Property Professional - May/Jun 2016 by Property Professional

MAY/JUNE 2016

PROPERTY

PROFESSIONAL THE SOUTH AFRICAN PROPERTY INDUSTRY MAGAZINE

IN T E RV IEW

SAMUEL SEEFF SUCCESS Be the first at something, ON

ideally lots of things

CLEVER SHORTCUTS TO STREAMLINE YOUR BUSINESS

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THE INDUSTRY REACTS TO PROPERTY24 FEE INCREASES ARE THE SUPERRICH LEAVING SA? A N D W HERE A RE T HEY BUY I NG HO U SES N OW ?

2016/04/22 11:32 AM

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2016/04/13 10:53 AM

Your chance to become a Millionnaire... Millionnaire

SEND US YOUR OTPs BEFORE JUNE 2016 Turn to page 18 for more.

INDUSTRY NEWS

Editor’s note I

t’s the time of year when your suppliers and service providers send that letter: “Thank you for your support; as of 1 April our rates are now ...”. Annual increases are expected and hopefully you’ve accounted for them in your business budget for the year ahead. One that’s really had the industry talking is the agent subscription fee increase from Property24. Yes, they’re South Africa’s biggest property portal but many agents feel that they may be behaving like the schoolyard bully. Read more on p29. We also have some great features such as tracking national initiatives to increase property values by stimulating urban precincts (p19), how to think like an entrepreneur (p40) and practical ways to streamline your business systems (p39). In our cover feature, Samuel Seeﬀ, chairman of Seeﬀ Properties, puts his success down to thinking like a businessman in a real estate environment. Find more of his no-nonsense insights on p24. Finally, sign up for the soon-to-launch Property Professional e-newsletter. Every month you’ll get new and exclusive stories delivered straight to your inbox – turn to p17 now.

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

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24 19

TECH TO GET YOU AHEAD

Catherine Davis

THE INDUSTRY REACTS TO PORTAL FEE INCREASE

SAMUEL SEEFF ON THE IMPORTANCE OF INNOVATION

ARE THE SUPERWEALTHY LEAVING SA? Where are they buying now?

BEATING URBAN DEGENERATION

HOW TO THINK LIKE AN ENTREPRENEUR ... and make more money

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 and Leah de Jager Sub-editor Kirsty Wilkins Online Editor Andy Möller

ADVERTISING Sales and Marketing Manager Michèle Jones michele.jones@thecreativegroup.info 084 246 8105 Advertising, production and 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.

2016/04/22 11:20 AM

LOCAL NEWS

LOCAL INDUSTRY NEWS BIGGEST ATLANTIC SEABOARD RESIDENTIAL DEVELOPMENT FROM FORMER LAND CLAIM

A prime piece of land in Bantry Bay is set to become Cape Town’s single biggest Atlantic Seaboard residential development. In 2001, the area was awarded to the Tramway Road Community Trust by the City of Cape Town as part of a restitution claim, on condition that it be redeveloped to benefit the beneficiaries. Now it is being developed into Bantry Hills, a R750m ultra-luxury development by Spear Properties. “We have been planning this 14,000m2 development for some time," explains Spear Properties CEO Mike Flax, the former CEO of JSE-listed Spearhead Property Holdings. “It will be one of the most iconic residential developments on the Atlantic Seaboard." According to Flax, the recent announcement by finance minister Pravin Gordhan that transfer duty rates have sharply increased for properties over R10m has created demand for such developments, as buyers need not pay the heavy transfer fees. “We have already sold more than half of the apartments to buyers from New York, Mumbai, London and Copenhagen. There has also been a lot of interest from South African families who are relocating to the Western Cape,’’ he says. The average value of the apartments is R12m. The development will be completed in November 2017.

HOLIDAY RENTAL AGENTS: SAME RULES APPLY There has been an increase in homeowners and agents trying to get on the holiday letting bandwagon to benefit from the Western Cape’s influx of visitors, says Annette Evans, GM of the Institute of Estate Agents (IEASA) Western Cape. However, there has been some confusion as to whether or not a holiday letting business and its agents are required to hold Fidelity Fund Certificates (FFCs), which is what is stipulated by the Estate Agency Affairs Board (EAAB) as a necessity for agents handling property transactions. In a recent case encountered by the IEASA Western Cape, the owner let out his home as holiday accommodation without knowing how much his property had been rented out for, or all the details surrounding the use of his property. All he received from the rental agent were a few ad hoc payments for what was deemed to be the owner’s share. “I recently interviewed a few reputable holiday letting business owners to get their input on the industry and common practices. They confirmed that their processes maintain absolute transparency as dictated by the EAAB code of conduct,” says Evans. (Download it at www.eaab.org.za/disciplinaries/ code_of_conduct.) Reputable holiday letting companies should adhere to the following steps and procedures: · An initial mandate between the owner and the agency signed by both parties, stating the commission payable – the majority will charge between 15% and 20%. · Each booking approved by the owner beforehand. · Each contract signed by the owner and the client. · Commission for each let to be invoiced separately and linked to a booking. “Anyone found guilty of an offence by the EAAB risks being disqualified from practicing in real estate. For those who have been wronged by unscrupulous action, there is recourse via the EAAB,” concludes Evans.

PROPERTY PROFESSIONAL

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2016/04/04 3:32 PM

LOCAL NEWS

Why your clients may not want 100% home loans

Neil Gopal, CEO, South African Property Owners Association

255 83 57

46 40

LON DO N

They are not easily secured, but about 40% of homebuyers are still being granted no-deposit or 100% home loans – and in some instances loans that cover not only the whole purchase price of their new home but their transfer fees and bond registration costs, too. These fees, including transfer duty (where applicable), bond registration charges and legal fees, currently work out to between 4.5% and 5.5% of the purchase price. However, while these loans, which are mostly granted to buyers in the aﬀordable homes sector, may come as a relief for those tight on cash, explains Shaun Rademeyer, CEO of BetterLife Home Loans. There's always a risk involved in borrowing more than a property is currently worth. “The problem is that for almost five years, the loan capital will hardly diminish for the homeowner able to make only the minimum monthly payments. What that means is that if the owner is for any reason forced to sell within that period, he or she might actually have to pay in a lot of cash to clear the loan and any accumulated interest. “The buyer who puts down a good deposit and uses cash to pay the transfer costs will usually be able to negotiate a lower interest rate – and will immediately start building equity in his or her home,” says Rademeyer.

It is critical to South Africa’s future that government, business and society work together to ensure that the country has a sustainable post-reform land tenure system – a system that will ultimately lead to the alleviation of poverty, the protection of food security and overall enhancement of democracy

WHAT $1M BUYS IN PRIME RESIDENTIAL PROPERTY Source: The Wealth Report 2016, Knight Frank. Based on prime residential prices in December 2015

PROPERTY PROFESSIONAL

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LOCAL NEWS

THIS AGENT ACHIEVED $10M IN COMMISSION

lthough never intending to become a real estate agent – she started her career as a grade 2 teacher – Kobie Potgieter has consistently been a top real estate professional. Potgieter, broker and owner of RE/MAX Independent Properties in Nelson Mandela Bay, was recently awarded a Circle of Legends career award at the RE/MAX of Southern Africa Awards. Potgieter is one of only five people in Southern Africa to achieve this prestigious accolade. One of three different career awards given by RE/MAX International, the Circle of Legends was first presented in 1987, with a current requirement of achieving $10m in gross commission and a minimum of 10 years of service with RE/MAX. Potgieter has been invited to attend the RE/MAX International Convention, which will be held this year in Las Vegas, to be recognised on stage as a career award recipient. Potgieter is focused on transferring her knowledge and skills to ensure that she leaves a lasting legacy. “I want to continue to run a sustainable, profitable business and provide my agents with the tools and guidance to achieve financial freedom,” she says.

TIPS FOR TIGHTENING UP ON SECURITY

Security is a major consideration for most residential purchasers in South Africa. Blue Security operations manager Brian Jackson suggests keeping your clients aware of their options. • Don’t cut corners when securing your property. Get at least three quotes, but don’t be tempted to choose the cheapest supplier and service provider – sometimes it can end up more expensive in the long run. Beware of fly-by-night operators – check that a company is registered with the Private Security Industry Regulatory Authority. • A layered approach to security is safest. This enables you to delay the progress of any intruder trying to break into your property. It also provides an early warning system so that you can run and hide in a safe room from where you can call for help. • Link an electric fence and anti-gate crashing

•

kit to the house alarm. Make this the first line of defense around the property perimeter. Razor wire fences are also effective. A CCTV camera near the entrance works as a deterrent and a tool for police if a crime occurs. External beams in the garden should form the next layer. Strong burglar bars work best. Some companies offer “invisible screens” and security shutters as alternatives to the standard options. Set up your cellphone to act as an additional panic alarm. In an emergency, press a single key on the cellphone to alert the security company’s control centre discreetly. Identify a safe place in your home. This place should have a phone or other means of outside communication. Everybody living or working in the house should be drilled so that in the event of an emergency, they know what to do. Neighbourhood watch organisations’ security initiatives such as CCTV street cameras are useful for intelligence. The footage can assist security companies and police in identifying and arresting suspects.

