venture

MARCH/APRIL 2016

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

Property finance is very hard to secure, and only a few banks are prepared to do a traditional home loan. In Nigeria you could pay 25% interest on your home loan and you would probably be required to put down a 50% deposit - Justin Clarke, chairman and CEO, One Africa Media and chairman of Private Property South Africa

OPPORTUNITIES BEYOND RETAIL

Peter Collins, CEO of Grand Towers Property Fund, believes that there is massive opportunity to produce double-digit dollar-based returns in Africa but cautions that growth is slower, and naturally it comes off a very low base. “My view is that the retail demand in East and West Africa will drive development for decades to come, and the Francophone countries are the next frontier. For those with the wherewithal to weather the storms, take a long-term view and stick to the fundamentals, there is an abundance of opportunity.” Zeelie agrees that the function of growth opportunity, cost of land, tenant mix and tax incentives differ from country to country and from project to project, but as a general rule, retail is the sector that consistently offers good growth. Collins adds that there is still plenty of opportunity for retail expansion as tenants look for exposure to the emerging middle class and African consumers demand a better quality of life experience relative to global standards. He mentions that multi-national tenant-driven office and industrial development opportunities are also available in Mozambique and Angola. “Most economies are dependent on state spending to maintain growth. And cash inflows into state coffers has plummeted,” he says. “We will still see good returns and growth in housing developments. And good retail and commercial space for those with the skills and experience to operate in these challenging environments.” RESIDENTIAL REAL ESTATE

NO MORTGAGE CULTURE

Also among the development challenges faced by property developers and agents in Africa is the fact that there isn’t a widespread property borrowing custom on the continent. “There’s no mortgage culture,” says Peet Strauss, Africa development manager for Pam Golding. “The top-end guys can pay cash, so that’s where it’s happening.” Justin Clarke, chairman and CEO of One Africa Media, and chairman of Private Property South Africa, affirms that the lack of financing options remains a challenge. “Property finance is very hard to secure, and only a few banks are prepared to do a traditional home loan. In Nigeria you could pay 25% interest on your home loan and you would probably be required to put down a 50% deposit.” But Strauss believes that a solution will be forthcoming. “A solution is needed. It’s coming slowly but surely because the insurance companies are now investigating.” 42

From a property real estate perspective, the market growth is underpinned by the expansion of various real estate agencies. Pam Golding Properties, for instance, continues to grow its presence in partnership with local expertise. Dar es Salaam in Tanzania is currently on the cards; Angola and Ghana are also in their sights. Pam Golding has already commenced sales in Uganda at the Lake Victoria Serena Golf Resort. In Abuja, Nigeria, sales have commenced at Legacy City. “Also in Abuja, we are forging relationships with a number of developers, which includes upmarket developments such as 200 apartments situated adjacent to the Abuja Hilton, priced from $950,000 to $1.5m. And The World Trade Centre, currently under construction. Product in this high-rise is priced from $1.5m to $2.5m,” says CEO Andrew Golding. The company is in negotiations to become the real estate service provider for residential units on the reclaimed island Eko Atlantic off the coast of Lagos. Elsewhere in Africa they are seeing residential developments springing up, with Namibia proving increasingly attractive to investors. While it is not possible to classify Africa and its opportunities as a whole – and different areas of real estate have varying stories to tell in diverging countries – the prevailing view seems to be that Africa has immense opportunities to offer. A key requirement is that developers and agents should remain informed and diversified if they are to weather the turbulence that will likely continue to affect the African business and property market.

PROPERTY PROFESSIONAL

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TO P T I P S WERNER SMIT

1 KNOW THE PROCESS

Developments take time; time is money. Good agents understand this and fulfill their roles within this context. By paying attention to detail when completing an offer to purchase, an agent can significantly shorten the sales process, which in turn simplifies the subsequent phases, from initiation of conveyancing procedures to obtaining development finance, construction and eventually transfer.

2 UNDERSTAND THE LAW

Two pieces of legislation are of particular importance. These are the Alienation of Land Act (68 of 1981) and the Financial Intelligence Centre Act (38 of 2001) or FICA. • The Alienation of Land Act sets out the formal requirements for a legally valid and binding contract of sale. These requirements are essentially that every contract must be (a) reduced to writing and (b) signed by all the parties. • FICA, which is intended to prevent financial crimes such as money laundering, places an obligation on attorneys to verify the identity and other information of the parties to a transaction. This is done by collecting identity documents, proof of residence and proof of income tax details. The documents and information required vary depending on the nature of the purchaser. We recommend that agents undergo training to familiarise themselves with the act. When agents understand these requirements, 44

it significantly simplifies and expedites the transfer process, because then the developer receives contracts that are not only legally valid but are also accompanied by the necessary supporting documents.

