South African Property Monthly – May Issue

MAY 2012 #78

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MONTHLY

South African property and lifestyle for international investors

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Sought-after seaside holiday homes

by DENISE MHLANGA Holidaymakers are checking out new property investments in prime seaside resorts in the Western Cape, Eastern Cape and KwaZulu-Natal.

According to the Top 11 Property Categories of 2011 report by Lightstone released in January, Kenton-on-Sea property values were said to have increased by 50 percent from 2010’s R1 million to R1.5 million in 2011.

Lightstone says Kentonon-Sea’s population swelled by 200 percent during the December holiday season.

Hayley Ivins of Lightstone says following this trend, and with April being a popular month for coastal getaways, they selected nine prime seaside resorts in South Africa

in order to find out whether the influx of holidaymakers impacted the property market in holiday hotspots.

These include Langebaan, Hermanus and Mossel Bay in the Western Cape, St Francis Bay, Port Alfred and Jeffreys Bay in the Eastern Cape as well as Ballito, Umhlanga and Richards Bay in KwaZuluNatal.

She explains that their research on property sales in seaside resort areas revealed that in 2010 and 2011, the largest proportion of sales occurred within the first three months of the year and then generally tapered off towards the December holiday season.

“In 2011 we noticed another slight spike in property sales in the winter months of May

and June which may be attributed to banks relaxing their lending criteria,” says Ivins.

Ivins points out that when reviewed on a quarterly basis for 2011, the majority of property sales in these coastal resorts occurred in the first quarter post the major holiday period, being January through March 2011.

Lightstone sees a positive lift in coastal retreat sales post peak holiday period.

However, they believe that while sales may not be immediate, holidaymakers may very well be eyeing out new property investments while enjoying family time at the beach before concluding the deal at a later date.

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BAROMETER

Rental debt collection increases in SA

by DENISE MHLANGA Tough economic conditions in South Africa have seen an increase in the number of cases that legal firms offering debt collection services handle.

According to Ntombi Mlambo of Gunstons Attorneys, the big challenge facing legal firms is tracing the debtor.

She explains that when a poor tenant leaves, landlords and rental agents tend to write off large sums owing because the new address to which the

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defaulter claims he will be moving turns out to be bogus and by the time a summons is served, the tenant will have moved on.

Mlambo says in situations such as these, defrauded landlords do no one a favour by letting a defaulting tenant get away with non-payment because experience shows they will do the same thing again.

Owners in the sectional title sector have in the last year also been slack about meeting levy payments and they

currently comprise a large proportion of the defaulting group South African debt collectors are dealing with, she says.

Mlambo urges property owners and estate agents who find themselves in these situations to always use a tracing service.

“We find that more than 70 percent of defaulting debtors are eventually traced, especially if we have a copy of their ID books and a photograph.

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by STAFF REPORTER While home ownership has become the goal for many South African consumers, buying a home too soon without completing the necessary research can leave homeowners with a very expensive noose around their necks.

This is according to Adrian Goslett, CEO of RE/MAX of Southern Africa, who says owning property has many benefits such as providing a sense of stability and the freedom to make decisions regarding what happens to that property.

Whether the owner wants to renovate or rent out the property, the choice is theirs, he says - however, along with the freedom home ownership brings, there are more responsibilities as well as additional costs that buyers should consider before entering the market.

Goslett says that the first step for a buyer to consider when assessing whether they are ready to purchase a home is to see what they can afford.

Buyers will need to look at their lifestyle and financial health to determine whether home ownership is right for them at this stage, he says.

If a buyer is unable to afford a home that meets their current requirements, they may have no other choice but to continue renting for a while.

He says it is important for the buyer to take into consideration all costs involved, such as maintenance, rates and taxes, and not just the bond repayment when looking at their budget.

According to Goslett there are opportunities in the current market for buyers to purchase value-for-money properties, but buyers must make sure they are in a financial position to be able to afford the home over the long term.

Although unforeseen circumstances may occur, purchasing property should be viewed as a long-term investment and buyers could end up losing money through reselling a property within a few years.

Generally, due to the cyclical nature of the property

market, a minimum period of nine years is required to see the best possible return on investment.

While having a steady income and stable job will be an important part of assessing home buying readiness, it is also important for buyers to have a contingency plan in place, should they lose their employment.

It is vital for homeowners to have savings available to cushion them and help them to continue making bond repayments for the next two to three months or until they find new employment.

Goslett emphasises that buyers having as much saved as possible will give the buyer more financial options.

A bigger deposit, for example, can result in a larger home or a lower bond repayment. “Financial institutions require a deposit of between 10% and 30% before a loan is granted and there are also legal fees, transfer duties and homeowner insurance that will need to be covered,” he says.

Speaking to a property industry professional or a mortgage originator will give the buyer an indication of what costs will be incurred during the purchasing process.

He says that where possible, potential buyers should deal with any debt they have before purchasing a home.

Having more disposable income will be viewed favourably by banks when applying for a bond, as well as alleviating some financial pressure on the buyer to meet monthly payments.