UK researchers have found that estuary and harbour views command PRIME WATER premiums of up to 82%, while here VIEWS in South Africa many of our most expensive properties OUTWEIGH are ocean-facing

LANDSCAPES

Tony Clarke, MD, Rawson Property Group

PROPERTY PROFESSIONAL

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LOCAL NEWS

Shopping centres should adjust their hours to shoppers’ needs Successful retail centres should stay open later to boost sales because modern South African lifestyles have changed. Opening hours still lag behind the needs of the consumers who support them, believes Marius Muller, CEO of shopping centre investor Pareto. “It is important for malls and retailers to see the big picture when it comes to being open for shoppers,” says Muller. He points out that many regional centres, including some of the largest and most popular, still have standard minimum hours until 6pm, which doesn’t make the cut for many consumers. He uses the example of a parent who works until 5pm, then navigates through peak-hour traffic to collect their children from after-school care. Many consumers also work unconventional hours, from top executives and professionals to nursery school teachers and taxi drivers. “The point is that, to make the sale, you need to be open for shoppers when they are able to shop,” he says. “It comes down to knowing your customer, understanding how they live, work and play, and what times are most convenient for them to shop with you. It also means that retailers and malls need to work together to find their optimal opening times.” Pareto is one of the country’s leading retail property industry players and owns, among others, Menlyn Park Shopping Centre in Pretoria, Cresta Shopping Centre in Gauteng, The Pavilion in Durban and Mimosa Mall in Bloemfontein.

BRIDGET MCNULTY

PROPERTY TREND: MOVING TO HIGHDENSITY LIVING

As the economy shifts along with priorities, more and more people are considering sectional title properties

look at residential property buying trends over the last few years shows something surprising: a move away from the white picket fence dream of a large house with a large garden, towards something smaller, denser and closer to the neighbours. There has been a marked increase in the number of people purchasing smaller, sectional title properties, particularly in developments – and especially among first-time and younger buyers. A steady increase in first-time buyers since 2009 has meant that those who are financially limited are driving a lot of the demand for sectional title units. “Overall demand for sectional title units has risen by about 7% year on year, with the increase among firsttime buyers around 6%," says Simon Bray, CEO of Private Property. "Interestingly, sectional title has also been outperforming freehold property in terms of price growth over the last few years.” The reasons are both economic and social. Security is a big factor for many: living in close proximity to neighbours and in a more communal environment is perceived to be more secure than living on a freehold property. Affordability is a factor: sectional title units are both cheaper to buy (especially if new, as there are no transfer costs) and cheaper to maintain due to their size. Convenience also comes into play, as new developments are usually close to business hubs, amenities or transport links. While many sectional title properties are found in high-cost, high-density areas such as Sandton, Cape Town’s city bowl and uMhlanga, there are also less expensive units not as central but still close to public transport links such as the Gautrain or major highways. The current economic environment is also a key influencer. “People have less money but still want to own their own homes, so smaller properties – that require smaller deposits – are attractive,” says Bray. In the midst of this interest rate hiking cycle, buyers are also wary of overextending themselves, so are opting for homes that are cheaper to maintain.

MAY/JUNE 2016

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THE CLOCK IS ALWAYS TICKING IN PROPERTY TRANSACTIONS Parties to a contract are sometimes surprised to learn that missing a contractual deadline does not always amount to a material breach entitling the innocent party to cancel and claim damages. However, in legal principle, where “time is of the essence”, non-compliance with a contractual provision by one party paves the way for the innocent party to validly cancel the agreement. A case in point is the decision in February this year in the matter of Myburgh v Equestrian Valley (Pty) Ltd. Myburgh bought a property in a new equestrian estate development but became disenchanted with the rate of completion of extras (stables, dressage and show jumping facilities). He sought to cancel the agreement as a result and the court was asked to determine, almost six years after signing the sale agreement, whether he could do so when no date was stipulated by when the extras had to be completed.

Ultimately Myburgh’s claim failed as the court held, amongst other things, that he did not properly demand performance within a reasonable time from the developer, a requirement where a time for performance is not stipulated in the agreement. The court confirmed the legal principle that placing a party in default was not sufficient to entitle an innocent party to cancel the contract. The failure to perform must go to the root of the contract which will be the case if, in the circumstances of the agreement, “time is of the essence”. Sale agreements often proffers intricacies with outcomes not anticipated by those less experienced in property law matters. Appoint an expert in all your property transactions, to smooth the way. Contact us at info@stbb.co.za or on www.stbb.co.za

MASTERING THE INTRICACIES OF HOME OWNERSHIP

MORE THAN JUST THE PAPER WORK

WANT TO BE A

Millionnaire?

WHAT’S ON

For BetterRewards members. Turn to page 18 for more.

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

JUNE

MAY

12-13

WHAT WESTERN CAPE PROPERTY IDEVELOPMENT FORUM CONFERENCE 2016 WHERE Crystal Towers Hotel & Spa, Century City, Cape Town CONTACT bit.ly/1UGKA0d

23-24

WHAT GLOBAL REAL ESTATE INSTITUTE IEAST AFRICA GRI 2016

23-24

WHAT PRETORIA REAL ESTATE BASIC IINDUCTION WORKSHOP

9-10

WHAT RENTALS AND EVICTIONS IWORKSHOP (CHAPTER THREE) WHERE IEASA Training Centre, Pinelands, Cape Town CONTACT bit.ly/1VRfXpS

WHAT INFRASTRUCTURE AFRICA 2016 WHERE Sandton Convention Centre, Johannesburg CONTACT infrastructure-africa.com/registering

WHERE Villa Rosa Kempinski Nairobi, Nairobi CONTACT globalrealestate.org/eastafrica2016

14-15

WHERE IEASA North Offices, Silverton, Pretoria CONTACT bit.ly/1WrbOJm

may june

31 -2

WHAT SUSTAINABILITY WEEK 2016 WHERE CSIR International Convention Centre, Brummeria, Pretoria CONTACT sustainabilityweek.co.za

Add to your diary now!

21-23

WHAT IEASA BUSINESS BROKER ITRAINING COURSE WHERE IEASA Training Centre, Pinelands, Cape Town CONTACT bit.ly/1Vjst0X

WHAT SAPOA 50TH ANNIVERSARY ICONVENTION AND PROPERTY EXHIBITION WHERE Sandton Convention Centre, Johannesburg CONTACT sapoaconvention.co.za

PROPERTY DEVELOPMENT PROGRAMME 2016 The Property Development Programme is jointly presented by UCT’s Graduate School of Business and the South African Property Owners Association (SAPOA). According to SAPOA CEO Neil Gopal, the programme attracts professionals from the ﬁnancial, legal, architectural, engineering, quantity surveying, property valuation, building planning and broking sectors, with relevant learning for the development of managers and leaders at senior level. Running from 19 to 31 July, the programme is NQF-7 certiﬁed and recognised by professional institutions, enabling delegates to claim Continued Professional Development points. Contact Mafonti Marobi on 011 883 0679 or email hr-education@sapoa.org.za

MAY/JUNE 2016

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2016/04/22 10:45 AM

Chas Everitt

Annual National Awards Ceremony 2016

Celebrating the success of our national champions and top achievers at a glamorous gala dinner extravaganza at The Venue in Melrose Arch.

NATIONAL TOP METRO AGENT + TOP ORIGINATION AGENT

NATIONAL NON METRO AGENT

Graeme Hamilton Reid - Randburg

Anmar Marais - Whale Coast

NATIONAL TOP METRO PARTNERSHIP + TOP LISTING AGENTS Werner van Schalkwyk & Francois du Pisani - Westrand

NATIONAL TOP RENTAL AGENT

NATIONAL TOP NON METRO PARTNERSHIP

Melissa Bell - Polokwane

Ivan Parnell & Greg Bisaro - Nelspruit

G O L D S TAT U S Cape Town North - Carlou Brand Western Seaboard - Nicky Sutherland East London - Clinton Krouse Westrand - Anette Rautenbach Whale Coast - Cheryl Van Deventer Plettenberg Bay - Di & Bobby Rogers Randburg - Debbie Rosz Randburg - Miranda Philip & Zandree Lill Bedfordview - Luz Vazzana, Natalia & Nicole Dias

Chas_Everitt_DPS_May_PP_FA.indd 2

P L AT I N U M S TAT U S Randburg - Lyn Massey-Hicks Whale Coast - Anmar Marais Randburg - Graeme Hamilton Reid D I A M O N D S TAT U S Westrand - Werner van Schalkwyk & Francois du Pisani WWW.CHASEVERITT.CO.ZA

