Global house prices increased by only 1.8 percent in the year to March, the lowest annual rate of growth recorded since Q4 2009.
Pam Golding Properties reports that Cape Town's Atlantic Seaboard area including City Bowl, remains relatively recession-proof.
According to the Knight Frank Global House Price Index Q1 2011, in regional terms, Asia remains the top performing continent recording 8.4 percent growth over the last 12 months. This is down from 17.8 percent a year earlier.
Liam Bailey, head of residential research at Knight Frank told Property24 that overall, price growth for the countries tracked within the index has remained in positive territory since Q4 2009.
This he says has been largely as a result of the Asian housing market boom, which led in some cases to annual price inflation of between 30 and 40 percent in locations such as Hong Kong and Singapore.
“The anti-inflationary measures taken by Asian governments to cool their overheated housing markets in 2010 and 2011 have started to take effect and this has had a dampening effect on the index’s overall price growth,” says Bailey.
In Q1 2010, Singapore recorded annual price inflation of 24.1% and this fell to 10.5 percent in Q1 2011. House price growth in Hong Kong declined from 32.8 percent to 24.2 percent over the same period, he says.
Other strong performing countries where governments are fighting to pull inflationary pressures under control were India (21.9 percent) and Taiwan (14.3 percent).
The weakest region was North America which saw a fall of 0.4 percent in values in the year to Q1 2011.
House prices in South Africa fell by 1.3 percent in the year to March 2011 as recorded in the index. In March 2010, the average house price was R1 051 997 but by March 2011, this figure had fallen to R1 038 322. In the three months to March 2011, the average house price rose by 1.5 percent, explains Bailey.
Asked where the South African market is headed in the next few months to end of 2011, he says the market presents risks and opportunities.
Globally, sovereign debt concerns in US and Europe could weaken investor confidence. Secondly, interest rates in South Africa may have bottomed out and may start to rise in 2012.
“This could threaten first time buyer demand, which has been solid in recent months and an important driver of market activity.”
On opportunities, Bailey says there is growing evidence that an increasing number of homeowners are selling due to financial pressure and opting to rent. This move could boost supply and may attract more buy-to-let investors to the sales market.
“South Africa’s trade links with China (and other BRICs nations) have strengthened considerably in the past two years.”
This modern double-storey home in Mostertsdrift, Stellenbosch, is on the market exclusively through Pam Golding Properties, priced at R18.5 million. The home is set on 2000sqm, and was built in 2008. It offers six en-suite bedrooms.
According to the Department of Trade of Industry two-way trade between China and South Africa reached R119.7 billion in 2009. This means China surpassed the US as South Africa’s largest trading partner.
Bailey says the strongest performing housing markets have seen a convergence of factors such as high demand, constrained supply, significant wealth generation and benign economic conditions.
“Supply can be controlled but housing markets are also intrinsically linked to confidence.”
Government and monetary policy decisions such as maintaining interest rates at historical lows has helped to keep the momentum going in the western housing markets.
“We expect to see the current slowdown in global housing markets to continue, hitting a low point in Q4 2011 (assuming the Asian markets continue to cool and the government intervention is successful) but with a slow recovery in global house prices taking place in 2012,” adds Bailey.
Absa Home Loans property analyst, Jacques du Toit says the global housing market is very mixed. Some countries are showing growth while others are still under pressure.
“In South Africa, house price growth is very low at this stage largely as a result of the state of consumer finances,” says Du Toit.
He says household debt to disposable income is still relatively high at almost 77 percent. Many consumers are struggling with bad debt making it difficult for them to obtain credit.
Du Toit reckons the property market will continue to reflect economic and consumer finance conditions.
“I expect very low nominal price growth for 2011 with house prices expected to drop in real terms this year,” says Du Toit.
It appears that the global housing market continues to be somewhat in the doldrums and this seems likely to continue for the foreseeable future, says Dr Andrew Golding, chief executive officer of Pam Golding Properties.
Aerial view of Umhlanga coastline: Elwyn Schenk, Pam Golding Properties area principal in Umhlanga, KwaZulu-Natal says this market is resilient. Its wide appeal and strong commercial growth has attracted those moving in from other areas in the Durban surrounds. Home buyers are a mix of end users and investors across all sectors of the market.
“Our housing market started to turn down almost a year before the start of the global economic downturn and we have been in this down cycle for the best part of four years,” says Dr Golding.
He says the residential property market has held up relatively well from a pricing point of view with prices (generally) only between 10 and 20 percent down off the peak at the height of the cycle.
“The market remains subdued but resilient and this status quo is likely to remain for at least the rest of 2011 and possibly well into 2012.”
