South African Property Monthly – June Issue

JUNE 2012 #79

www.sapropertymonthly.co.uk

MONTHLY

South African property and lifestyle for international investors

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NEWS/TRENDS >>

Expats could help drive recovery of upper-end homes market

by RONALD ENNIK Returning South African expatriates, particularly those who have been living in the UK, could be a key pillar in the recovery of the market for higher-

priced homes says Ronald Ennik, CEO of Ennik Estates.

The company is the exclusive affiliate in Gauteng of Christie’s International Real Estate – the global luxury property

Homecoming Revolution says that many young South Africans are looking to return home for a better standard of living, especially under the strain of the UK economy. Photo by Jordan Vuong.

arm of the world’s largest and oldest fine art auction house.

“In the wake of the euro zone debt crisis, and the employment and other uncertainty it has created, living and working abroad has lost its lustre for many expats,” says Ennik “This is clearly mirrored in the uptick in buy enquiries we are receiving from South Africans wishing to come back home,” he adds.

While no statistics are officially available, Homecoming Revolution, a Johannesburg-based non-profit organisation that encourages and assists expats to return, says it is receiving 120 enquiries a month from South Africans living abroad who wish to come home.

“One of our partners, who specialises in car imports to South Africa, has noted a 30 percent increase since August 2010 in the number of South Africans wanting to ship their vehicles back to South Africa,” says Brigitte Britten-Kelly, managing executive of Homecoming Revolution.

Most of the returnees, she says, are leaving the UK, where they have lived

for the past 10 years or more, and are now finding the economy a strain. Many are also coming home from Australia and Dubai.

“They are generally aged between 30 and 40, with young families, and are looking for a better standard of living for their children,” Britten-Kelly adds.

“Luxury homes in South Africa are well priced right now from a foreign investment perspective,” says Ennik.

“Given that returning expats are bringing hard foreign currency into a favourable exchange rate climate, they are generally spoilt for choice in an upper home price band that offers them high value and potential return for the Pounds, Euros and Dollars they invest in their new homes here”.

“Among the biggest factors driving their return to South Africa is the explosive economic growth that is taking place in sub-Saharan Africa, with South Africa not only its gateway but also the region’s leading investment destination,” Ennik concludes.

Article courtesy SA - The Good News www.sagoodnews.co.za

BAROMETER

FNB May House Price Index rose by 9%

by DENISE MHLANGA The FNB May House Price Index rose year-on-year (y/y) by 9 percent from 8.5 percent revised growth rate in April, according to the FNB Property Barometer report for May 2012.

In real terms, the FNB House Price index rose by 2.3 percent y/y in April, says John Loos, FNB Home Loans property strategist.

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Writing in the report, Loos notes that real house prices in April 2012 were still -12.8 percent lower than the peak reached in February 2008, but 69.9 percent higher than in July 2000.

He explains that the index is starting to lose growth momentum, pointing out that the month-on-month seasonally adjusted house price growth slowed to 0.96 percent for the fourth consecutive month of slowing from 1.4 percent in January.

Loos notes that for the time being, interest rates remain unchanged since late-2010, implying no new stimulus, while the global and local economy appears to be slowing.

“This points to a near term period of slowing house price growth, and although we can’t yet observe this in the y/y inflation rate of the FNB House Price Index, it has already been observed in the month-on-month price growth rate.”

While house price growth on a y/y basis accelerated further to 9 percent in May, a loss of month-on-month price growth momentum over the past four months suggests that the y/y growth peak in the FNB House Price Index is not far off, adds Loos.

- Property24.com

JUNE 2012

<< NEWS/TRENDS

Why Warren Buffet loves rental homes

by STAFF REPORTER Warren Buffett, CEO of Berkshire Hathaway and one of the world’s top investment brains, has said that private investors should now be buying up as many single family homes to rent out as they can afford.

According to Jan Davel, managing director of RealNet, Buffet has given several good reasons for this unequivocal advice which they believe is just as relevant in the South African property market now as in the US and other property markets around the world.

In an interview on CNBC television and again in the International Business Times, Buffett said that both equities and single family homes were attractive investments at the moment in terms of price.

He said that if they could be purchased at low rates and held for a long time, the houses would be a better investment.

Indeed, he said, he would buy up “a couple of hundred thousand” homes right now if he could only find a practical way to manage them.

Asked what he would say to young investors trying to decide between equities and property, he immediately replied that they should buy a couple of single family homes at distressed prices and find renters, notes Davel.

One reason for this was that as long as the management of such individual properties remained a logistical nightmare for big corporations, they would be drawn more to commercial properties and apartment complexes, leaving the single

family homes field wide open for private investors to acquire good assets very cheaply, according to Davel.