2016/04/22 1:12 PM

TOP METRO AGENT - 2ND PLACE

TOP METRO AGENT - 3RD PLACE

TOP NON METRO AGENT - 2ND PLACE

TOP NON METRO AGENT - 3RD PLACE

Lyn Massey-Hicks - Randburg

Clinton Krouse - East London

Cheryl van Deventer - Whale Coast

Nick Laubscher - Nelspruit

TOP METRO PARTNERSHIP - 2ND PLACE

TOP METRO PARTNERSHIP - 3RD PLACE

TOP NON METRO PARTNERSHIP - 2ND PLACE

TOP NON METRO PARTNERSHIP - 3RD PLACE

Zandree Lill & Miranda Philip - Randburg

Luz Vazzana, Nicole & Natalia Dias - Bedfordview

Di & Bobby Rogers - Plettenberg Bay

Janka Niemand & Antoinette du Toit - Oudtshoorn

NATIONAL TOP METRO OFFICE + TOP OFFICE REGISTERED REFERRALS + TOP ORIGINATION OFFICE + TOP OFFICE SUCCESSFUL REFERRALS SENT

TOP NON METRO OFFICE

Randburg

Whale Coast

TOP RENTAL OFFICE + TOP RENTAL OFFICE INCOME Umhlanga

Chas_Everitt_DPS_May_PP_FA.indd 3

TOP AGENT SUCCESSFUL REFERRALS SENT

OUTSTANDING SERVICE

Tracey Everitt - Westrand

Jomarie Louw - West Coast

TOP NEW ENTRANT

TOP AGENT REGISTERED REFERRALS

Kevin Welman - Benoni

Philip Mostert - Westrand

TOP UNITS AGENT - JOINT WINNERS Anette Rautenbach - Westrand Anmar Marais - Whale Coast

2016/04/22 1:12 PM

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

PROPERTY MOVEMENTS AROUND THE WORLD LEA JACOBS

GLOBAL STUDY OF PRIME V MAINSTREAM PROPERTY VALUES Global investment in major cities is often blamed for pushing up house prices for ordinary residents, but research by Savills suggests this is not the case. International investment seems to be pushing up prime property values instead of raising ordinary mainstream values. The 12 cities surveyed are Dubai, Hong Kong, Los Angeles, London, Mumbai, New York, Paris, San Francisco, Singapore, Shanghai, Sydney and Tokyo. The most expensive for mainstream residential properties are Hong Kong, New York and London. Both New York and Sydney have seen big price increases in recent years, despite restrictions on foreign ownership. Mainstream properties have shown an average increase of 58% across the 12 cities since December 2008. Most growth is associated with economic recovery in the second half of that period, with 33% occurring between December 2011 and June 2015. Growth in prime markets is lower across the

12 cities, with an average increase of 37% over the past seven years. On average, mainstream property values are 19% of prime property values in the 12 cities. Values are most heavily discounted in internationally invested cities including Hong Kong, Dubai, Paris and London. US cities have the smallest gap between prime and mainstream values, alongside locally invested cities such as Sydney and Tokyo. It would appear that international investment is concentrated in prime markets, pushing up prices in the most expensive echelons. High levels of commercial real estate investment in US cities result in international investment in multifamily housing, but this appears to have had a moderating effect on rental growth instead of contributing to price growth in mainstream markets. Savills is a strategic partner of Pam Golding Properties. Pam Golding reports that South African residential sales to international buyers remain low as a percentage of total sales – approximately 1% for SA and 3% for Pam Golding Properties nationally in 2015.

Savills Executive Unit mainstream capital values City

Capital values

Growth December 2011 to June 2015

Mainstream as proportion of prime capital values

Hong Kong

$910,478

53%

10%

New York

$707,738

40%

27%

London

$699,485

49%

15%

Singapore

$642,499

20%

Sydney

$671,165

70%

33%

San Francisco

$565,620

74%

34%

Tokyo

$555,771

16%

24%

Average

$537,537

33%

19%

Los Angeles

$493,339

56%

39%

Shanghai

$397,689

14%

Paris

$349,249

-5%

14%

Dubai

$299,464

81%

14%

Mumbai

$257,948

16%

19%

Source: Savills World Research, 12 Cities

BRITISH INVESTORS STORM THE MARKET

uy-to-let investors in the UK and those looking to own a second property were frantically snapping up housing in a bid to beat the increase in stamp duty, which came into effect on 1 April. According to the National Association of Estate Agents (NAEA), the increase of 3% (which only applies to additional residential properties) has led to 85% of its members reporting an increase in the buy-to-let sector during March this year, raising demand for property to a 12-year high. Although estate agents may be smiling, first-time buyers may not be as enamoured with the situation. The NAEA noted that, although there were an average of 463 buyers per branch in February, only 24% of these were purchasing homes for the first time – a 5% decrease month on month. The increased demand for housing has meant that those entering the property market for the first time have had to compete with established landlords. As a result they have lost out, says NAEA MD Mark Hayward. He raises a good point. Investment and buy-to-let purchasers generally pay cash, which is understandably a far more attractive option for sellers. The UK has a number of schemes aimed at helping those climbing onto the property ladder for the first time, however. Help to Buy ISA, the Help to Buy scheme and Lifetime ISA will be beneficial, says Hayward.

PROPERTY PROFESSIONAL

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YOUR CHANCE OF a AMillionnaire I N T becoming E R N AT I O N L NEWS ENDS JUNE 2016!

-1.3% Vienna

-7.1% 3.3% Toronto

1.9%

Geneva

0.7%

-1.5%

-6.5%

London

Shanghai

Beijing Moscow

1 OTP = 1 scratch card

0.0% Taipei

Turn to page 18 for more.

3.3%

2.4%

Tokyo

New York

-0.8% Hong Kong

-3.2% -0.8%

Zurich

Tel Aviv

-5.1% Nairobi

1.6%

-3.8%

THE HIGHS AND LOWS

5.3%

Singapore

Guangzhou

Cape Town

Luxury rental prices under the spotlight

ecord low commodity prices and a lacklustre performance in equity markets have led to prime rental prices weakening in a number of countries. This is according to Knight Frank’s Prime Global Rental Index, which monitors the change in luxury residential rentals in 17 cities around the world. Prices in this sector fell by 1.1% in Q4 2015, down from a growth of 2.5% recorded in 2014. However, it wasn’t all gloomy. The market in Tokyo increased by 3.3% and New York recorded growth of 2.4%, while the prices of prime rentals in London increased by 0.7%. The strongest increase in prime rentals were in US cities, with an average increase of 2.8%. Europe experienced the largest decline with average prime rents decreasing by 3.5%.

2015 high-end rental growth in strongest performing city Guangzhou

Prime Global Rental Index, Q4 2015 Annual % change to Q4 2015 Source: Knight Frank Prime Global Rental Index

Since its post-financial crisis low in Q2 2009, the Prime Global Rental Index has increased by 19%. From Q1 2007 to Q3 2008, prior to the financial crisis, the index averaged increases of 9.1% per annum; however, after Q2 2009, the average annual increase has diminished to 2.5%. Although the threat of Greece pulling out of the European Union (EU) has been significantly reduced, the chance that the British may vote to leave the EU at their 16 June referendum is fuelling further uncertainty on the continent. This, coupled with markets already reflecting negative interest rates, low commodity prices and an economic slowdown in China, means a likelihood of further uncertainty in the world’s key luxury rental markets.

7.1%

2015 high-end rental decrease in weakest performing city Geneva

Find more international industry news at propertyprofessional.co.za

MAY/JUNE 2016

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2016/04/22 10:56 AM

TOOLS OF THE TRADE

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

Stay ahead in the digital game with your best images and videos

CAMERA+ YOU NEED IT BECAUSE Taking an iPhone shot of your listing and putting it straight online is not going to cut it. A little post-production is essential, whether cropping the photo or adjusting the highlights and shadows. THE NITTY GRITTY ‘The Lab’ is the really useful part: there are 14 different functions available to edit photos, including image sharpening and straightening. You can also shoot directly from Camera+, where the stabiliser and timer come in handy. The easy set-up to save your images help you decide which you’d like to edit. X-FACTOR It’s simple to use. All it takes? Decide what you’d like do and then move the slider until the image looks better. The ‘clarity’ button is a useful tool to start off with: it’s a one-stop solution to turn your image into a professional-looking one. R60; iTunes

CANON POWERSHOT SX610 HS CAMERA YOU NEED IT BECAUSE Technology has come a long way and now you can take impressive images with even the most basic cameras. This Canon offers aspirant photographers the opportunity to take professional photos using affordable equipment. THE NITTY GRITTY Snap close-ups with the 18x zoom or take advantage of the useful 25mm ultra-wide angle lens. The image stabiliser allows you to shoot sharp hand-held shots in low light and at full zoom. X-FACTOR Because there’s Wi-Fi, you can transfer photos to your smartphone or tablet directly from your camera, or upload them to your website or onto social media. The camera also fits neatly into your pocket for those site visits. R2,995; canon.co.za

PROPERTY PROFESSIONAL

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2016/04/22 10:46 AM

MANFROTTO COMPACT LIGHT TRIPOD YOU NEED IT BECAUSE Camera shake compromises the quality of your images. A tripod is a necessary addition to keep the camera steady and therefore take the sharpest images possible. THE NITTY GRITTY If you’re using a camera such as the Canon PowerShot, a lightweight tripod (0.92kg) is perfect. It’s easy to stow away, being just 39.8cm in length and with a maximum height of 131cm, plus the 360° panoramic rotation is simple to adjust. X-FACTOR Combine the aluminum legs, hardy adjustment parts, low weight and compactness, and it’s no effort at all to take with you. No need to lug it around! R1,095; ormsdirect.co.za

