Real Estate Investor Magazine February 2013

1www.reimag.co.za February 2013 SA Real Estate INVESTOR

RESIDENTIAL

ContentsEDITORIALEDITOR-IN-CHIEF Neale Petersen

ASSISTANT EDITOR Angelique Redmond

DESIGN STUDIO Michelle Alexander, James Clark & Brent Fisher

CONTRIBUTORS Monique Terrazas, Jonathan Courtwell, Koos du Toit, Angie Redmond, John Roberts, Scott Picken, Iselle McCalman.

PHOTOGRAPHY Stock Exchange, Dreamstime

TRAFFIC Juanita Heilbron

All rights reserved. No portion of this publication may be reproduced or used in any form without prior written consent and permission from Real Estate Media. The publisher gives no written guarantees or assurances and makes no representation regarding any goods or services written or advertised within this edition. Prospective investors should always

consult their attorneys, advisors or accountants.Copyright © Real Estate Media cc

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Your Tenant Could Sue You!

LISTED PROPERTYAre You Missing The Fireworks?7 Deadly Sins Of Property Investment

The New Land Rover Evoque Reviewed

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Feel The Pulse Of The Property IndustryWhere is South Africa heading?

MASTER INVESTOR DOLF DE ROOS

2012 PROPERTY HANDBOOK

20122012OFFSHORE

BROUGHT TO YOU BY:R 99.95 (EXL VAT)EDITION 3• 2012

Autumn 2012Autumn 2012

PROPERTYMAGAZINEyour absolute look into the wor ld of real estate

www.justpropertygroup.co.za

Rental Income SecurityChallenges can be overcome

The Commercial Property MarketWhere to this year?

A wise � nancial decision?A wise � nancial decision?Holiday Homes

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FINANCIAL MANAGER Marisa George

WEBSITE Diamatrix

WEB ADMINISTRATOR Russell Bennett

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to advertise:021 674 5026

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FEATURES

Page 14 Property Scams!

Page 44 How To Guide

Page 32 Add Real Value

Page 52 Buy Ahead In Brazil

Page 10 Master Investor Graham Power

Page 18 Free Financial Consultion

5 INVESTOR TALK Your Investment Chemistry Listen to your instincts

6 INBOX Ask The Property Experts Standing surety for a new trust

8 ONLINE What’s New On The REIMWebsite

New on REIM TV, Events & Resources

10 MASTER INVESTOR GRAHAM POWER Transforming The Property Industry

14 COVER STORY Don’t Get Hoodwinked Property investment the smart way

20 CASE STUDIES The Good, Bad & Ugly

26 STRATEGIES Property Investment Pitfalls To Avoid

28 SMART MOVES Property Investment Myths Debunked

29 CONSUMER NEWS Your Electricity Is Set To Double

30 ACQUIRING Buy Or Build Which path is right for you?

32 IMPROVING Home Improvements That add real value to your property

FEBRUARY Cover Guide

www.reimag.co.za2 February 2013 SA Real Estate Investor

Jonathan Smith is the Director of Courtwell Consulting and has extensive experience in property and consulting, including educational programs

Contributors

COMMERCIAL

OFFSHORE

LIFESTYLE

Mike Smuts is an author, and property investor, he is the owner and managing director of Smuts and Taylor, a London based investment firm

John Roberts is the CEO of The Just Property Group, a dynamic property company born from the motivation to create a property industry leader

Koos du Toit is the CEO of P3 Investment Group that offers hope and guidance to anyone looking to build a successful investment portfolio.

Rui Marto is the Director of Marto Lafitte & Assoc, a firm specializing in Property Law Commercial Law, Foreclosures, Civil Litigation and Consumer Law.

Olga Koma is a researcher with FinMark Trust’ Centre for Affordable Housing Finance in Africa. Her interests are urban studies, urban design & African cities discourse.

Monique Terrazas is REIMS 2012 SAPOA award winning property investment writer, she is a treasured REIM contributor for almost five years.

Angelique Redmond is our talented in-house copy editor. With a passion for words and music, her pink earphones are a permanent fixture.