“If buyers have debt such as credit cards or clothing accounts, it is generally a sign that they are living beyond their means and they may want to determine what they can pay off before deciding to take on a bond and the costs of owning a property,” says Goslett.

Home ownership is not a decision to be taken lightly, Goslett says, as buying property is a long-term commitment, so it is vital that the buyer is prepared to make that commitment.

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APRIL 2012

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thesouthafrican.com | 8 May – 14 May 2012 |

Business: SA Power 100

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Lynne Sherriff

Read interviews with other SA POWER 100 achievers... on our website: TheSouthAfrican.com/Business/SAPower100 Njabulo Madlala

Master of Wine, Cape Wine Master

by GORDON GLYN-JONES

BULLET BIOGRAPHY • Born: Cape Town • Education: - Star of the Sea Convent, St James - Dip. Hotel Management, Arthur’s Seat Hotel, Cape Town 1974 - 1976 - Dip. Cellar Technology – Elsenburg, Stellenbosh 1977 - 1978 - Dip. Oenology and Cellar Technology - Weinsberg, Germany 1979 - 1981 - Cape Wine Master - 1988 - Master of Wine - 1993 • Career Trajectory: - Various posts, Stellenbosch Farmers Winery, Nederburg Winery 1981 – 1990 - Director Hong Kong International Wine & Spirits Academy 1990 – 1991 - Commercial Director Vinfruco Ltd, London 1991–2000 - Independent Wine Consultant 2000 – present • Notable appearances: Guest on various food broadcasts, visiting lecturer numerous international colleges • Website: www.lynnesherriffmw.com

What sparked your passion for wine?

During my hotel training at Arthur’s Seat Hotel in Sea Point, the hotel was run by a Swiss hotelier called Werner Hinder.

He had one of the most extensive wine collections I’ve ever seen and at the end of various banquets, to broaden our education and as a thank you to the team, he was in the habit of opening a bottle of good wine such as Château Margaux or RomanéeConti and thus I developed a keen interest in very fine wines.

There are some wonderful characters in SA winemaking.

Who is your favourite?

It’s a very difficult question to answer. I think for being a sheer maverick, for lateral thinking and always searching for the next thing, it would be Charles Back, who was a year ahead

of me at Elsenburg. But then two other very inspiring winemakers (and good friends of mine) are Neil Ellis and Gyles Webb.

What was the biggest personal adjustment for you when you moved to London in 1991?

I think when you are new to London, young, single and only have your work colleagues around you, London can be a fairly lonely city. However, I was very fortunate to meet Patrick Straker, who owned Harpers Wine & Spirit Gazette, and his wife who became like brother and sister to me and introduced me to many people.

You conceived‘Arniston Bay’ as a lifestyle concept wine and established it as the 12th most successful brand in the UK. How? That’s one of my proudest achievements. Around ‘95 or ‘96 South African wine labels were criticised for being very old-fashioned, with too much information on the front. I was in charge of the UK and European markets, so spent much of my time at Heathrow.

On one trip I noticed the label of a perfume called CK One, which championed the

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Internationally famous baritone

trend of minimalistic labelling.

It struck me that what SA wine needed was a strong, simple brand that reflected the lifestyle of the country, with all information displayed subtly on the back.

Su Birch, the current director of Wines of South Africa, and I developed the label that changed the face of South African wine marketing.

As far as exports, is the wine industry in SA struggling?

No, I don’t think so. But what I have seen is a shift in focus. At one point up to 70% of South Africa’s wine exports were coming just to the UK and I think that is a problematic position for any country to be in. Recently other markets have shot up such as Sweden, Germany and Holland; Canada continues to grow and the US is lagging behind but only at the beginning of its growth. Many people are doing a great deal of exporting to China.

While I think UK will always be a very big market for SA wines, I think it is healthier that we look to other markets as well.

You speak a range of languages, is that a passion or a sideline of your work?

I think I was the only one in my matric

class who really enjoyed Hannibal over the Alps! Seven years of Latin really gave me a great grounding for all the languages I have learned. But yes, I learned French, Spanish, Italian and German while studying wine in those countries. Japanese is simply a passion of mine.

What is your favourite wine of all time?

Oh no, I don’t have a favourite wine. I am fortunate to have a husband who can cook fabulously and we try all sorts of wines all the time. Collecting perfume is a hobby of mine, I have 60 different types of fragrance in my home,

Vice Chairman at Deloitte UK

so you can see I love variety and this is reflected in my wine tastes. I always say to people ‘Be imaginative in your wine choices, take a risk, what’s the worst thing that can happen?’ If, however, I were asked a favourite wine ‘category’, I would have to say champagne.

How do you feel about being the first South African to be selected as Chairman of the Institute of Masters of Wine?

I would say this was probably the highest honour of my career thus far. I do feel as if they honoured not just me, but the South African industry as a whole.

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LIFESTYLE >>

Breaking interior design rules

by ANTONELLA DESI Over time, we have been dictated to about the rules of interior decorating – what is hot, what is not and what should be avoided at all costs.

However, as the saying goes, rules are there to be broken so that new ones can be made.