PARROT BEBOP 2 DRONE YOU NEED IT BECAUSE Drone footage is fast becoming a must-have way to show off your property. THE NITTY GRITTY There’s a 14MB capacity for photos and the video records in Full HD at 1080p, which gives you the quality you need. Expect 8GB of storage, enough to record for the full flight time of 25 minutes. X-FACTOR Although drones can be tricky to control, the Parrot is compact and simple to use. It comes with control sensors for stabilisation and GPS satellite navigation. R12,500; dionwired.co.za

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2016/04/22 10:47 AM

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PP May_June_Online.indd 17

2016/04/22 11:25 AM

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SOUTH AFRICAN

REGENERATING URBAN SPACES ANDRÉ FIORE

Special Ratings Areas are transforming SA’s neglected urban nodes, unleashing economic potential and upping property values one precinct at a time

rban degeneration is not a uniquely South African problem. But the success of a growing number of carefully managed Special Ratings Areas (SRAs) worldwide, and the related learning and expertise in this ﬁeld, is resulting in the marked upgrade and growth of many economic nodes. They are tagged locally as Special Ratings Areas (SRAs), City or Business Improvement Districts (CIDs or BIDs) or Urban Improvement Precincts (UIPs). Considered management of these public open spaces is making huge headway in unlocking economic development and delivering liveable urban spaces, as well as optimising public and private sector investment and property values – and enhancing the quality of life of their users. And as SAPOA KwaZulu-Natal regional chairman Ed van Niekerk, also executive director at Maxprop, comments, “When property values increase, every single property professional beneﬁts.” So do the users of those properties. CAPE TOWN AND GAUTENG

With 34 CIDS, Cape Town leads the local ﬁeld in precinct management. The city’s oldest CID – the Cape Town Central City Improvement District (CCID), established in 2000 – manages the CBD. The CCID is an area that will boast a cumulative property investment of R32bn by 2021 – R24bn (as recorded in the City of Cape Town’s latest 2013/14 oﬃcial property valuation report) – and conservatively, another R8bn in current constructions and new developments on the cards. In Gauteng, it’s notable that, besides marked capital investment, job creation and support of local economy, crime rates within CIDs are comparatively much lower than the wider sector in which they are situated. And while there’s no doubt that, in most South African towns and cities, CBDs have declined due to loss of buying power to suburban developments, according to National Treasury the CIDs and SRAs that have emerged in commercial nodes represent a new public and private sector commitment to turning these negative trends around. They give property professionals a reason to invest and promote these once-attractive nodes. SHAPING PERCEPTIONS

The cold truth is that regardless of what statistics say or how physically attractive an environment may be (a revamped city centre, a beautiful beachfront promenade), desirability, economic vibrancy and property returns are determined by perception – how the man in the street, the tourist, the business, the investor, feels about a place. How safe they feel relative to the

experience they had in that place is what determines if they will return with their families or invest in that node. It is these intangibles that form the basis of effective precinct management, according to Brian Wright, founder and MD of Urban MGT. “Our work is about stitching together interventions that collectively transform the public realm and change perceptions, which together create a solid base that turns areas around,” he says. Wright has been involved in precinct management since 2007. Areas under his vigil include Ballito UIP, Bridge City Management Association, Cornubia Industrial Business Estate, Florida Road UIP, Riverhorse Valley Business Estate and uMhlanga Rocks UIP. Riverhorse Valley is one of the pioneers in the implementation of a greenfield management structure. “It has been nothing but a success,” says estate manager Bruce Macaulay. Founded 15 years ago, plots on the estate sold for R285/m2. “Four years ago the last available plot was sold, filling the 304ha estate. Land is currently priced in excess of R2,000/m2. Drawcards include a pleasant work environment, safety and superb infrastructure, thanks to the diligent management of the precinct,” he says. The Florida Road UIP put structures in place to deal with their informal car guard issue last year. “The difference is amazing,” says Dina Soukop of Soukop Property Group, whose head offices are located there. “You can see and feel the difference. It’s cleaner, the area is buzzing again, we don’t feel afraid and we’ve had a surge of people wanting to buy in Florida Road. We’ve even been asked whether we want to sell our own building.” And Florida Road UIP is only a toddler. The real difference introduced by precinct management can be seen in an example such as uMhlanga Rocks (see sidebar on the next page for the case study by Urban MGT).

Our work is about stitching together interventions that collectively transform the public realm and change perceptions, which together create a solid base that turns areas around Brian Wright, founder and MD, Urban MGT

MAY/JUNE 2016

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SOUTH AFRICAN

uMhlanga Rocks case study

WHAT NEXT?

Why then don’t we have more SRAs? National Treasury asks how, with scarce resources, can municipalities support the operational management of key precincts that require services beyond what the municipality can equitably provide to all its citizens? Short of cash and leadership, creating a SRA isn’t child’s play. While National Treasury is aware of the importance of SRAs in adding value, committing to assisting however it can, Wright believes “municipal/private sector partnerships are essential for the success of precinct management as neither party can, on their own, cost-effectively deliver at a competitive level. “There are two parallel but inextricably linked deliverables required. The private sector has to show decisive leadership by getting organised into a credible institutional structure to engage with municipalities with a unified and collective voice. And municipalities have to embrace precinct management partnerships with the private sector as catalysts for economic development. This underpins a city’s, and in fact a country’s, sustainability and liveability.” PLANS FOR MAJOR CENTRES

SAPOA KwaZulu-Natal has undertaken to formalise a collective precinct management voice, engaging with municipalities and spearheading a way forward, with the Durban beachfront and city centre earmarked for future urban management precincts. In Cape Town the CCID is working in partnership with the City of Cape Town to introduce a number of pilot projects new to SA as a whole. This includes leveraging a R1.7bn fibre optic network being rolled out by the city to government buildings across the metropole, which is now robust enough to be leveraged by the private sector. As part of the pilot project, connections will be made, at the city’s cost, to about 1,000 privately owned CBD buildings by June 2021 (to date 49 have been connected). In Gauteng The Johannesburg CID Forum has been set up as a platform from which Joburg CIDs can share info, follow international trends and keep track of issues having an impact on CIDs as a collective. There are 30 CIDs (18 legislated, 12 non-legislated) in the Joburg municipal area, collecting an estimated R91m annually for services in public spaces. The CIDs have attracted an estimated R25bn in private investment in built form, representing a total municipal value of about R53bn. SAPOA is working on a National CID Forum to act as a similar structure for national urban management structures. What about property values? Says Cara Reilly of Urban MGT: “One of the fundamental advantages for those selling or buying a property in a managed urban environment is not just that it looks better and feels safer. It is the assurance that, in well-structured and formal management precincts, there are sound and productive relationships with local municipalities that are realising the potential of precinct management to solve the challenges faced in urban nodes and unlock the economic viability of an entire area.” 20

In 2008 uMhlanga Rocks was in crisis. Crime was on the increase, there was little enforcement of bylaws, a poor municipal structure was degenerating, urban decay was rampant and the precinct was in economic crisis as investors disinvested in favour of new uMhlanga Ridge developments. The private sector in uMhlanga Rocks took action. They put together a “war chest” to drive the establishment of uMhlanga Rocks Village UIP. As with sustainable SRAs, it was imperative to have a mutually beneficial relationship between the private and public sectors. They engaged with eThekwini Municipality and brought them on board as partners. This mutual cooperation included: • Lobbying for economic-enabling infrastructure • Agreement on municipality service levels and optimising service delivery • Integration of SRA and municipality service delivery • Fault reporting to the municipality, follow-up and meetings This particular SRA put its operational plan into practice, with the focus on securing property values and building investor confidence to retain and attract investment. The project has been an overwhelming success. Since its inception there have been reinvestments, a stream of new tenants and upgrades to private properties and residential complexes. Improvements were also made to Breakers Resort, uMhlanga Sands Resort, Cabana Beach Resort, The Oyster Box Hotel, Umhlanga Centre and a Protea Hotel (in progress), and there is a planned Beverly Hills Hotel upgrade. Despite tough economic conditions there have been new developments including Beacon Rock and the Pearls of Umhlanga. The total estimated value of these investments exceeds R5.5bn.

uMhlanga UIP Perceptions Survey: Public Space Rating 2015-16 91% 86% 83% – rated safety good/excellent

– rated cleanliness good/excellent

– rated general maintenance good/excellent

Find out more umhlangauip.co.za | floridaroaduip.co.za | ballitouip.co.za sapoa.org.za | capetownccid.org | cidforum.co.za

PROPERTY PROFESSIONAL

PP MayJun_South African UIP.indd 20

2016/04/22 11:27 AM

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CHANGING NATIONAL CREDIT LIMITS PATRICK CAIRNS

On 6 May, the Limitations on Fees and Interest Rates Regulations, in terms of the National Credit Act, comes into effect. These amend interest rates and fees that credit providers may levy on home loans, credit and store cards, and unsecured credit transactions

n November last year, the government announced changes to the maximum fees and interest rates that may be charged on certain credit products. This includes home loans. It is important for estate agents and developers to be aware of what is changing and to understand how their clients may be affected after 6 May. “Under the National Credit Act (NCA), the regulator is obliged to review the maximum interest rates and fees every three years, but this is the first time they have changed them,” explains Bridget King, a director at law firm Cliffe Dekker Hofmeyr. “I think the new limits have been put in place in anticipation of interest rates rising.” In the case of home loans, this table (right) explains how the calculation for the maximum interest rate will change.