Dr Golding says they are seeing an increase in sales numbers and activity levels but the upward trend is slow rather than a rapid recovery.
He adds that key to the faster improvement in the residential market will be a relaxation of the current stringent bank lending criteria. – Denise Mhlanga
We offer property investment opportunities throughout South Africa and Europe
Showing posts with label pam golding. Show all posts
Showing posts with label pam golding. Show all posts
Friday, 26 August 2011
Friday, 10 December 2010
UK commercial property an investment for South Africans
The continued recovery of the UK commercial property market, coupled with the strengthening of the rand relative to pound sterling, has presented South African investors with a unique opportunity to invest in the UK while capitalising on the recovery cycle.
This is according to Eric Mounier, CEO of the Pam Golding Properties/Athanor International Property Investments joint venture which markets direct offshore commercial property investments.
"Since 2000, the joint venture has been involved in property asset transactions valued at over R5 billion and currently is involved in supporting over 40 active property investments,he said.
Despite commercial property values in the UK being devalued by over 40 percent following the global credit crisis, the asset management team has been successful in ensuring all properties under management remain operational and income producing, and favourably positioned to take advantage of the expected recovery cycle.
Illustrating the UK commercial property market's recovery is the Investment Property Databank (IPD) UK monthly index, which indicated a 0.1% growth in un-geared commercial property values for the month of October 2010.
This growth concluded the 15th consecutive month of capital appreciation, bringing the compounded upturn in values since the recovery to 15.9%, according to the IPD.
While there had been significant growth during this period there was still a long way to go to get back to the values prior to the global credit crisis.
"This trend is supportive of the market commentary which indicates that investors are starting to re-enter the market, with the UK providing a popular investment destination.
During the period of downturn following the global credit crunch, the UK experienced a significant re-pricing of commercial property values, and as a result investors were taking advantage of the favourable prices which were now possible.
In addition, during the past year we have seen a significant strengthening of the rand against the pound with a slight reversal of this trend more recently, Mounier said.
For those taking the view that the pound was likely to remain strong against the rand and the euro, the timing seemed opportune to invest in a solid pound-related asset class, he added.
The aim of the Athanor/PGP JV is to facilitate property investments which derive the vast majority of their returns from the large net yields currently available as a result of the positive gap between the rental income and the cost of finance. "
Consequently, less dependence was placed on capital growth to achieve the expected return which reduced the risk associated with these investments.
As an example of such an investment, a recently launched property in Parkhouse West Industrial Estate in Newcastle-under-Lyme in Staffordshire, England, is expected to produce cash flow of around 11 percent per annum, from which a portion will be used to pay down the bank loan and the remainder available to return to investors.
The majority of the projected return will come from the annual cash flow," he said.
This is according to Eric Mounier, CEO of the Pam Golding Properties/Athanor International Property Investments joint venture which markets direct offshore commercial property investments.
"Since 2000, the joint venture has been involved in property asset transactions valued at over R5 billion and currently is involved in supporting over 40 active property investments,he said.
Despite commercial property values in the UK being devalued by over 40 percent following the global credit crisis, the asset management team has been successful in ensuring all properties under management remain operational and income producing, and favourably positioned to take advantage of the expected recovery cycle.
Illustrating the UK commercial property market's recovery is the Investment Property Databank (IPD) UK monthly index, which indicated a 0.1% growth in un-geared commercial property values for the month of October 2010.
This growth concluded the 15th consecutive month of capital appreciation, bringing the compounded upturn in values since the recovery to 15.9%, according to the IPD.
While there had been significant growth during this period there was still a long way to go to get back to the values prior to the global credit crisis.
"This trend is supportive of the market commentary which indicates that investors are starting to re-enter the market, with the UK providing a popular investment destination.
During the period of downturn following the global credit crunch, the UK experienced a significant re-pricing of commercial property values, and as a result investors were taking advantage of the favourable prices which were now possible.
In addition, during the past year we have seen a significant strengthening of the rand against the pound with a slight reversal of this trend more recently, Mounier said.
For those taking the view that the pound was likely to remain strong against the rand and the euro, the timing seemed opportune to invest in a solid pound-related asset class, he added.
The aim of the Athanor/PGP JV is to facilitate property investments which derive the vast majority of their returns from the large net yields currently available as a result of the positive gap between the rental income and the cost of finance. "
Consequently, less dependence was placed on capital growth to achieve the expected return which reduced the risk associated with these investments.
As an example of such an investment, a recently launched property in Parkhouse West Industrial Estate in Newcastle-under-Lyme in Staffordshire, England, is expected to produce cash flow of around 11 percent per annum, from which a portion will be used to pay down the bank loan and the remainder available to return to investors.
The majority of the projected return will come from the annual cash flow," he said.