Here are a few décor rules, which have informally become law, that can be broken in order to create an attractive new aesthetic in your home: Colour the ceiling Traditionally, all ceilings were painted white – it was believed that this added height and brightened a room.

However, this is not necessarily always the case.

Adding colour to a ceiling can bring another dimension to the space, creating harmony between the ceiling and the room’s walls and intensifying the interest of the space.

To achieve a good look, it is recommended that you use a colour similar to the walls – perhaps a shade or two lighter or darker.

Alternatively, you could choose an entirely different colour for a dramatic effect.

Window dressings We have always been told to hang our window dressings just above the window trim, but hanging them just under the ceiling can create a wonderful illusion of height

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and added symmetry – often making smaller windows seem larger and the ceiling seem higher.

Wallpaper isn’t just for walls Today’s wallpaper comes in a wide variety of exciting colours, patterns and textures – it is such a shame to limit its application exclusively to walls.

Wallpaper can be used with great effect on a number of different interior elements.

You could use it to decoupage door fronts, headboards or other furniture for a custom look, or you could frame interesting wallpaper designs and hang them on the walls as art pieces.

are made from traditional items such as two candlesticks and a vase of flowers.

Why not rather create focal points that comprise items of real fascination.

The collection of objects can be made from anything that means something to you on a personal level – from a collection of interesting boxes, mirrors or plants, to a grouping of rocks and animal skulls.

An interesting grouping of books, letters or vases, or

perhaps some unique frames filled with attractive images or photos could also work.

The more unique and unusual, the more impact it will make.

Layers underfoot Just because you have wall-towall carpeting does not mean you shouldn’t include rugs in your interior composition.

Rugs are a great way of dividing up spaces, especially open-plan spaces.

They also add wonderful

colours and visually appealing elements to any décor scheme.

For example, if you have an open-plan dining and living area with wall-to-wall carpeting, including a rug under the coffee table and sofas, and another under the dining table and chairs, will visually divide the two spaces.

If the colours in the rugs tie in with the rest of the colour palette, they will anchor each décor scheme down.

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Mix it up Not everything has to match – it just needs to coordinate.

For example, you don’t need to include a collection of matching patterns in your interior composition.

Try mixing geometric patterns with florals, or modern designs with more classical pieces, and include a variety of rough and sleek textures for added visual interest.

Tie all the juxtaposing designs, textures and shapes together by ensuring they share the same colour palette.

Creative centrepieces All too often, centrepieces

Hanging a rug up on your wall can be a great way to visually divide up spaces and add a burst of colour to a room.

www.sapropertymonthly.co.uk

APRIL 2012

<< ASK THE EXPERT

Retirement village investments in SA

I

have residential property investments around the world, but would like to start investing in a retirement village now. As I am 40 years old, I would like to rent out the property in a retirement village until I am ready to use it myself, especially with the long waiting lists most places have. I heard there are age restrictions and specific rules to adhere to when doing this.

Could you please advise?

I

applaud the decision you are contemplating. If only more people of your age were as wise. My advice would be to do a lot of research into the various types of retirement homes available. South Africa has legislation applicable to the development and running of retirement villages, such as the Development of Housing Schemes for Retired Persons Act 65 of 1988.

As you ultimately want to use the property for yourself, you would need to determine what type of property you are buying: Full title, Sectional title, Share Block, Life Right Ownership. Each type has its own unique advantages and

disadvantages, and we would be happy to explain these to you in more detail. Further, you would need to determine what type of medical facilities are offered at the particular village. Again these vary and can include: Full Frail Care, a sick bay or in-home nursing.

Pay attention to the financial state of the Body Corporate and the terms and conditions of resale. Many villages will have low levies subsidised by a percentage payback of the selling price of the property.

Regarding, the rental option, you are correct that certain

properties have regulated age restrictions on inhabitants.

The usual minimum age limit is 55 years, but allowance is made for casual visits from children/ grandchildren for

have a fractional ownership in a property in Langebaan.

I currently live in the UK and am unable to use my scheduled weeks at the property. Can I rent my weeks out? If not, what are the best options for me to make the most out of it?

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Clive Hartman, Seeff Stellenbosch

to SA, or perhaps you could arrange to swap some weeks with them for a time when you will be in SA.

I

t all depends on the rules of the particular scheme.

Most schemes do not allow you to rent out unused weeks to anyone who is not also a member of the scheme, but some – where the unit is in a luxury hotel or resort complex – are structured so that unused weeks can be put into a rental pool to generate income for the members. If your scheme is not one of the latter, you could approach your fellow members to see if any are willing to rent your “extra” weeks until you return

APRIL 2012

would be in the range of R7 000 per month and above.

Clive Hartman Manager Seeff Stellenbosch www.seeff.com

Run by South Africans

Fractional ownership

I

limited periods. There is high demand for rentals, especially in areas such as Stellenbosch.

We currently market properties in the R2 million price range and above. Rentals

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Earlsfield Business Centre, 9 Lydden Road, London, SW18 4LT Tel: +44 (0) 208 875 2070| Fax: +44 (0) 207 160 9333 enquiries@qi-properties.co.uk | www.qi-properties.co.uk Robby Du Toit

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