Before 6 May Formula for calculating the maximum interest that can be levied on a home loan

The repo rate

x2.2 + 5% After 6 May

The repo rate

+12%

The legislation tries to protect against abuse and overcharging, but beyond that the market has taken over. Competitive forces have effectively kept the rates in a reasonable range for consumers Zakheni Dlamini, director of business development at SA Home Loans

PROPERTY PROFESSIONAL

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FINANCE

Practically speaking, that would result in the following maximum rates at diﬀerent points in the interest rate cycle.

Maximum interest rate that can be levied on a home loan

Old formula

Theoretical repo rate

New formula

In a low interest-rate environment, the old formula results in a reduced maximum cap. On the other hand, King explains, the formula to be applied after 6 May is more beneﬁcial to homebuyers when repo rates are higher. However, it is also clear that whichever formula you use, the maximum levels are actually unlikely to be tested. With the repo rate at 7%, the prime lending rate is 10.5%. That means that a 19% interest rate would be prime plus 8.5%. Currently, nobody lends at those kinds of rates in South Africa.

“Tips for clients to ensure they are able to qualify for a favourable rate would include keeping their credit records in good standing, timely and continuous payment of their existing contractual commitments, and saving up a deposit,” says Timothy Akinnusi, Nedbank’s executive head of home loan sales and client value management. The new regulations also allow lenders to charge higher initiation and monthly service fees on mortgage agreements. The table below shows how these fees will change.

MARKET FORCING COMPETITIVE RATES

13.8%

4% 7%

Current rate

20.4%

10%

Current rate

27%

16% 19%

Current rate

22%

Tips for clients to ensure they are able to qualify for a favourable rate would include keeping their credit records in good standing, timely and continuous payment of their existing contractual commitments, and saving up a deposit Timothy Akinnusi, executive head of home loans and client value management, Nedbank

“On our side, the highest rate we would look at is probably prime plus 3%,” says Zakheni Dlamini, director of business development at SA Home Loans. “We know that other lenders may go higher than that, to about prime plus 5%, but that is well below what is allowed.” The reason for this is primarily that the market has forced lenders to compete. “The legislation tries to protect against abuse and overcharging, but beyond that the market has taken over. Competitive forces have effectively kept the rates in a reasonable range for consumers,” he says. Alan Hargroves, chief operating officer at Absa Home Loans, agrees that average lending rates for mortgage agreements are “at or near” the prime lending rate, and therefore new home buyers are unlikely to be affected by the change in regulations. However, there are times when higher interest rates may be applied. “If a customer goes into default and restructures the loan after a prolonged period of non-payment, it is theoretically possible for a bank to negotiate a higher interest rate. Under this scenario the bank is also bound by the Act to ensure that caps are not exceeded,” he says. IMPACT OF NEW LIMITS

For the most part, however, estate agents can advise their clients that the new limits are unlikely to impact anyone applying for a home loan. Potential homeowners should put themselves in a position to get the best rates through the usual channels.

Maximum fees that can be levied on a home loan

Before 6 May

Monthly Monthly service service fee fee

R5,000 R50 Initiation fee

Initiation fee Initiation fee

After 6 May

R5,250 R60

Monthly service fee

These amounts are fairly small, particularly in relation to the other costs related to buying property. And given the modest increases, consumers should expect all lenders to charge the maximum amount allowed automatically. “It’s fair to assume that everyone will default to the maximum fees,” says Dlamini. “Bear in mind that those fees have been fixed ever since the NCA came into effect in 2007, but there has been inflation in terms of the cost base of the lenders.” He suggests that, if the allowed increase had been much larger, lenders might have used the opportunity to differentiate themselves by not all raising their fees to the highest possible level. Because the increase is so small, however, it’s likely everyone will apply the maximum rate.

MAY/JUNE 2016

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2016/04/22 10:44 AM

Seeff Properties chairman Samuel Seeff says you can’t dictate to a market – if buyers and sellers move in a different direction, you can’t hold them back. Instead, innovate and be smart enough to move with them

TRAILBLAZER IN REAL ESTATE CATHERINE DAVIS

Watch Samuel Seeff talk about how to make it big as an estate agent in South Africa. propertyprofessional.co.za

PROPERTY PROFESSIONAL

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2016/04/22 11:59 AM

amuel Seeff has officially been in the business for 32 years, although that excludes the time he spent as a kid assisting his estate agent parents with office duties and distributing drops over weekends, and sitting at Sunday show days. That means he’s actually been in real estate for closer to 40 years. And 40 years is a long time to get to know what’s working and what’s not, how to get to the top (or as near as) and stay there. His secret? Be the first at something. Ideally lots of things ... A company can’t stick to the same formula just because it has worked in the past. It needs to be open to innovation. Seeff sees that innovation success comes down to trying new things, not being complacent and being prepared to change. A culture of performance also needs to prevail in the company. He’s always asking: can we do it differently? Can we do it better? Can we innovate? And he’s not shy to say that Seeff Properties has been “one of the biggest innovators, if not the biggest, in the industry over the last 30 years”. Seeff’s approach to success derives from the perspective of “a business in the real estate environment”, not as an estate agent trying to run a business. During his graduate studies at UCT, Seeff’s father passed away. Together with his older brother Lawrence, he took over the reins of the family business. Lawrence relocated to North America in the mid-2000s, but remains a director of the company. The latter-day story of Seeff Properties is very much that of Seeff. First as MD from 1992 and subeas chairman since 1997, he continues to drive the growth and success of the brand.

Seeff Properties in numbers

200

offices throughout South Africa, Namibia, Botswana, Zimbabwe, Zambia, Swaziland and Mauritius

1,300

t otal number of agents working

CLAIMING INNOVATIONS

“As one of the oldest estate agencies, Seeff Properties has grown with the country’s property sector and has been at the forefront of many industry innovations,” says Seeff. In addition to pioneering the first show houses in the Cape, Seeff spearheaded activities such as mortgage originating in his role of founding shareholder of ooba (initially Mortgage SA, born out of Seeff Home Loans) and at Multi Listing Services (MLS). Seeff Properties was the first (and only) estate agency to list on the main board of the JSE in 1995 (it was delisted in 1996 and the family bought back all shares in 1999). The company was also first to commit to the “pledge” with the Estate Agency Affairs Board (EAAB) in the Transformation Charter. Recently, as founding member, Seeff led the drive to establish Real Estate Business Organisations of South Africa (REBOSA), the first real estate employer body in the country. Seeff was also a pioneer of web-based marketing and the first to roll out a Google platform nationally allowing agents real-time access to its network nationwide. Seeff’s entrepreneurial spirit has meant the brand has more than doubled in size since the late 1990s – and, in recent years, grow its turnover at more than 20% annually, despite the prolonged economic downturn. The company has also set the bar high, achieving some of the highest prices in residential real estate, including selling the first of three One&Only Cape Town penthouses for a record-setting R110m at the end of 2009.

645

verage a number of units sold monthly

R1.14bn

verage a gross sales monthly

R13.3bn

pproximate a total sales in 2015

MAY/JUNE 2016

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TOUGH AT THE TOP

Unlike most estate agent brands, Seeff Properties runs a licence, not a franchise operation. Another innovation, perhaps? Maybe not intentionally ... Seeff concedes that the licence operation came about because Seeff franchisees at the time wanted more autonomy in a tough economic climate. “They wanted to fall under the banner of a brand but also be able to operate more independently compared with a normal franchise situation,” he explains. “It wasn’t an easy time and there were some hard-fought, and at times even acrimonious, negotiations.” But he quickly spins it around. “However, as a business we heard the franchisees and we agreed to change the structure.” He believes it’s part of the group’s success story, in fact. “We took a tough situation and made it into something that has worked really well,” says Seeff. “It’s not a top-down approach: the licensor and licensee recognise each other’s strength to go forward. Sometimes it’s great, sometimes it’s frustrating ... You see one direction you want to go in and you have to convince, rather than tell them, to come with you. Sometimes, there’s disagreement and the licensees have been right – it wouldn’t have been a good idea to take a certain route. It’s a partnership-style business and it becomes more their brand.” Seeff believes this approach has been a drawcard for agents choosing to join Seeff Properties as a company. TECH OF THE FUTURE

If there’s one area in business – especially this business – where innovation is everything, and thinking ahead is vital, it’s technology. “We’re in for interesting times. The ﬁrst 20 of my 32 years in the industry remained relatively unchanged. We’ve had more change in the past 10 years than the previous 20. “Nobody can look as far as 10 years down the line these days – it’s changing too quickly. In a few years, your current competitors may not be your competitors. And people who are not your current competitors – they may not even be in the industry – they could be ones to watch. The skill to survival is to be able to predict that, and to be agile and adept enough to adapt to the market.” 26

As for technology replacing estate agents altogether? “We ask ourselves that daily. We don’t take our position for granted. As good as we are, we could be better – we have to keep ourselves relevant.” Says Seeff: “I do think there will always be a need for a middleman. The nub of it is, when it comes to valuations, you could have two homes in the same complex, but they will be worth substantially different prices depending on position, fittings, condition, the view ... yet the man in the street won’t know that. People need the advice and the negotiation process to be managed because we are dealing with people’s personalities, their fears, their egos ...” What he’s saying is that there isn’t an app for that. “Our definition as estate agents may be different but we’ll be needed.”