Friday, 3 December 2010
Foreign buyers now few and far between.....
There was a time two or more years ago when residential property estate agencies, some with international connections, earned considerable kudos by publicising impressive figures on the number of foreign buyers to whom they had sold South African property.
That time, says Bill Rawson, Chairman of the fast expanding South African property group that carries his name, is now by and large past.
"At present I regret to say we are just not seeing foreign buyers in territories like the Western and Southern Cape where their presence previously - and their ability to buy in the more expensive brackets - very definitely did help to keep prices up."
Sales of upper bracket homes, adds Rawson, have been the hardest hit by the recession and the lack of overseas buyers here has been felt in this sector to a far greater degree than elsewhere.
In the circumstances, he says, the government's investigation some years back into the impact of foreign buying had become almost irrelevant today.
"Those who have had to sell in the upper brackets have been forced to accept fairly drastic price cuts," says Rawson. "For example, a seven bedroom Constantia home originally on the market at R17 million was knocked down recently on auction for R10 million.
"However, it is also true that in this market there are relatively few distressed sellers and those planning to sell are often able to sit back and wait for better times. Prices in areas like Constantia have, therefore, remained fairly satisfactory."
Buyers in South Africa who are not adopting a wait and see attitude (as some are), says Rawson, are currently getting exceptionally good prices - for which, he is convinced, they will later be grateful.
"This applies particularly, I think, to those buying currently in Rawson Properties' three “academic belt” (Rondebosch) multi-unit projects - Rivers Edge, Rondebosch Oaks and The Rondebosch. Buyers here are taking up units at the same pace we saw in the boom years."
Investors, says Rawson, have in recent months been able to arrange bank finance far more easily and at better rates than was possible earlier this year - "and it looks if the trend will continue".
Commending Dr Andrew Golding and his research team at Pam Golding Properties, Rawson says that their publication of the best areas in which to invest is "exactly the sort of information buyers and the whole industry needs. It will very definitely facilitate investor decision making".
The report, says Rawson, once again shows the importance of close proximity to good schools and efficient transport systems as well as upper bracket retail areas. It also emphasises the absolute necessity of increased security for private homes.
A further finding of the report, which, says Rawson, is particularly important and which has reinforced the long-held convictions of many Capetonians, is that the Southern Suburbs of Cape Town have been and are likely to remain the safest and steadiest appreciating place in SA to make a long term property investment.
That time, says Bill Rawson, Chairman of the fast expanding South African property group that carries his name, is now by and large past.
"At present I regret to say we are just not seeing foreign buyers in territories like the Western and Southern Cape where their presence previously - and their ability to buy in the more expensive brackets - very definitely did help to keep prices up."
Sales of upper bracket homes, adds Rawson, have been the hardest hit by the recession and the lack of overseas buyers here has been felt in this sector to a far greater degree than elsewhere.
In the circumstances, he says, the government's investigation some years back into the impact of foreign buying had become almost irrelevant today.
"Those who have had to sell in the upper brackets have been forced to accept fairly drastic price cuts," says Rawson. "For example, a seven bedroom Constantia home originally on the market at R17 million was knocked down recently on auction for R10 million.
"However, it is also true that in this market there are relatively few distressed sellers and those planning to sell are often able to sit back and wait for better times. Prices in areas like Constantia have, therefore, remained fairly satisfactory."
Buyers in South Africa who are not adopting a wait and see attitude (as some are), says Rawson, are currently getting exceptionally good prices - for which, he is convinced, they will later be grateful.
"This applies particularly, I think, to those buying currently in Rawson Properties' three “academic belt” (Rondebosch) multi-unit projects - Rivers Edge, Rondebosch Oaks and The Rondebosch. Buyers here are taking up units at the same pace we saw in the boom years."
Investors, says Rawson, have in recent months been able to arrange bank finance far more easily and at better rates than was possible earlier this year - "and it looks if the trend will continue".
Commending Dr Andrew Golding and his research team at Pam Golding Properties, Rawson says that their publication of the best areas in which to invest is "exactly the sort of information buyers and the whole industry needs. It will very definitely facilitate investor decision making".
The report, says Rawson, once again shows the importance of close proximity to good schools and efficient transport systems as well as upper bracket retail areas. It also emphasises the absolute necessity of increased security for private homes.
A further finding of the report, which, says Rawson, is particularly important and which has reinforced the long-held convictions of many Capetonians, is that the Southern Suburbs of Cape Town have been and are likely to remain the safest and steadiest appreciating place in SA to make a long term property investment.
Friday, 9 July 2010
Strong foreign interest in SA property
Despite the precariousness of the world’s economy, there is still a lot of foreign interest in South African property, with investors from the United Kingdom, Germany, Australia and even the USA eyeing property here.