He explains that such homes are not only available at low prices, says Davel, but more affordable at the moment thanks to the fact that mortgage interest rates are at historic lows.

“This reduces the minimum monthly repayment and makes it more likely that it will be covered by the rent that tenants are paying.”

Although home loans are harder to come by, it is still possible in most cases to gear a large percentage of the purchase price – which is not something one can do when buying equities, he says.

As it is, the number of buyto-let purchases is already starting to rise, although not as fast in South Africa as in other parts of the world.

In South Africa, the FNB Estate Agent Survey for the first quarter of 2012 found that buy-to-let purchasing had risen to account for 9 percent of all purchases, up from 8 percent in the previous four quarters and from a 7 percent low point late in 2010.

However, in March the US National Association of Realtors (NAR) reported that investment purchases made up 27 percent of all new and existing home sales in the US during 2011 and NAR economist Lawrence Yun said investors were “swooping in” to take advantage of low home prices.

He also noted that while optimism for the recovery of the market was part of the picture, a very big factor in the increased investor activity

was the fact that rising rental incomes were easily expected to beat the returns one could get on cash “just sitting in the bank”.

“It must be said that this

is increasingly also the case in SA,” especially in areas where rental homes are in short supply and there is high demand due to expanded mining activity or

infrastructure development.”

He adds that they believe it will shortly give significant additional impetus to the buyto-let market.

- Property24.com

STOP PRESS: New London Office: Call Jeff Watts 0207 224 4455 m: 07767 862608 e: jeff@lipadi.com

Warren Buffet is encouraging private investors to buy single family homes and take advantage of the buy-to-let market. Photo by TaxBrackets.org.

JUNE 2012

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R4 995 000

LEISURE ISLE

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Bedrooms 4 Bathrooms 3 Garages 2 WEB 265723 Well-designed. Large verandah with panoramic, North-facing lagoon and mountain views. Functional kitchen, lounge, dining room, large entertainment deck, TV lounge.

[O] +27 44 382 5919 HAZEL DIJKSTRA +27 82 345 9878 knysna@seeff.com

Bedrooms 4 Bathrooms 4 Garages 2 WEB 264948 In a secure, sought-after estate with panoramic sea and mountain views. Upmarket finishes, lots of accommodation, including flat. The price includes an additional erf.

[O] +27 44 533 0311 PETER BLIGNAUT +27 76 906 8571 plett@seeff.com

R5 500 000

SANDHURST ENCLOSURE

R17 000 000 INCL. VAT

THE ULTIMATE IN LUXURY LIVING! Bedrooms 5 Bathrooms 5 Garages 4 Self-contained Units 2 WEB 266554 A new boutique home in a secure environment. Indoor/outdoor living at its best.

Mature, landscaped garden, rim-flow pool deck. Top finishes! State-of-the-art security.

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Bedrooms 4 Bathrooms 4 Garages 2 WEB 267103 Two bright, beautifully finished clusters - each with open-plan living which flows on to patio and pool with deck-surround. Priced at R8,5m and R9,5m - make your offer!

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KEMPTON PARK

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Bedrooms 21 Bathrooms 21 WEB 263023 Tucked away in the mountains of the Southern Drankensburg lies this fully equipped, fully functional hotel with full conference facilities and many amenities.

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Bedrooms 5 Bathrooms 5 Garages 4 WEB 265596 On 4 stands. All reception rooms leading out to the patio, pool deck and bar. 1000m² Of architect-designed luxury living. Underfloor heating throughout. Koi pond, boma.

[O] +27 11 395 4800 ANDRé LANDMAN +27 82 414 6202 kemptonpark@seeff.com

LIFESTYLE >>

“Simply merging households and calling it eclectic doesn’t work”

Decorating tips for young couples

by KATLEGO SEKANO It’s a classic dilemma - but instead of fighting each other on what to put where, there are ways to keep each other happy by discussing your different tastes, looking at what will work in your new apartment and how best to turn dreary walls into a warm home.

Simply merging households and calling it eclectic doesn’t work. You can’t have your grandmother’s antique vase, that blue suede couch you bought on impulse and those faded curtains that your partner’s had since he started university all working in the same space.

What you need is a plan.

Make the decisions together and have them in writing to avoid arguments.

Don’t land up in couple’s therapy because of endless arguments over interior decorating. Rather learn how to blend design styles... and here’s how: Make an inventory of things Use the opportunity to start afresh and create something special without starting from scratch.

Make a note of what you

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have, what needs to go and what you still need.

As a couple weed out old, unwanted furniture and take the time to discuss big purchases and any changes that you might want to make.

The 80/20 rule The 80/20 rule always works, provided that 80 percent of your décor is tied together by similar trends and ideas.