People who are not your current competitors – they may not even be in the industry – they could be ones to watch. The skill to survival is to be able to predict that, and to be agile and adept enough to adapt to the market Samuel Seeﬀ, chairman, Seeﬀ Properties

PROPERTY PROFESSIONAL

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PLEASE DO NOT APPLY ...if you want to work 4hrs a day and earn 5-10k per month. Our top-earning, successful agents believe in undergoing regular training through the Seeff Smart Academy and are renowned for their knowledge and professionalism, accessibility at all hours, entrepreneurial spirit and attention to detail. In addition, our exceptional performing agents attain our elite Achiever Status level of recognition. At Seeff, our agents believe selling Real Estate is a career with unlimited earning potential and advancement and don’t regard it as a hobby or something to occupy their spare time with. If they did, they would be working elsewhere...part time.

So, if you just want a job, then perhaps you’re better off staying where you are, however, if you are interested in building a career and becoming a Property Professional, please email your CV to Ronel Bornman at careers@seeff.com

smart move | Buy. Sell. Let. | Close on 200 offices in and around Southern Africa including Botswana, Namibia, Swaziland, Zambia, Zimbabwe and Mauritius. www.seeff.com is South Africa’s preferred home for more than 30 000 properties for sale and to let. 08610 SEEFF(73333)

Move on Move up

www.leapfrog.co.za

NEWSWORTHY

SHIFTS IN THE PROPERTY PORTAL ARENA CATHERINE DAVIS

Property24’s recent fee increase has agents talking. Will they be pushed to stand together and seek out an alternative? We take the industry’s temperature

ost house hunters now search online for their next home, and rather than visiting local agents’ sites, they plump for property portals. Property24 is the most visited property portal in the country, although Private Property has made significant ground in recent months, making it South Africa’s fastest-growing portal, with IOLProperty is at a distant third. So it’s crucial that an estate agent maintains an online presence that goes beyond listing properties on their own website. However, as property portals grow in size and extract more and more valuable client data, so their fees increase and their rules become more stringent. Discontent among agents seems to be growing proportionately. Estate agents have been particularly vocal about the annual price increases announced by Property24. Since 1 April, depending on the package for sales subscriptions, new monthly fees increased from 7.7% (for one to 10 leads) to almost 45.9% (for 751 to 1,000 leads). “We highlight that 94.5% of our clients received an average increase of 12.4%,” says Jacques Rossouw, Property24 GM.

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NEWSWORTHY

Says Simon Bray, Private Property CEO: “Private Property is increasing its rate card by the Consumer Price Index (CPI) of 7%. This is despite the value growing across our client base. We sent 30% more leads than the previous year but we are only increasing rates by 7% because we are committed to responsible, sustainable growth. We want to be a valued part of the property marketing ecosystem for years to come.” IOLProperty MD Carolyn Savage says: “IOLProperty will shortly implement its first price increase in more than three years. It has been a free portal for more than seven years and has only introduced a nominal fee to provide users with better exposure and a better portal experience. Our price increase is set at 6% on the subscription amount for Pro account holders only.” Since 2014, Property24 has increased the number of lead categories from five in 2014 to nine (from 1 April 2016). This targets those subscribers who fall within the 500 to 1,000 leads per month, which has been split into 501 to 750 leads and 751 to 1,000 leads, resulting in increases of 25% and 45.9% respectively. A subscriber who was paying R1,995 for 800 leads in 2014, will now be paying R3,499 – an increase of 75%. “We have increased certain of our top lead categories with 45.9% and 25% respectively,” says Rossouw. “We identified that these categories were substantially out of line with the other lead categories in terms of cost per lead. The 45.9% price increase applies to only 1.6% of our clients. Using the example of an agency receiving 800 leads per month from Property24, the cost per lead is now at R4.37 per lead.” Rossouw continues: “The 25% price increase applies to 3.9% of our clients. The cost per lead for these clients reduces to R3.06 per lead at 1,500 leads per month. This further reduces as lead numbers increase above 1,500. We believe we continue to provide exceptional value at the price, which is unique to the industry being based on volumes of leads generated.”

The industry may well be up in arms, but let’s not forget that agents are in fact in control. Or could be ... Agent listings put Property24 where it is TRUST ISSUES

But a substantial number of agents don’t share that logic. “Their [Property24] reason for the price increase is the support of Private Property by a group of the country’s largest real estate companies. Property24 staﬀ have been quite open about this in their meetings with agents,” says Bruce Swain, MD of Leapfrog Property Group. Berry Everitt, CEO of the Chas Everitt International Property Group, says: “We are concerned about these disproportionate increases. This is not based on increased costs for Property24 but basic proﬁt-taking, utilising its dominant market position. The industry set up a joint venture with Property24, called REASA, which Property24 unilaterally cancelled in the

middle of last year. In terms of that agreement they were quite amenable to keeping our rate increases at a reasonable level. This [increase] is in stark contrast to the arrangement put in place when they were trying to get the support of the property industry.” Everitt goes so far as to say that he believes a case can be made that the recent actions of Property24 constitute anti-competitive behaviour. “Until recently, group discounts applied, which have now been cancelled. The reason given was something like, ‘since you are supporting an opposition portal, Private Property, we are no longer willing to honour the discount arrangement’. It sounds almost impossible that one can be penalised for supporting an opposition portal as well.”

Digital marketing has been relatively inexpensive for the value it provides. Online is providing more than 90% of the buyer enquiries in the market but still only receives a small amount of the marketing spend Simon Bray, CEO, Private Property

While Rossouw says that only a small portion of the market has queried the recent price increases, and that on consultation they have largely concurred that these prices provide good value, industry feedback to Property Professional says otherwise. “Exploited”, “aggravated” and “up in arms but helpless” are some of the descriptors from agents in reaction to the increase. Bray says their feedback from agents is certainly negative. “I think Property24 may have either misread the mood of agents or is happy to have an antagonistic relationship with the industry they serve. Agents appreciate the service portals such as Property24 and Private Property provide but business is about people who need to feel supported and respected, particularly on the issue of fee increases.” The increase seems excessive but not surprising, says Christian Kohnle, an estate agent at RE/MAX Helderberg. “If you can offer something that everyone wants – you can dictate the price. Supply and demand is an integral factor in the property business.” But, says Samuel Seeff, chairman of Seeff Properties, the industry is not enamoured with Property24. Seeff Properties, with the industry, went out on a limb with Property24. “We wanted to be alongside them as they grew and secured an industry deal. Once they had established themselves, they cancelled the deal at the first opportunity, despite our wishes not to, and to say, let’s engage. “We get eyeballs from them, no question. And with their financial muscle, they continue to grow. But with the latest price increase one has to ask, is this just the start? Where does it go to from here? And how to do we protect our own turf?”

PROPERTY PROFESSIONAL

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NEWSWORTHY

WINNERS AND LOSERS

Says Swain: “Right now it looks like a two-horse race between Property24 and Private Property, with ground being made up by Private Property in terms of leads and listings. But Private Property has an advantage in the long run with agent support and loyalty; something Property24 forfeited with their cancellation of the REASA transaction and now with the heavy-handed rate increases.” “Marketing spend will flow from print to online as we have seen in other markets,” says Rossouw. “Our business model stays the same. However products will continue to evolve to enable those who wish to compete more effectively online.” Bray believes digital marketing has been relatively inexpensive for the value it provides. “Online is providing more than 90% of the buyer enquiries in the market but still receives only a relatively small amount of the marketing spend. The value of print is about finding new ways to deliver for its clients. We are working closely with Sunday Times Neighbourhood and continually innovating the offering to make it complementary to our clients’ digital efforts.” Everitt is less positive about the future of print. “Print is the biggest loser. Technology has improved dramatically and the experience that any consumer would have on the internet surpasses that of print. As to who might be the winner in the portal war ... I think actions like Property24 has just taken will drive agents to alternatives such as Private Property. “Portals are here to stay. Our role as agents would be to ensure that we are not disintermediated in the process ... and we are working on that.”

BALANCE OF POWER

The industry may well be up in arms, but let’s not forget that agents are in fact in control. Or could be ... Agent listings put Property24 where it is. Property24’s significant market share and high margins may infuriate the industry, but mean that it will remain the dominant portal for the indefinite future unless agents can regain control of the homebuyer audience and find a reasonably priced alternative. Individually, agents may feel limited in what they can do. But united they could wield collective power to send a strong message: they won’t accept exorbitant price increases and further erosion of the industry. Much will depend on the patience of the agency owners and advertisers being prepared to play a long game. In the end, though, property portals provide a service to buyers and sellers, and it will be those consumers who will decide on the best portal for them, whether searching for or listing property.