A recent analysis of traffic on the Lew Geffen Sotheby’s International Realty website shows that the number of international visits to the website is on the up.
The French seem to be the most interested in property in South Africa, with the number of French visitors to the site up by 62%. The number of website visits from people in Australia, Canada and the UK is also up by 52%, 32% and 23% respectively.
Visits by Germans have increased by 14% and American visitors have also increased by 10%.
Properties in the bracket of between R3m to R12m get the most hits from international visitors showing that it’s mainly up-market holiday homes that foreigners are after. There is also growing interest in smaller, lock-up-and-go properties in metropolitan areas suggesting that corporate travellers want a little place to call home when they are in the country on business rather than staying in a hotel.
“There has always been significant interest in SA property from Europeans, particularly people from the United Kingdom. Generally, they buy properties here for holiday purposes or as retirement homes.
“Interest is now more widespread, with people from all over the world looking into buying property here. Where it was once primarily luxury holiday homes in coastal regions that were being snapped up by foreigners, we are seeing an increase in the number of smaller properties in the metro areas of Johannesburg and Cape Town being sold to international investors,” says Jason Rohde, CEO of Lew Geffen Sotheby’s International Realty South Africa.
Rohde points out though that while foreign interest in SA property is growing, overseas buyers are more cautious about actually taking the plunge.
“While it is only the wealthy who are able to afford to buy homes overseas, they are not entirely untouched by economic factors so they aren’t as ready to jump into actually buying property as they perhaps were two years ago. The strengthening of the rand means that the foreigners’ purchasing power isn’t quite what it was either.
“As a result, foreign buyers are more price-sensitive and are looking for value for money. As with local investors, they are also weighing up their options more carefully, taking into account other factors such as security. The home has got to meet their criteria, including price, in order for them to make a commitment.
“Generally speaking, there is an oversupply of housing stock across most price categories, so it is essentially a buyers’ market. Sellers must be realistic about the asking price on their properties if they want to ensure a sale. They must present a fair deal,” Rohde advises.
Dr Andrew Golding, CE of the Pam Golding Property (PGP) group, says South Africa remains a sought-after property investment location among high net worth German investors.
“While the Soccer World Cup has focused increasing worldwide attention on South Africa, the fact is that even amid the global economic downturn South Africa has remained prominently on the radar of German property investors as a market to watch. Over the past year, Gaby Moëssner, who represents PGP in Germany, has seen increasing interest among German investors in leisure or holiday homes in South Africa.
“During this period their main areas of interest for such homes include the Eastern Cape with its exceptional value for money, the Garden Route, and the Cape and its popular Winelands region, particularly its scenic golf estates.
"As a rule and understandably, overseas buyers do not make quick decisions regarding property investment in overseas countries, including South Africa. And the Soccer World Cup – being a once-off event – may not necessarily influence their investment decision, although it certainly is considerably raising our country's profile abroad.
"Interestingly we've noted that several PGP clients in Germany have recently sold their properties in Spain and are looking to invest elsewhere. Certainly with our beautiful coastlines, spectacular natural scenery and appealing weather conditions during the harsh European winter months, South Africa can compete with other countries, such as Croatia and Turkey, which are currently of high interest among investors wishing to acquire holiday homes," adds Dr Golding.
Eugene Brink
A recent analysis of traffic on the Lew Geffen Sotheby’s International Realty website shows that the number of international visits to the website is on the up.
The French seem to be the most interested in property in South Africa, with the number of French visitors to the site up by 62%. The number of website visits from people in Australia, Canada and the UK is also up by 52%, 32% and 23% respectively.
Visits by Germans have increased by 14% and American visitors have also increased by 10%.
Properties in the bracket of between R3m to R12m get the most hits from international visitors showing that it’s mainly up-market holiday homes that foreigners are after. There is also growing interest in smaller, lock-up-and-go properties in metropolitan areas suggesting that corporate travellers want a little place to call home when they are in the country on business rather than staying in a hotel.
“There has always been significant interest in SA property from Europeans, particularly people from the United Kingdom. Generally, they buy properties here for holiday purposes or as retirement homes.
“Interest is now more widespread, with people from all over the world looking into buying property here. Where it was once primarily luxury holiday homes in coastal regions that were being snapped up by foreigners, we are seeing an increase in the number of smaller properties in the metro areas of Johannesburg and Cape Town being sold to international investors,” says Jason Rohde, CEO of Lew Geffen Sotheby’s International Realty South Africa.
Rohde points out though that while foreign interest in SA property is growing, overseas buyers are more cautious about actually taking the plunge.