37 COMMERCIAL INVESTOR News And Industry Update Updates and property hear say

38 COMMERCIAL OVERVIEW Your Investment Map For 2013 Increase your risk appetite

40 IMPROVING Add Value To Your Building

42 HOSPITALITY Tourism And The Property Industry

44 GETTING STARTED Developing New Commercial Properties

47 OFFSHORE INVESTOR News And Industry Update Updates and property hear say

50 USA The Most Important Lessons

52 BRAZIL Buying Ahead Of The Boom

54 NAMIBIA Understanding Investment

58 WEALTH MONITOR Most Expensive Real Estate In SA

60 INSPIRATION 2013 Is Your Year

62 DIY Create The Perfect Office

64 TECH Mobility Will Be Key

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INDEXABC ABACUS DIVISIONS ........................................................37BLACK PEPPER PROPERTIES ........................................37CYPRUS...............................................................................03COURTWELL CONSULTING ..........................................45CREATIF ..............................................................................56DEFDEGON GROUP................................................................23DAILY NEWS ......................................................................29DOGON PROPERTY GROUP ........................................59

GHI IPS ........................................................................................... 51

JKL JUST PROPERTY GROUP ...............................................30JUST PROPERTY GROUP ...............................................31KORBITE..............................................................................23KIA ........................................................................................61LIGHTSTONE .....................................................................22

MNONATIONWIDE ....................................................................IFCMASTER INVESTOR .........................................................13MASTER INVESTOR .........................................................19MAZARS FINANCIAL SERVICES ..................................38NIKOR ..................................................................................35OOBA ..................................................................................23

PQRPOWER GROUP ................................................................12PROPERTY 24 ...................................................................23PROPERTY FRONTIER ....................................................25RAWSON PROPERTY GROUP ......................................OC RAWSON PROPERTY GROUP ......................................47P3 PROPERTY GROUP ...................................................26P3 PROPERTY GROUP ...................................................27P3 PROPERTY GROUP ...................................................28PATTERSON BUILDING ..................................................41PAM GOLDING PROPERTIES ........................................47PROPWEALTH ...................................................................47PROPWEALTH ...................................................................48PROPWEALTH ...................................................................49PROPERTY BOND BRAZIL .............................................53PROPERTY BOND BRAZIL .............................................53RODE & ASSOCIATES .....................................................37

STUVWYZWERKSMANS ATTORNEYS ...........................................37WWF ....................................................................................0BC

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Save the datesnew

Please be advised that the 45th SAPOA International Convention & Property Exhibition will now be held on

14 - 16 May 2013Venue: Sun City

www.sapoaconvention.co.za


extra digital video content

Neale PetersenEDITOR-IN-CHIEF

“I am grateful for all of my problems. After each one was overcome, I became stronger and more able to meet those that were still to come. I grew in all my difficulties.”James Cash Penney (1875-1971) - Founder of J.C. Penney Stores

BY NEALE PETERSENINVESTOR TALK

It’s All In Your Investment ChemistryListen to your own instincts first

Property analysts always try to put the best possible spin on the statistics, but some of the latest facts from FNB seem

indisputable. The latest f igures from FNB suggest that 2012 was a slightly better overall year than 2011. According to FNB House Price Index, the average house price for the entire 2012 rose by 5% compared with average price for 2011. House price growth in 2013 is expected to be a nominal 2.5%.

The upside for investors is that the future is looking good, according to John Loos, Property Strategist of FNB. He says investors can expect yields to broadly increase further, slowly improving property’s attractiveness as an asset class. REIM has always maintained that property investment is a long-term game and as seasoned investors, we are delighted that the industry is starting to understand the fundamental benefits of investing in real estate.

According to Meyer de Waal of Budget Fitness, investment decisions made under pressure are most often not the best decisions and are usually regretted. Stories about investors losing money in various property schemes such as Sharemax, King Financial Services, Herman Pretorius, Treoc, Genesis Properties and Realcor, to name a few, have been widely reported in the general media over the years. REIM is now offering a FREE consultation service to distressed property investors and homeowners who are either over-indebted to the banks or are just financially distressed. REIM does not benefit from the service at all except, of course, for providing our readers with yet another value-add as they build their financial wealth.

Our headline story looks at how investors can avoid being hoodwinked into making poor investment decisions, by investing in property the smart way.

Get energised with new ideasGreed is still driving our society, according to our Master Investor of the month, Graham Power, the visionary leader of the Power Construction group. He shares some sage advice for those wanting to invest in property. Graham believes many people a l lowed themselves to become slaves to the banks. Read Graham’s inspirational and practical story of success and find out how he built a multi-million rand business from nothing.