Our role as agents would be to ensure that we are not disintermediated in the process ... and we are working on that Berry Everitt, CEO, Chas Everitt International Property Group

Online house hunting

According to research conducted in bigger online markets, like the US, it is now estimated that 80%-90% of property searches begin online, compared to just 30% in 2002

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

ARE THE SUPERWEALTHY DITCHING SOUTH AFRICA? LEA JACOBS AND KIM MAXWELL

Many dollar millionaires seem to be moving themselves and their assets offshore. But there may be more to it, aside from South Africa’s shaky political and economic climate

f the news headlines are to be believed, South Africa’s high net worth individuals (HNWIs) are fleeing the country in their droves. This would be a concerning development, considering the financial benefits the superwealthy bring to the country’s economy and its tax table. Andrew Amoils, head of research at global wealth data capturer New World Wealth, estimates that 950 dollar millionaires left South Africa in 2015, up from 600 in 2014. Who are they? The South Africa 2016 Wealth Report, published by New World Wealth, notes that there were 38,500 dollar millionaires – defined as HNWIs – living in South Africa in 2015. Those numbers have decreased by 10%, dropping from about 42,800 dollar millionaires in 2007. The personal wealth of the ultra rich also declined from a total of $168bn in 2007 to only $159bn in 2015.

of 2015, South African HNWIs held 21% of their wealth overseas, compared to 20% overseas in 2007. The majority keep their wealth in private banks and trusts in the UK’s Channel Islands, Switzerland, Luxembourg and Mauritius. The question: if the super-wealthy invest offshore, does it mean they have lost faith in South Africa or are they merely making the world’s markets work for them? Some may simply be shifting their assets, and their homes, for a while. “We have period figures showing 4,800 have left since 2007. But these people have not necessarily immigrated officially; they are either working or living overseas,” says Amoils. “Some of them, in theory, could return.”

DOLLAR MILLIONAIRES AND BILLIONAIRES

By the end of last year there were 2,030 multimillionaires – individuals with net assets of $10m or more – in South Africa, of which 620 were ultra high net worth individuals (UHNWIs) owning net assets of at least $30m. That figure includes seven billionaires, 91 centimillionaires (net assets worth $100m to $1bn) and 522 affluent millionaires (net assets worth $30m to $100m). It’s worth noting that 2015 was a particularly bad year, with the number of HNWIs falling by 18%. At the end of 2015, cash and bonds held the lion’s share (35%) of HNWIs invested asset classes, but real estate formed 18% of their investment allocations. Although the number of HNWIs decreased during the past eight years, their change in wealth wasn’t only due to South Africans migrating. A depreciating rand and falling equity markets were also responsible. There was a movement of funds offshore during this period, but the change was negligible – at the end

South Africa’s ultra wealthy • •

•

eal estate and construction was the primary wealth source R for 20% of South African dollar multimillionaires in 2015. Johannesburg was home to the largest portion (48%) of South Africa’s multimillionaires in 2015. Next is Cape Town (18%), Durban (6%) and Pretoria (5%). Mauritius is the fastest-growing African destination where South African dollar millionaires choose to live.

Source: The South Africa 2016 Wealth Report, New World Wealth

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

ARE THEY FLEEING OR BUYING?

Rather than seeing HNWIs fleeing the country, the company’s sales improved by as much as 30% at the top end of the market (properties at R10m or more) in recent months, says Andrew Golding, CEO of Pam Golding Properties. RE/MAX Living sales associate Rainer Kloos agrees, saying despite concern surrounding the political situation, social stability and exchange rate risks, his recent business dealings in India and China indicated a keen interest for HNWIs to invest in the South African property market. Seeff Properties chairman Samuel Seeff isn’t as sure. “A snap survey of our top-end areas certainly supports the notion that wealthy South Africans, especially those with young families, are looking to hedge their bets overseas. A number of our branches have reported an uptick in listings due to emigration,” he says. Seeff puts this down to government policies around land ownership, a looming junk status downgrade and additional financial burdens levied on certain sectors of the market, higher transfer duty and capital gains tax, making the top end of the market think twice about investing in property. According to the New World Wealth 2015 Migration Survey, South Africa lost just more than 4,800 HNWIs to emigration since 2007. Of those who left, 42% moved to the UK, 14% to Australia, 10% to the US, 8% to Canada, 5% to Mauritius, 4% to New Zealand and 4% to Israel. The number of South African HNWIs living in and/or emigrating to Mauritius has increased by 160% since 2007 – in 2015 there were 3,200 HNWIs. This figure is expected to increase by 130% over the next 10 years – attractive tax rates, the lifestyle and a growing financial services sector are some of the factors that appeal in Mauritius. OVERSEAS SECOND HOMES

Money may not buy you love, but as a HNWI it does open doors to various countries around the world. For ease of travel through having the “right” passport, there are a number of destinations in the Caribbean such as Antigua, St Kitts and Nevis, and Grenada, which oﬀer investment for citizenship programmes. For a European passport, choices include the UK, Portugal, Greece and Cyprus, all of which oﬀer similar schemes. Research by New World Wealth also showed that 38% of South Africa’s dollar millionaires owned second overseas homes at the end of 2015. Places where they tend to buy include London, New York, Geneva, Paris, Sydney, Melbourne and Mauritius.

The world’s wealthy are attracted to particular cities to live in and invest, educate children and grow their businesses. The top destinations according to the Knight Frank Wealth Report 2016 are London and New York, followed by Singapore, Hong Kong and Dubai. Property in these regions doesn’t come cheaply. Knight Frank’s Prime Residential Index in 2015 explored what $1m can buy in square metres of luxury property globally. In London your hardearned money will buy 22m2 of property, in New York it fetches 27m2 and in Hong Kong, it’s 20m2. In Monaco $1m will buy only 17m2 of real estate. Foreign property ownership has always held wide appeal for the wealthy and South Africa has some of the world’s most spectacular scenery combined with a weaker rand. New World Wealth identiﬁed the hot spots for wealthy foreign buyers in South Africa. Patterns were signiﬁcantly lower in 2015 compared to 2014, thanks to stricter visa requirements for foreigners visiting South Africa. Yet despite this decline, wealthy foreigners continued to buy South African properties, particularly at the top end. MORE AFRICAN BUYERS

The type of foreign property buyer has also changed between 2007 and 2015. Signiﬁcantly, wealthy African citizens made up the largest share of foreign property buyers in 2015, increasing considerably since 2007. “Most of them came from Nigeria, Angola and Ghana,” says Amoils. “We expect more than 10,000 African millionaires to move to South Africa over the next decade.” Africans are purchasing local property for a variety of reasons, says Golding. “Some are seeking investment properties or personal residences that provide access to an upmarket lifestyle. More traditionally, some HNWIs are purchasing luxury seaside residential properties or other ‘lifestyle properties’. These not only provide a holiday destination or a second or third home, but, given the weak rand, this represents an excellent means of diversifying their property portfolios and securing a sound long-term investment,” he says. Gauteng and Cape Town have long been an international drawcard for property, and business prospects exist for those who show entrepreneurial savvy. Some of South Africa’s ultra wealthy will shift their assets on a permanent basis in 2016 – let’s view it as an opportunity to attract new wealth.

Foreign investment in South African real estate

2007–2017

Origin

2007

2015

2017 (projections)

35%

22%

18%

Germany

27%

19%

16%

Africa

24%

30%

Other*

31%

35%

36%

Total

100%

*Other buyers mainly from Switzerland, France, China, India, Russia and UAE Source: The South Africa 2016 Wealth Report, New World Wealth

SEPTEMBER/OCTOBER 2015

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AGENT DEVELOPMENT

THE POWER OF NETWORKING Why are relationships so important for estate agents? The most important aspect of being a successful estate agent is the ability to make connections and form strong relationships. You’re asking people to trust you when they’re making one of the biggest ﬁnancial decisions of their lives, so aim to connect with them on a personal level.

Which events can be potential networking opportunities? For an agent, any event should be considered a networking opportunity since it can give you a window to meet people and increase your sphere of inﬂuence. Keep your eyes open for: Community events This shows that you are involved in your local community. The people attending will probably be active in your market. Business breakfasts An opportunity to meet others bright and early before their workday starts. Industry-specific events Most people, regardless of the industry they’re in, will have property needs at some stage. Treat everyone as a potential client.

NOT SURE IF NETWORKING REALLY IS HELPFUL TO YOUR BUSINESS? WE ASKED PRIVATE PROPERTY FOR SOME TIPS ON HOW INCREASE SALES BY DOING JUST THAT

Is there an art to networking? Absolutely! Here are a few points to keep in mind: • Listen more than you talk. • Don’t spend too much time with people you already know. The point • Collect more cards than you give out of networking is to make new contacts. – this puts the power to follow up in your hands. • Keep notes when others talk. The more you know about them, the better you • Stay off your phone and interact can serve them as an agent. personally with the people around you.