3 KNOW YOUR ROLE IN THE PROCESS

As an agent you act as a representative of your principal. Understand that while you and your agency are technically distinct from your developer client, you will more often than not be the public face of the developer, and therefore of the development you are marketing. Your actions, both positive and negative, go a long way towards shaping public perception of the product.

4 BE FAMILIAR WITH THE PRODUCT

It’s important for agents to place themselves in the shoes of every potential purchaser. From the first-time homebuyer to the seasoned investor, the agent should anticipate their respective wants and needs. Information is readily available and a modern potential buyer has access to every bit of information they need regarding the market, the area in which they’re interested and the development plans for surrounding areas. As an agent you have to up your game if you want to remain relevant. Agents should know every detail and be able to answer any question relevant to the development they are marketing. Agents should also keep abreast of any proposed or current developments in the surrounding areas, and stay informed of any changes in their profession.

The more experience an agent has in helping clients buy homes, the more value they bring to the table – for both client and developer 5 OPEN THE COMMUNICATION LINES

We want our agents to know they are as much a part of our development team as our marketers, attorneys, builders, bankers and designers. We encourage regular and open communication between all parties, since our agents have the critical task of selling our developments. We value their ideas and suggestions in making that task easier.

We encourage regular and open communication between all parties, since our agents have the critical task of selling our developments Werner Smit is an attorney, notary and conveyancer. He heads up the internal conveyancing department at the Amdec Group. The company has been responsible for developments including Melrose Arch, Val de Vie Estate, Westbrook and Pearl Valley Golf & Country Estate. amdec.co.za

IMAGE: SUPPLIED

5 things developers wish all estate agents knew

PROPERTY PROFESSIONAL

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List with a tech world leader. As profiled by Apple. apple.com/business/harcourts

By nature, real estate is a mobile business - on the road, meeting clients, inspecting properties and showing homes. Our teams now have instant access to an unprecedented level of sales tools and information wherever they are – a virtual real estate agency in their pocket. Tools across the suite of apps are designed to simplify the complex, boost productivity and ultimately clinch that sale. Do you want to take your real estate career to the next level? Let’s make it happen. Harcourts. With you all the way. T 0860 33 77 88 | harcourts.co.za

“A leader in innovation…” Apple Inc. press release, October 2015.

LIFE HACKS LINZI KELLY

Tips for successful recruitment

eople determine your brand and your value proposition to potential buyers, sellers, lessors or lessees. The recruitment of these people is complex and rife with challenges from a legal and process point of view. You need to arm yourself with questions that will evoke thoughtful conversation and provide insight, plus familiarise yourself with the processes.

CULTURE FIT

An organisational culture is defined as the values and behaviours that contribute to the unique social and psychological environment of an organisation. Every estate agency has a unique organisational culture. It’s based on shared attitudes and beliefs, plus written and unwritten rules that have been developed over time within the business. When interviewing candidates it’s critical to establish the ways in which they conduct business, and manage and build relationships with potential clients.

IMAGE: SUPPLIED

SKILL FIT

Most candidates will present themselves with an existing skill set. It’s up to you, the interviewer, to establish whether these skills are directly transferrable into your business context and whether the candidate would be able to apply these skills to add value to your business. There are various ways of tapping into a candidate’s skill level. Ask skill and competency-based questions in the interview; ask questions around behaviour by asking the candidates to respond to business-based

Finding the right people for your business is probably one of the most critical aspects to determining its success. Use this advice to help you identify agents who will be the right fit

scenarios; and obviously check their references.

RELATIONSHIP FIT

Relationships and the ability to establish, build and maintain them are critical in any business, but this is even more so in estate agencies. These relationships apply internally with sales and support teams, as well as externally with existing and potential clients. From our experience, the client can very quickly sense when internal relationships are dysfunctional. This dynamic will disrupt service levels and professionalism and have a detrimental impact on clients. Ensure that your internal relationships are intact before embarking on developing external relationships. During an interview establish the “relationshipping” abilities that the candidate has – it’s a fundamental aspect to this industry and to building your brand and business.