In terms of offshore investments, investors are still looking for the best returns, but language remains an important factor in selecting an investment destination. Most only invest in countries where they can speak the language and as such the UK, US and Australia remain top of the list. Other countries like Cyprus, Mauritius and Seychelles are also popular. The US still offers good returns but the market is turning fast. In the US, the era of private investors is starting to come to a close as institutions with billions in funding are starting to clean up the market. This means that the smaller investor will have to be more agile and smarter than ever.

Property investor of the yearThis is the last opportunity to win R50 000 cash, plus loads of exciting prizes valued up to R100 000, in our Investor of the Year competition. Don’t miss out, there is only a month left to enter! In the next edition we

will publish the best stories from the entries received and the winners will be announced in our April edition. Go online and enter at www.reimag.co.za.

Exciting changesThis is my last appearance as editor of REIM, as I take up my new role as CEO of RealeMedia, focusing on expanding on our digital publishing business (including REIM) and introducing new exciting titles to our readers and clients. I will still correspond to REIM on a regular basis from an investor perspective. I have thoroughly enjoyed the ride as editor on the forefront of property investing for more than five years. Thank you for your feedback, input and contributions, which have been invaluable. It is now time to hand over the reins to my esteemed colleagues who also have their fingers on the pulse of real estate investing in South Africa and around the world and are ready to bring you fresh and exciting new perspectives. Farewell and prosperous investing!

www.reimag.co.za6 February 2013 SA Real Estate Investor 6

If so, post it on ASK THE EXPERTS on www.reimag.co.za or email [email protected]

INBOX ASK THE PROPERTY EXPERTS

When committing to a fixed foreign amount when investing overseas, clients feel out of control as there is normally time pressure and an exact foreign currency amount that needs to be settled.

The solution is simple, when paying the costs a client must inform us of the exact amount that is payable to the seller or the seller’s representative as well as the due date for this payment.

We will then quote a rate and the exact corresponding Rand amount payable. On acceptance the deal wil l be executed as accepted, in other words there will be no further fees and deductions and the foreign funds will be received in total and on time by the seller/ seller’s representative.

For more information contact Sable FX.

T Malinga Asks:

I would like to know what steps I need to take in order to conduct a propery due diligence before I buy property. I need to know what and how to investigate before I commit to buying the property.

The voetstoots clause used to protect the seller from defects that the buyer could identify during a viewing of the property, but not against defects that the seller did not know about, and thus could not disclose to the buyer.

Without knowing the true condition of the property, many buyers had to fork out a substantial amount to repair their homes, resulting in serious implications on their budget and their ability to meet other financial obligations after taking ownership. In addition, most buyers do not have the knowledge or experience to request relevant information about a property in which they’re interested, and seldom ask for even basic documentation, such as a copy of the title deed, current and approved building plans, or zoning certif icates. They have just as much responsibility to request the required documentation from the seller, as the seller has to obtain and present it to them. Once presented with all the facts, the buyer can then decide to buy the property as is or ask the seller to adjust the price.

Meyer De Waal Oosthuizen & Co Meyer de Waal Attorneys

www.oostco.co.za

Jose DelgadoDelgado Velosa Kenworthy & Associates

How do I convince banks to allow me to stand surety for a new trust. They want to establish the loan in my personal name which means the property needs to be registered in my own name. Also what would be the best way to move rental property currently in my own name into said property trust without incurring excessive costs?

When banks lend money to a trust there are no hard and fast rules and often a bank will apply different criteria at branch or regional level and these often change. Banks have reasons why they do not fund trusts, e.g. compliance issues, checking the trusts borrowing capability, the trustees authority, various resolutions by trustees and in some cases beneficiaries. Whatever concerns a bank or the individual at the bank raises these can, with the support of an able legal trust practitioner, easily be allayed.I suggest you ask them the following:1. Why are they happy to lend you money to acquire a property but not the trust? 2. Why would your surety not suffice if they are happy to lend you the money, same property, same obligations?3. Argue the fact that the bank is better off lending to a trust than to you as they can mitigate their risk against your death, other risk, businesses, divorce etc.

Andrew RissikSable FX Group

www.sable-group.com

I want to buy property overseas in London, but am concerned about transfer cost’s that I will face when it comes time to purchase the property and losing out due to the amount of time it takes and the changing rate of return. What do you advise?

Proper Due Diligence

Do you have a property question you would like answered by our experts?