Should you sell yourself and your services? Explain what you do, but keep the selling to a minimum. Talk about yourself and allow the other person to chat. Selling will be easier once you’ve made that personal connection.

Tips for new contacts DO • Write a personal email • Follow up immediately to keep the conversation going • Stay in touch so that you’re the first person they think of when they need to buy or sell a home

DON’T • Automatically sign them

up for your newsletter • Send out an impersonal group email • Get in touch repeatedly if there is no response from them

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INSIDE INFO

WHAT BUYERS WISH AGENTS KNEW KATE CALNAN

THE QUESTION TO THREE RECENT RESIDENTIAL BUYERS

What do you wish agents knew about client communication THEIR ANSWERS SUSANNAH MOEHL, ATLANTIC BEACH, CAPE TOWN My parents bought my first flat for me. Not only did they pay for it, they also did all the transaction admin. So when I was ready to sell and buy something bigger, it was pretty daunting and incredibly stressful. I found an agent who was well known in the area. She promised she had lots of clients on her books. But she left me in the dark at every step. She’d show my flat, and then I’d have to call to ask for feedback. When I noticed it wasn’t in the property pages one weekend, and asked why not, she said she had meant to tell me she missed the placement deadline! What may seem like insignificant information to an agent who’s been 36

in the business for years can be really important to clients who are new to the house-selling process. When it came to signing the oﬀer and doing the legal stuﬀ, I expected the agent to hold my hand but she didn’t. Every call and email from the conveyancer took me by surprise. I didn’t enjoy the experience at all. RYAN THORNE, PARKLANDS, CAPE TOWN I know a common complaint about estate agents is that they don’t communicate. But I had the opposite issue. My agent talked too much. I couldn’t get my views and needs across, and his calls lasted 20 minutes each. It showed a complete lack of respect for my time and was incredibly frustrating. He would call me after absolutely anyone showed interest, even if it was just someone inquiring if the house was near the main road. It was as if he needed to prove that he was working hard. He would also call back and forth to set up viewing times even though he had my availability

What may seem like insignificant information to an agent who’s been in the business for years can be really important to clients who are new to the house-selling process Susannah Moehl, Atlantic Beach, Cape Town

schedule – he would just “try his luck” in case I could be home at 10.30am on a Tuesday. Eventually, I asked him to SMS me only. DAVID KLAASSEN, GREYVILLE, DURBAN I’ve learnt my lesson. Now, as soon as I start a working relationship with an estate agent, I set down my preferred methods of communication. I’m not shy about letting the agent know what I expect from them, and then if he or she fails to live up to these expectations, I’ll take them to task. The real estate market is time-sensitive, so I want an agent who will let me know quickly where I stand with my current buying or selling situation so I can move on to another property or potential buyer fast. I’ll be paying the agent a lot of money when my property sells, so I want to make sure he or she does the job to my satisfaction, otherwise I may as well sell it myself.

PROPERTY PROFESSIONAL

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LIFE HACKS ANDRÉ FIORE

Systems to streamline your business

perating largely as your own boss comes with the ability to choose your working times and deﬁne your worklife balance. It also comes with chasing the next sale or dealing with the last one – and the admin that goes with it. Put these structures and systems into place to take your business to the next level.

KEEP TRACK OF YOUR RENTALS, INCLUDING COMMISSION

IMAGE: SUPPLIED

To do this, try an approach that, for the most part, replaces hard copies, ﬁling and older programmes. One idea is PayProp, a reliable and simple system designed especially for rental agents. Says agent Cal de Beer of RE/MAX Living City Bowl: “It’s an easy way of reporting to landlords and tenants as well as keeping track of payments – and you don’t need detailed accounting knowledge to use it. Because of the way most agencies are regulated, the principal would have to open an account on behalf of an agent, who can then run their own rental portfolio beneath the umbrella of the agency.”

Getting involved in communities is not only part of our marketing strategy, but we feel it is our duty to be part of their upliftment Jonathan Acutt, MD Acutts

SEARCH FOR LISTINGS

There is always pressure to find new and unique listings. Virtual Agent is a web-based application specific to the South African property market to help agents do just that. “We tested Virtual Agent. Being able to access comprehensive and up-to-date contact and property information is a key issue for industry professionals,” says Barry Davies, group franchising director at Chas Everitt. “Combine the accuracy of data delivery, speed of the system, practical interface, the support team’s understanding of our business and their willingness to adapt the system to the needs of top agents, and the net result is a compelling offering.”

CREATE MARKETING PARTNERSHIPS

There are two major ways of using partnerships to help you stand out. Form symbiotic relationships with local, related businesses, such as electricians, pest control specialists, bond originators, finance companies and attorneys. This can include co-sponsoring functions, sending leads and sharing ideas. Partner with companies that offer exceptional service otherwise your name could suffer. Become socially entrenched in the community where you work, such as at schools, charities, churches and sports days. “Getting involved in communities is not only part of our marketing strategy, but we feel it is our duty to be part of their upliftment,” says Acutts managing director Jonathan Acutt. “Very few people are open to a cold call. It simply doesn’t work. Getting involved

As an agent you are, in essence, running your own company. Take ownership of that and put practices in place to keep yourself ahead of the pack

with the community allows us to have simple conversations with its members, without having to cold call them.”

HIRE ADMIN STAFF

It’s worth investing in an admin and book-keeping guru. You’ll have the necessary support in-house to follow up with potential clients. Most sales require a huge amount of after-sale service and this is a great way to get clients to recommend or use you again. Your administrator can ensure the conditions of sale have been met, check in with buyers and sellers regarding progress, assist with ﬁnance arrangements and instruct a conveyancing attorney if necessary. Responsibilities could also include keeping your diary and books, and placing ads. Consider clubbing together with other agents when hiring someone to save costs.

Being able to access comprehensive and up-to-date contact and property information is a key issue for industry professionals Barry Davies, group franchising director, Chas Everitt André Fiore is a journalist who has written about real estate and lifestyle for about 14 years. She is in contact with a network of real estate professionals countrywide.

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M O T I VA T I O N GRANT GAVIN

How to be more entrepreneurial

n entrepreneur is somebody who takes action, is self-disciplined, driven by a strong purpose, able to overcome barriers and can commit to and implement a well-constructed business plan. Entrepreneurs make things happen through sheer will and determination. Given that most real estate agents struggle to earn a consistent income and endure a fair amount of risk in their trade, many are probably operating with an employee mindset when they should be thinking like entrepreneurs. Gain more entrepreneurial habits with these ﬁve guidelines.

STOP BEING TRANSACTIONAL IN YOUR THINKING Too many agents spend their time running from deal to deal, with not a spare moment for proper planning or analysis. To achieve more consistent results, spend extra time working on your business, rather than in your business. Plan for annual targets, set out marketing plans up front, implement feedback and follow-up systems for leads, analyse areas in

Relationships are invaluable for any entrepreneur, so it’s important to build networking time into your diary 40

need of improvement and plan for applicable training sessions.

PLACE A STRONGER EMPHASIS ON LEAD GENERATION

Agents tend to complain about a lack of leads coming into their business but this is often due to a failure to invest in their own marketing. While not all campaigns require a cash investment, especially with the availability of social media, most agents only rely on one or two sources of lead generation, when four to six are probably required. Top agents utilise more than 10 sources to ensure their business never dries up.

INVEST IN YOUR OWN GROWTH AND DEVELOPMENT

If you’re going to be successful, it’s up to you. Robert Kiyosaki talks about the Law of Compensation for Entrepreneurs, which states that your income will go up along with your level of experience, wisdom and knowledge. To be an entrepreneur, you need to be an aggressive learner. Attend seminars and training sessions – don’t brush them oﬀ as a waste of time. If you don’t see value in investing in yourself, why would anybody else?

DON’T BE AFRAID TO SPEND MONEY

To make money, you have to spend it. Part of the risk of running a business is that you need to invest before you earn an income. This might be for marketing, training sessions,

A career in real estate is well suited to business-minded people who understand the principals of entrepreneurship

coaching or even to employ an assistant, all of which will bring great value to your business in the form of future income.

BUILD NETWORKING INTO YOUR PLAN

Relationships are invaluable for any entrepreneur, so it’s important to make time in your diary for networking. People do business with people and, considering that relationships are built over time, look for opportunities to join clubs or business networks. Don’t launch into a sales pitch at your ﬁrst meeting but just keep building your sphere of inﬂuence. This ultimately determines your net worth.

To make money you have to spend it. Part of the risk of running a business is that you need to invest before you earn an income Grant Gavin is a property entrepreneur and public speaker from Durban, with business interests in RE/MAX Panache and property investment. In 2015 Grant founded the Durban Entrepreneurs Club. He is a speaker on entrepreneurship and leadership. grantgavin.com

PROPERTY PROFESSIONAL

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Our growth

At Property24, our audience, page views, listings and leads just keep growing. And thatâ&#x20AC;&#x2122;s good news for you because it means more views for your properties, more leads and more value than ever before. So let us connect you to the largest audience of buyers in South Africa. www.property24.com

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