“While it is only the wealthy who are able to afford to buy homes overseas, they are not entirely untouched by economic factors so they aren’t as ready to jump into actually buying property as they perhaps were two years ago. The strengthening of the rand means that the foreigners’ purchasing power isn’t quite what it was either.
“As a result, foreign buyers are more price-sensitive and are looking for value for money. As with local investors, they are also weighing up their options more carefully, taking into account other factors such as security. The home has got to meet their criteria, including price, in order for them to make a commitment.
“Generally speaking, there is an oversupply of housing stock across most price categories, so it is essentially a buyers’ market. Sellers must be realistic about the asking price on their properties if they want to ensure a sale. They must present a fair deal,” Rohde advises.
Dr Andrew Golding, CE of the Pam Golding Property (PGP) group, says South Africa remains a sought-after property investment location among high net worth German investors.
“While the Soccer World Cup has focused increasing worldwide attention on South Africa, the fact is that even amid the global economic downturn South Africa has remained prominently on the radar of German property investors as a market to watch. Over the past year, Gaby Moëssner, who represents PGP in Germany, has seen increasing interest among German investors in leisure or holiday homes in South Africa.
“During this period their main areas of interest for such homes include the Eastern Cape with its exceptional value for money, the Garden Route, and the Cape and its popular Winelands region, particularly its scenic golf estates.
"As a rule and understandably, overseas buyers do not make quick decisions regarding property investment in overseas countries, including South Africa. And the Soccer World Cup – being a once-off event – may not necessarily influence their investment decision, although it certainly is considerably raising our country's profile abroad.
"Interestingly we've noted that several PGP clients in Germany have recently sold their properties in Spain and are looking to invest elsewhere. Certainly with our beautiful coastlines, spectacular natural scenery and appealing weather conditions during the harsh European winter months, South Africa can compete with other countries, such as Croatia and Turkey, which are currently of high interest among investors wishing to acquire holiday homes," adds Dr Golding.
Eugene Brink
Monday, 28 June 2010
What sporting events mean for Property in South Africa
28 Jun 2010
Global sporting events tend to not only significantly raise the status of the game, but also property prices in the host city and bring with them a cornucopia of associated benefits.
This is according to Ya’el Geffen, executive director of Sotheby’s International Realty South Africa, who adds that “past international sporting events have proved that being a host city brings investment in public infrastructure, urban regeneration, a significant social impact and an increase in property values”.
“On average, the previous Olympic host cities of Athens, Sydney, Atlanta and Barcelona all outperformed their national markets, with 19% higher property prices in the five years leading up to the games.
“Similarly, before and after the 2002 World Cup in South Korea, property prices increased by as much as 55% over a one-year period before and after the tournament, with properties near the stadiums rocketing by more than 100% in value.”
Geffen says that the 2010 FIFA World Cup has and is going to have a dramatic impact on the country.
“It is estimated that over 370,000 tourists will visit South Africa for the World Cup. They will stay an average 18 days and each is expected to spend around R30k (US$4,500), therefore injecting much-needed money into the economy. Thanks to the World Cup, over R40bn (UD$5,45bn) has been spent on upgrading the country's infrastructure, including roads, airports and public transport as well as the stadiums.
“The long-term benefits include the increase of tourism and the creation of thousands of new jobs. This will, in due course, translate into thousands of new homebuyers and owners.
“From a property perspective we are very excited,” says Geffen.
Charles Smith of Sotheby’s International Realty in London, host city of the 2012 Summer Olympic Games, recognises that it is not just the immediate rise in property prices that will have a positive impact on the United Kingdom capital – the legacy of the Olympic zone is also crucial.
“Global sporting events can be the catalyst to make major infrastructure projects happen, improving transport connections and leisure facilities, benefitting the city in the long-term long after the games are over,” says Smith.
The announcement that Rio de Janeiro will host both the World Cup in 2014 and the Olympics in 2016 already is having positive consequences.
“Investment in real estate has been rising in Brazil since 2008 and there have been significant increases in land speculation, which have increased residential property prices by 10% to 20%.
“The Abadi (Brazilian Association of Real Estate Management) has reported a greater impact on rising real estate values in areas where the Olympics will be taking place, such as Barra da Tijuca,” says Guilherme F.Caldeira of Brazil Sotheby’s International Realty.
Vancouver also has reported many favourable benefits due to the global exposure of hosting the 2010 Winter Olympics earlier this year.
“The spotlight on Vancouver has educated people about Canada’s sophisticated economy,” says Anna-Maria Retsinas of Sotheby’s International Realty Canada in Vancouver.
“There has been significant foreign investment in and around Vancouver and British Columbia from Europe and Asia as a direct result. In turn, we are experiencing an increasing number of inquiries for our local properties.”