INBOXSurety For A New Trust

Michelle de Beer Asks:Q Julie Sumner Asks:Q

Meyer de Waal Responds:AJose Delgado Replies:A Andrew Rissik Replies:A

Offshore Transfer Costs

Q

This guide presents everything you need to know about reaching your highest potential at work - collected in one comprehensive volume. It is based on the author’s f ive years’ work as a coach with personal and leading corporate clients and examines career, finances, health, relationships and total well-being. It is specifically targeted at those wanting to reach their highest potential with regards to their career and is a ‘business’ book, rather than a ‘self-help’ title, a fact reflected in the content and design.

Never Too Late to be Great is about the power of thinking long. Exposing the myth of ‘overnight’ success, author and motivational speaker Tom Butler-Bowdon shows us that contrary to popular be l ief , people , compan ies , products and ideas invariably need a long time to realise their potential.Never Too Late to be Great offers inspiration for the impatient or disheartened to stay the course, and gives reassurance to us all.

By Tom Butler-Bowdon

From the man who has inspired millions of people to transform their lives and create their heart’s desire comes his latest book on seeking and embracing the power source within.In Self Power, Chopra offers that guidance and encouragement, while inspiring his readers to take their lives into their own capable hands no matter what challenges they may confront - job loss, financial difficulties, relationship issues , hea lth problems or spiritual questions.

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Never Too Late To Be Great

By Andrea Molloy By Deepak Chopra

Knowledge Is Money

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BOOK REVIEWS

What makes a business grow beyond the competition? Great businesses naturally have many things in common: superbly designed products and services, knockout customer experiences, s u s t a i n e d e x c e l l e n c e a t execution, outstanding talent and teamwork , and g reat leadership. In this, the next big idea book, Stengel deftly blends timeless truths about human behaviour and values into an action framework.

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Success: The Ultimate Guide to Success at Work Self Power

How can I get more done? How can I condense my workday so I have time to spend with the people I love? The answer to all these questions, according to bestselling author and business guru Stuart Levine, is to cut to the chase, and in his new book he’s gathered together 100 concise, invaluable lessons to help you do just that. Cut to the chase is about more than getting to the point; it’s about staying focused, getting to grips with the job in hand and concentrating on what’s

In this groundbreaking guide, Stephanie Winston explains how she d iscovered , a f ter more than two decades as a leading organization expert and bestselling author, that senior executives and CEOs seem to possess unique conceptual skills in the areas of time management and organization that enable them to dramatically increase their productivity.

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Cut To The Chase Organized For Success

www.reimag.co.za 7February 2013 SA Real Estate INVESTOR

www.reimag.co.zaFebruary 2013 SA Real Estate Investor 8

ONLINE


Property Events 2013Fri, Mar 1st, @8:00am - 05:00PMSouth African Property Owners Association (SAPOA) Journalism Awards

Sat, Mar 2nd, @8:00am - 05:00PMSouth African Property Owners Association (SAPOA) Journalism Awards

Sun, Mar 3rd, @8:00am - 05:00PMSouth African Property Owners Association (SAPOA) Journalism Awards

Mon, Mar 4th, @8:00am - 05:00PMSouth African Property Owners Association (SAPOA) Journalism Awards

Tue, Mar 5th, @8:00am - 05:00PMSouth African Property Owners Association (SAPOA) Journalism Awards

There is so much uncertainty at the moment. How do you make the right decisions and how do you turn 2013 into one of your best years yet? Join us on a FREE LIVE webinar with Clem Sunter to determine how to make the best decisions for the future in 2013, where to invest and what to invest in.

Clem Sunter – Live Webinar how to succeed in 2013!

Property Webinars


BY NEALE PETERSENMASTER INVESTOR

Transforming The Property and Construction Industry

Turn your ordinary day into an extraordinary calling…

www.reimag.co.zaFebruary 2013 SA Real Estate Investor 10


Africa’s Leading Managers, by the Corporate Research Foundation.

Power Construction has received numerous awards from the Professional Management Rev iew (PMR) and was named the corporate winner for the 2009 National Productivity Awards in South Africa, by Productivity SA. It also received a Certificate of Acknowledgement at the Govan Mbeki Awards evening, for its contribution to housing for the poor.

Poor startGraham grew up in what he describes as a poor living environment. He was the second youngest of five children and his father passed away at the tim he f inished school. There was no money to pay for studies, so after completing his compulsory military service, Graham immediately started his career with Savage & Lovemore (S & L), a civil engineering and construction company (now Group 5 Construction), starting his first job as a Trainer Surveyor. At 21 he became one of the youngest site managers in the industry and one of his earliest major projects was the Steenbras Dam Hydro Electric scheme.