VALUES FIT

Values are the principles or standards of behaviour, as well as judgements, of what is important in life. Along with a culture, skill and relationship fit, the alignment of values between the candidate and the business is hugely important. This is one of the more difficult areas to establish in an interview as it can be based on religious, personal or cultural principles. As South Africans, we tend to find these conversations uncomfortable. But there are ways of engaging in an individual’s values and principles while displaying respect, sensitivity and empathy. In the interview, ask questions about their

thoughts and actions on giving back to communities, for example. Once again, asking scenario-based questions to elicit behaviours and responses would provide interesting insights around this.

ENSURING A SUSTAINABLE FIT

Don’t overlook what needs to happen in the final stage of the recruitment process – many do! Complete the reference checks, criminal record checks, credit checks and psychometric testing. These will assist you in confirming the right candidate for the role and business, once you have completed the interviewing process.

Most candidates will present themselves with an existing skill set. It’s up to you to establish whether these skills are directly transferrable into your business context Linzi Kelly is a co-owner of Cherry Bomb Recruitment with Frances Williams. Cherry Bomb offers recruitment and business consulting expertise by partnering with their clients, understanding their context and delivering value aligned with that context. linzi@cherrybomb-recruitment.co.za

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M O T I VA T I O N DENISE DOGON

How to negotiate well

ood negotiating is a skill that can be learnt up to a point. My definition of negotiation is to find a mutually acceptable solution between two different objectives: the one being to pay as little as possible, the other to achieve as high a price as possible. What are the most important ingredients? ATTITUDE. No doubt. You’re sitting with people that have different objectives. You are in the middle, so to achieve success from your negotiation you need the right attitude. If you want to be successful at negotiating you have to be enthusiastic. You need that element of positivity so that both sides feel they’re working towards a good outcome. KNOW WHEN TO KEEP QUIET. When I’m

sitting with a buyer and he says, “I’m not going up”, then I say, “But the seller’s already refused your offer”. At that point I just keep quiet. The buyer invariably says “Okay I’ll go up”. I’ve watched agents talk themselves into a successful sale (the buyer was ready to sign) and then right out of it again because they didn’t stop talking.

I’ve watched agents talk themselves into a successful sale (the buyer was ready to sign) and then right out of it again because they didn’t stop talking 48

Is good negotiating something that can be learnt? Follow these pointers to achieve a successful outcome without one party feeling short-changed

HAVE KNOWLEDGE OF YOUR PRODUCT.

Know all the details about what you’re selling. It’s the agent’s responsibility to know the property’s size and age, the rates and latent defects (always expose these to a potential buyer), why the seller is selling and what stays with the house. You also need in-depth knowledge of what you’re asking the buyer to sign in the offer to purchase so that you can answer any questions. By law you should go through every clause with the buyer and seller.

A GOOD NEGOTIATOR: LWAYS OPERATES WITH ETHICS AND A SINCERITY. These are paramount to

qualify an agent as a good negotiator. When you feel somebody doesn’t understand a clause, explain it in detail and don’t brush over it.

conflict or stressed. ILL NOT BE AFRAID TO ASK FOR AN W OFFER. Have the courage to say “Let’s put

in an offer”. It’s about asking the question as an agent, instead of walking away and losing an opportunity. Buyers often need the negotiator to take the initiative and ask.

CAN ADAPT TO THE CIRCUMSTANCES.

You cannot be rigid on any one thing. Also, if the buyer’s offer is too low, be prepared to ask the seller for a counter offer.

SHOULD NOT BE AFRAID OF REJECTION.

If you negotiate and there is rejection (of the asking price or transfer date) expect it as a normal part of the negotiating process. Don’t be intimidated by it.

HAS CONFIDENCE. Knowledge of the

property and the legalities around sales and purchases and sound ethics will give you confidence.

OULD SOMETIMES RECOGNISE W NEGATIVE QUESTIONS AS A POSITIVE SIGN. Very often when buyers ask negative

questions about a house, they are displaying buying signals because they wouldn’t ask those questions (“Is there only a single garage?”) if they were totally disinterested. Good negotiators recognise that there is an opportunity to achieve an offer early on in the process.

LLOWS THE BUYER AND SELLER TO A OPERATE IN A RELAXED ATMOSPHERE.

Neither of them should feel rushed, in

Good negotiators recognise that there is an opportunity to achieve an offer early on in the process Denise Dogon is the CEO of Dogon Group Properties. She started selling property 43 years ago, and specialises in homes on the Atlantic Seaboard. Dogon opened her business focused on residential property in 2002. She now sells exclusive properties and oversees marketing of the group. dogongroup.com

PROPERTY PROFESSIONAL

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