Meanwhile, Grinrod Bank's chief investment officer, Ian Anderson, said the World Cup has “helped South Africa weather the worst recession in 80 years’’.
“Unfortunately, the real estate markets were at the heart of the recession and as such have a fairly bad reputation at the moment.
Anderson noted that on an international basis banks were very generous in their lending and had lent to people that probably shouldn’t have obtained loans in the first place. “The result was that when things got tough, a substantial number of foreclosures took place in the US, Europe and the UK.”
He said that in South Africa banks had been faced with a completely different set of circumstances. “We are not in the same predicament as the rest of the world.”
According to Anderson South African banks had been a lot more circumspect in their lending practices. This was mainly due to restrictions imposed by the IMF and the World Bank. “Our banks performed well from 2003 to 2008.”
He said in the last four years the South African construction industry has been focusing virtually exclusively on delivery for the World Cup, said Anderson, who believes that while there were developers who were itching to develop, they found that there simply wasn’t a construction company available to build anything of any great significance.
In addition, he said that construction costs rose significantly and while he wasn’t sure of the exact figure, he believed these were around the 40% per annum mark, putting a further damper on any development actively. As a result of this, there was a strong balance between supply and demand, particularly in the commercial sector.
There hasn’t been a significant decline in property prices and in his opinion, the South African property market was extremely well positioned at the moment, with interest rates expected to remain stable and no pressure on rentals. “Although there are certain problems in the commercial sector, this is the exception rather that the rule.”
The one area where there is significant over-capacity is hotels. He noted that a recent report predicted that 20% of South African hotels will fail within the next 18 months. The One and Only hotel in Cape Town will at no point during the World Cup be more than 40% occupied, and in fact will only have a 20% occupancy rate during most of the tournament.
It is not just the high-end hotels that will be affected, he said. “While the property market has remained balanced, hotels were the one area that hadn’t.”
FNB Commercial Property Economist John Loos has said that while an influx of foreign tourists would up the interest in the residential property market it was unlikely to be sufficient enough to make a meaningful difference to the overall market.
"One could expect some increase in foreign visitor viewing, and possibly demand too, in some of the luxury areas of Cape Town and the southern Cape for instance.
"However, I remain of the view that this number won't be big enough to make a meaningful difference to the overall residential market of the country," Loos said.
Loos painted an optimistic longer-term picture. "I am very positive about the long-term benefits of the World Cup, along with all the other international events hosted before it, in terms of gradually changing the perceptions of the country and its organisational capacity for the better.
"And insofar as it achieves this, long-term economic growth can benefit from higher interest from investors. Anything that's good for the economy is good for property," he said.
The economist said he remained of the belief that short-term direct impacts in terms of World Cup visitor residential demand would be small in the grander scheme of things.
However, agents and principals report that World Cup visitors as well as locals are indeed taking time out to view properties and enquiries for leisure properties are increasing.
Ling Dobson, Pam Golding Properties’ (PGP) area principal in Knysna, says there’s been a surge in attendance at show days over the past two weekends.
“We have had enquiries from French and Italian visitors who are here for the World Cup, who are mainly interested in properties with sea views in the R3-R5m price range, for use as leisure homes when visiting South Africa on holiday. We are also in contact with an Italian who is travelling to Knysna in two weeks’ time to view properties with a view to purchase. Even just prior to the World Cup we sold a property in Knysna to French buyers from Brenton-on-Sea.”
“However, what is interesting is that suddenly the positive sentiment generally seems to have sparked a dramatic increase in enquiries from South African home buyers from Johannesburg, Durban and Cape Town, as well as local buyers in this area. While this demand is mainly for homes, there are also enquiries for commercial properties, which is a very positive indicator,” she says.
In KwaZulu-Natal, PGP’s Umhlanga office reports strong interest from a number of German investors who are seeking leisure homes in the R5m price range, located close to the beach and with sea views. “This is a group of friends who are all interested in property here. They are very impressed with Umhlanga. In addition, we are assisting a Brazilian buyer, who says this is a fantastic place to buy property, who is looking in the price range up to R1,7m. Another visitor, a young, male UK buyer, is looking for an apartment close to the beach and in the R2m price bracket,” says Elwyn Schenk, PGP’s area principal.
PGP area principal for Rustenburg, Ian Straarup, says overseas buyers are mainly interested in properties in a tranquil, scenic environment, particularly those which have a strong African flavour, for example game farms and smallholdings. “They are looking for value for money and probably properties ranging in size from 15ha, and not necessarily in residential areas.”
Meanwhile from Germany, Gaby Moessner, PGP’s manager based in the Munich area, reports that World Cup Soccer fever is running high with considerable interest being shown in South Africa. “All over Europe and especially in Germany there is huge media exposure for South Africa.