In April 1983, Graham resigned to start his own business. He sold his home and two plots and along with the help of his father-in-law, Heinz Baumker, bought a smallholding in Elandskloof for R100 000, which he used as collateral for the business. He then started tendering for business with a secondhand ‘bakkie’ he had acquired. His first projects involved developing parking areas and driveways for local authorities and churches. Fortunately, many of the consulting engineers knew him well and he started operating successfully. His turnover for the first year was R300 000, but then the business grew rapidly. In 1984, the business turned just over R3 million and by 1986, the turnover had doubled to R12 million.

Some of the major projects included the civils for Parel Vallei High School in Somerset West and civil work for the Rabie Group. Once the company clinched the contracts for Airport Industria, Plattekloof phases 2 and 3 and a number of affordable housing projects, the business really took off. The first development in the affordable housing space

Graham Power is the founder and Board Chairman of the hugely succe s s f u l Power Group of

Companies. More importantly he is a high achiever and philanthropist and inspires many of his colleagues and peers through his example, leadership and achievements.

From humble beg innings, w ith one employee, one vehicle and minimal funding, Graham has built the Power Group, which now operates nationally from the head office in Cape Town and three regional off ices in Knysna, Port Elizabeth and Centurion. The civil engineering arms include Power Construction South operating in the Western, Southern and Eastern Cape, and Power Construction North operating in Gauteng. Power Building is based in Cape Town, but operates nationally. Power Developments is the property development division of the Group, based in Cape Town and also operates nationally from the regional offices. The group’s vision is “to improve the quality of life in Africa through infrastructure development”.Stemming from Graham’s involvement as Chairman of the National Commission for Labour Intensive Construction (NCLIC) in the early 90 ’s, and the negotiat ion of a framework agreement with labour organisations, job creation has always been a priority for the Power Group. Today it employs more than 1 600 people of whom 1 000 are permanent employees and 600 are contracted. In addition, the Group’s sub-contractors employ another 600 to 1 000 people.

The Group remains a market leader in South Africa in the civ i l engineering, property development and construction sectors. Graham and his company has been acknowledged and lauded on many occasions during its 30 years of existence.

Graham was recently awarded the f irst international ‘Entrepreneurial Leader of the Year’ award by the World Evangelical Alliance and the Entrepreneurial Leaders Organisation in Vancouver, Canada. He was also awarded in the category for Social Affairs and Services, at the Civic Honors’ Ceremony in Cape Town in recognition of his outstanding contribution to its citizens. Among numerous other accolades, Graham was also voted as one of South

Personal StatisticsAge: 57 Achievements: Junior Sakeman, Meritorious Award for Civil Engineer-ing, Businessman of the Year on two occasions and Entrepreneurial Leadership AwardMarital status: Married to Lauren with three children: Gary, Nadene and Alaine, and five grandchildren.

Mentors: Graham believes that everyone should have a mentor. Graham’s mentors include spiri-tual leaders Michael Cassidy, Angus Buchan and Pastor AyJay Jantjies.. For practical business insight and wisdom, he places complete trust and faith in his mastermind team of non-executive directors, as well as in Prof. Kurt April; Johan du Preez, a business executive; Thys Loubser, previous CEO of KWV; and Hilton Saven of Mazars.. Books: Graham mines wisdom from books and some of the books that have impacted him include: 5 Levels of Leadership by John Maxwell and Halftime by Bob Buford. He has also written a book with Dion Forster called Transform your work life and Not by Might nor by Power.. Hobbies: : Some of Graham’s moun-tain biking accomplishments include doing the Argus on various occa-sions, the Karoo to Coast (Uniondale to Knysna 95km). He is also a rugby enthusiast, until recently serving on the Western Province Rugby Board (+ 15 years) and a Honarary President of the Helderberg Rugby Club. Motto: We all make mistakes, but don’t let it keep you down because mistakes teach us life lessons.

FEATURES

GrAhAm POwer

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miraculously, with millions of Christians from 220 nations joining in the Global Day of Prayer (www.globaldayofprayer.com).