You can use the other 20 percent to deviate from this, meaning you can add your grandmother’s vase to the ultramodern mix.

Find inspiration Set aside time to look through interior design magazines and visit design blogs together.

Share your ideas and opinions, and focus on practical items that will add comfort and style to your new home.

Even if one of you has no design sense at all, try to find some common ground and for those times when you can’t even agree to disagree, create individual zones.

Let him have his man cave while you create your own retreat, but do decide on one final look for the home.

Go shopping together Make shopping for furniture and art pieces fun and exciting.

Remember that this is a joint effort so consult each other before making separate purchases.

Be open-minded and don’t say no before you’ve heard what your partner has to say.

Negotiate Relationships are about compromise, and decorating is no different.

Decorating together is not an all or nothing situation.

So let your partner have the flat screen TV in exchange for your choice of furniture.

Avoid being emotional about it but do consider your partner’s feelings.

If that lava lamp you’ve been dying to get creates tension, let it go and re-negotiate for something else.

Give it a personal touch Modelling your living space after high-end TV homes is all fine and well but does the space say anything about your relationship?

Adding personal touches throughout your home will remind you of the journey

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you’ve taken together.

So hang up those crazy pictures you took five years ago. Create a feature wall showcasing all your favourite places and the wonderful people in your lives.

Add décor that says ‘this is who we are and this is who I am’ without missing the stylish mark.

Interior decorating doesn’t

have to turn into a war.

Forcing your personal style onto your partner is not only unfair but it will also cause tension between the two of you.

Remember that coordinating your décor tastes to create a warm, loving home is far more important than getting your way.

- Property24.com

Designing a home together should be about merging two styles in a fun way that incorporates elements of both people. Photos by Mazzali Amardi Productions.

JUNE 2012

<< ASK THE EXPERT

Investing in upmarket locations in the Western Cape I

am a 27-year-old living in the UK and would like to invest in a property in Cape Town. I can afford to buy in an upmarket area, but was wondering if it’s more practical to invest in an area that is still going to pick up. Do upmarket areas generally increase much in value or would it be a better investment to pay less for an up-and-coming area?

Marius Pieters, Seeff Hermanus

W

e are very fortunate to live in the picturesque coastal town of Hermanus which is a mere 125km from Cape Town. Hermanus is highly recommended as one of the Cape’s top holiday destinations and is known for its annual whale season. Hermanus has always been a popular area to invest in and although there has been a drop in values since the 2008 downturn we have

recently seen a levelling out of prices as our property values hold very well.

Hermanus also offers you the best of both worlds from ‘upmarket’ seafront properties, apartments and popular golf estate dwellings to ‘up-and-coming’ neighborhoods such as Sandbaai, Onrus and Vermont.

An ‘upmarket’ apartment is a strong recommendation as there is no room for further expansion for developing within our town borders.

The amount of seafront land is limited so the number of upmarket seafront apartments is very limited, with prices ranging between R4 million and R12 million. With a reasonable rental income your property should be able to sustain its costs, allow for you to enjoy a holiday of your own and over a period of five years it should bring you a good investment return.

The popular Fernkloof Golf Estate offers various opportunities with vacant land from R700 000 to develop your dream home or rather invest in a new home from R3,3 million to more upmarket dwellings around the

R6 million mark.

Our up-and-coming areas offer great opportunities with Sandbaai from R700 000 to R4 million seafront; Onrus Vermont from R1 million to R6 million seafront.

live 6 months in the UK and 6 months in SA each year.

In the UK I rent my friend’s spare room, while in SA I stay at our home which we rent out the remaining six months of the year. Due to financial reasons we might have to sell our SA home. What is the likelihood of finding a flat in SA that I could rent for only six months each year? Would it be wiser to rent it for a year and sub-let while I am away or are there better options?

are not in SA, but in your current circumstances I think the very best alternative would be to identify a good complex of furnished apartments and make arrangements to rent one of these for six months every year. Letting the space for the remainder of the year would then be the responsibility of the owners.

'upmarket’ areas.

Our recommendation is to “buy low to sell high” which is absolutely relevant now!

Marius Pieters Seeff Hermanus Licensee www.seeff.com

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Renting in the UK and SA

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To summarise, I would say in the short to medium term you will have better returns percentage wise in the ‘upand-coming’ areas, however in the long term you can expect a higher capital growth in the

Track Record

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Email enquiries@qi-properties.co.uk to book a call back

I

f you rent a flat for a year, the landlord will probably prefer you not to sub-let to someone else as that can create all kinds of administrative and possibly even financial problems.

A better option would be to buy your own flat and rent it out furnished for the six months of the year that you

JUNE 2012

Berry Everitt CEO of the Chas Everitt International property group www.chaseveritt.co.za

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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Issue 1, July 2012