“During 2009 and prior to this event 50% of my clients were those interested in buying a property in South Africa with a view to the World Cup, for example a guesthouse or B&B. These buyers were mainly from Germany, Austria and Switzerland, with the main focus on the Western Cape and Somerset West in particular, with the second highest interest shown in Mpumalanga in areas such as White River and Hoedspruit, with proximity to Kruger Park and value for money of key importance.”
In terms of residential property, Moessner says currently enquiries are mainly for houses and apartments initially for holiday and later for retirement use, in the price range from R2-R3,5m and situated along the Garden Route, Eastern Cape and south coast of KwaZulu-Natal.
“However, these are clients who have already visited South Africa or who are planning a trip after the World Cup. I definitely see good prospects for property sales following this event as many of our buyers first research the market, and may then consider looking at homes for leisure or retirement at competitive prices,” she says.
Eugene Brink and I-Net Bridge
Global sporting events tend to not only significantly raise the status of the game, but also property prices in the host city and bring with them a cornucopia of associated benefits.
This is according to Ya’el Geffen, executive director of Sotheby’s International Realty South Africa, who adds that “past international sporting events have proved that being a host city brings investment in public infrastructure, urban regeneration, a significant social impact and an increase in property values”.
“On average, the previous Olympic host cities of Athens, Sydney, Atlanta and Barcelona all outperformed their national markets, with 19% higher property prices in the five years leading up to the games.
“Similarly, before and after the 2002 World Cup in South Korea, property prices increased by as much as 55% over a one-year period before and after the tournament, with properties near the stadiums rocketing by more than 100% in value.”
Geffen says that the 2010 FIFA World Cup has and is going to have a dramatic impact on the country.
“It is estimated that over 370,000 tourists will visit South Africa for the World Cup. They will stay an average 18 days and each is expected to spend around R30k (US$4,500), therefore injecting much-needed money into the economy. Thanks to the World Cup, over R40bn (UD$5,45bn) has been spent on upgrading the country's infrastructure, including roads, airports and public transport as well as the stadiums.
“The long-term benefits include the increase of tourism and the creation of thousands of new jobs. This will, in due course, translate into thousands of new homebuyers and owners.
“From a property perspective we are very excited,” says Geffen.
Charles Smith of Sotheby’s International Realty in London, host city of the 2012 Summer Olympic Games, recognises that it is not just the immediate rise in property prices that will have a positive impact on the United Kingdom capital – the legacy of the Olympic zone is also crucial.
“Global sporting events can be the catalyst to make major infrastructure projects happen, improving transport connections and leisure facilities, benefitting the city in the long-term long after the games are over,” says Smith.
The announcement that Rio de Janeiro will host both the World Cup in 2014 and the Olympics in 2016 already is having positive consequences.
“Investment in real estate has been rising in Brazil since 2008 and there have been significant increases in land speculation, which have increased residential property prices by 10% to 20%.
“The Abadi (Brazilian Association of Real Estate Management) has reported a greater impact on rising real estate values in areas where the Olympics will be taking place, such as Barra da Tijuca,” says Guilherme F.Caldeira of Brazil Sotheby’s International Realty.
Vancouver also has reported many favourable benefits due to the global exposure of hosting the 2010 Winter Olympics earlier this year.
“The spotlight on Vancouver has educated people about Canada’s sophisticated economy,” says Anna-Maria Retsinas of Sotheby’s International Realty Canada in Vancouver.
“There has been significant foreign investment in and around Vancouver and British Columbia from Europe and Asia as a direct result. In turn, we are experiencing an increasing number of inquiries for our local properties.”
Meanwhile, Grinrod Bank's chief investment officer, Ian Anderson, said the World Cup has “helped South Africa weather the worst recession in 80 years’’.
“Unfortunately, the real estate markets were at the heart of the recession and as such have a fairly bad reputation at the moment.
Anderson noted that on an international basis banks were very generous in their lending and had lent to people that probably shouldn’t have obtained loans in the first place. “The result was that when things got tough, a substantial number of foreclosures took place in the US, Europe and the UK.”
He said that in South Africa banks had been faced with a completely different set of circumstances. “We are not in the same predicament as the rest of the world.”
According to Anderson South African banks had been a lot more circumspect in their lending practices. This was mainly due to restrictions imposed by the IMF and the World Bank. “Our banks performed well from 2003 to 2008.”
He said in the last four years the South African construction industry has been focusing virtually exclusively on delivery for the World Cup, said Anderson, who believes that while there were developers who were itching to develop, they found that there simply wasn’t a construction company available to build anything of any great significance.
In addition, he said that construction costs rose significantly and while he wasn’t sure of the exact figure, he believed these were around the 40% per annum mark, putting a further damper on any development actively. As a result of this, there was a strong balance between supply and demand, particularly in the commercial sector.
There hasn’t been a significant decline in property prices and in his opinion, the South African property market was extremely well positioned at the moment, with interest rates expected to remain stable and no pressure on rentals. “Although there are certain problems in the commercial sector, this is the exception rather that the rule.”
The one area where there is significant over-capacity is hotels. He noted that a recent report predicted that 20% of South African hotels will fail within the next 18 months. The One and Only hotel in Cape Town will at no point during the World Cup be more than 40% occupied, and in fact will only have a 20% occupancy rate during most of the tournament.
It is not just the high-end hotels that will be affected, he said. “While the property market has remained balanced, hotels were the one area that hadn’t.”
FNB Commercial Property Economist John Loos has said that while an influx of foreign tourists would up the interest in the residential property market it was unlikely to be sufficient enough to make a meaningful difference to the overall market.
"One could expect some increase in foreign visitor viewing, and possibly demand too, in some of the luxury areas of Cape Town and the southern Cape for instance.
"However, I remain of the view that this number won't be big enough to make a meaningful difference to the overall residential market of the country," Loos said.
Loos painted an optimistic longer-term picture. "I am very positive about the long-term benefits of the World Cup, along with all the other international events hosted before it, in terms of gradually changing the perceptions of the country and its organisational capacity for the better.
"And insofar as it achieves this, long-term economic growth can benefit from higher interest from investors. Anything that's good for the economy is good for property," he said.
The economist said he remained of the belief that short-term direct impacts in terms of World Cup visitor residential demand would be small in the grander scheme of things.
However, agents and principals report that World Cup visitors as well as locals are indeed taking time out to view properties and enquiries for leisure properties are increasing.
Ling Dobson, Pam Golding Properties’ (PGP) area principal in Knysna, says there’s been a surge in attendance at show days over the past two weekends.
“We have had enquiries from French and Italian visitors who are here for the World Cup, who are mainly interested in properties with sea views in the R3-R5m price range, for use as leisure homes when visiting South Africa on holiday. We are also in contact with an Italian who is travelling to Knysna in two weeks’ time to view properties with a view to purchase. Even just prior to the World Cup we sold a property in Knysna to French buyers from Brenton-on-Sea.”
“However, what is interesting is that suddenly the positive sentiment generally seems to have sparked a dramatic increase in enquiries from South African home buyers from Johannesburg, Durban and Cape Town, as well as local buyers in this area. While this demand is mainly for homes, there are also enquiries for commercial properties, which is a very positive indicator,” she says.
In KwaZulu-Natal, PGP’s Umhlanga office reports strong interest from a number of German investors who are seeking leisure homes in the R5m price range, located close to the beach and with sea views. “This is a group of friends who are all interested in property here. They are very impressed with Umhlanga. In addition, we are assisting a Brazilian buyer, who says this is a fantastic place to buy property, who is looking in the price range up to R1,7m. Another visitor, a young, male UK buyer, is looking for an apartment close to the beach and in the R2m price bracket,” says Elwyn Schenk, PGP’s area principal.
PGP area principal for Rustenburg, Ian Straarup, says overseas buyers are mainly interested in properties in a tranquil, scenic environment, particularly those which have a strong African flavour, for example game farms and smallholdings. “They are looking for value for money and probably properties ranging in size from 15ha, and not necessarily in residential areas.”
Meanwhile from Germany, Gaby Moessner, PGP’s manager based in the Munich area, reports that World Cup Soccer fever is running high with considerable interest being shown in South Africa. “All over Europe and especially in Germany there is huge media exposure for South Africa.
“During 2009 and prior to this event 50% of my clients were those interested in buying a property in South Africa with a view to the World Cup, for example a guesthouse or B&B. These buyers were mainly from Germany, Austria and Switzerland, with the main focus on the Western Cape and Somerset West in particular, with the second highest interest shown in Mpumalanga in areas such as White River and Hoedspruit, with proximity to Kruger Park and value for money of key importance.”
In terms of residential property, Moessner says currently enquiries are mainly for houses and apartments initially for holiday and later for retirement use, in the price range from R2-R3,5m and situated along the Garden Route, Eastern Cape and south coast of KwaZulu-Natal.
“However, these are clients who have already visited South Africa or who are planning a trip after the World Cup. I definitely see good prospects for property sales following this event as many of our buyers first research the market, and may then consider looking at homes for leisure or retirement at competitive prices,” she says.
Eugene Brink and I-Net Bridge
Subscribe to:
Posts (Atom)