Graham also launched the “Unashamedly Ethical” campaign, an independent and far-reaching initiative founded with the aim to promote ethical, professional and values-based trading in South Africa – both in business and in private matters. (www.unashamedlyethical.com)

The Power Group’s corporate socia l investment programme further ref lects Graham and his team’s commitment to making a contribution. For example, through a non-profit organisation called “Go for Gold”, Power Construction is helping to address the critical shortage of construction sector candidates from disadvantaged communities. The Power Group also supports the Eagles Rising Training Centre, which is involved in training youth from the poorest informal settlements from the greater Western Cape . There is also Power’s Roadworks Emerging Contractor Programme through which young previously disadvantaged entrepreneurs are given exposure to business opportunities. The Power Group Charitable Fund was started in 2000 and the companies in the group donate the first 10% of their profits to the fund which supports various charitable organisations.

Sharing his life experiences, Graham wrote two books. One with with Dion Forster, a consultant and chaplain to the Power Group of Companies, called Transform your work life. The book offers practical, sometimes challenging, but always inspiring insights into the tools and processes that you can use to transform your ordinary day into an extraordinary calling and, by doing so, transforming your work life.

was a development in the Kraaifontein area. Power Developments, as a housing developer, has constructed more than 70 000 houses. Their latest development is in Pelican Park, where they are developing affordable housing for 3 600 residents.

Graham says their landmark development was the upmarket Thesen Islands development in Knysna. Working with an exciting architect and as the largest shareholder of the team of friends (JV partner), Graham rates this as one of the many excting projects which they have had the privilege to be involved with.

Following the success of Thesen Islands in Knysna, Power Developments has been responsible for a number of residential, industrial, off ice and retail developments. Among these are the Jack Nicklaus Golf Club at Plettenberg Bay and the R3 billion Waterberg Game Reserve development near Bela Bela.

Beyond wealthFor more than 20 years, says Graham, his business grew year after year. But the accumulation of wealth only lead him to seek true fulfillment with ever-greater vigour.

Graham established Transformation Africa in July 2000 after much deliberation because he had no theological background. But in an act of faith in 2001, he hired the Newlands Rugby Stadium, encouraging 45 000 Christians from all denominations and races to come together to pray for Cape Town. Across the African continent millions of Christians were inspired to participate in the process of transforming Africa. The result was the first Day of Repentance and Prayer for Africa on 1 May 2003. By 2004 Christians from all 56 nations of Africa participated in the first-ever continental Day of Repentance and Prayer for Africa. This movement of prayer expanded

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Acquire land and property - God is not making more! With more and more people inhabiting the planet, demand for land will always be there. Watch out for the debt trap - when you get into it, you will have to work yourself out of it systematically. Don’t become too dependent on the banks for finance.

SUCCESS TIPS FOR INVESTING & BUSINESSDon’t invest for the short term - view investments from a minimum 10-year perspective, not from a quick-fix short-term perspective.Hold on to your investments as great value in property will return and continue. Understand the dynamics of the property market, for example, how interest rates can be an indicator of the market.

RESOURCES

Power Group

“ You have to work like a slave to live like a king, but there is

nothing more rewarding

than working for

what you achieve.”

MASTER INVESTOROF THE YEAR COMPETITION

??

Are you South Africa’s no.1 Property Investor?Real Estate Investor Magazine together with WEALTH MIGRATE INVESTMENTS is searching for South Africa’s

leading property investor for 2013.


BY MONIQUE TERRAZASCOVER STORY

Don’t get hoodwinked!Property investment the smart way... and your rescue plan

Fraudsters and charlatans have been around since the dawn of mankind. In fact, variants of the advanced fee scam,

aka the Nigerian or 419 scam (“419” refers to the article in the Nigerian Criminal Code dealing with fraud), has been traced back as far as 1830, and it was called the “Spanish Prisoner” scam in the late 19th century. Of course, scams abound today thanks to the instant communication and the easy access to vast amounts of electronic information which characterise our modern world. For this

reason, sooner or later, almost everyone will be approached by a scammer.

You may believe it will never happen to you, but the truth is that today’s scammers are highly sophisticated and it can be difficult to distinguish conmen from the qualified experts, especially in highly regulated industries such as the f inancial, investment and property industries. While law enforcement agencies do their best to deter and track down these criminals, they can only react after the

fact, when it is too late for the scammed investor. And there is, of course, no chance of recovering the money lost.

Fortunately, while some scams can succeed without you doing anything at all, most scams do require you to do something for it to work, for example, transferring money, divulging your personal details, signing a contract before obtaining legal or financial advice, or buying something without checking it out properly first. This provides investors with an


executor’s fees at the time of your death. In worst case scenarios, individuals may even write themselves into your will.

Property investment scams Unfortunately, the property industry lends itself perfectly to fraud and scams. This is quite evident from the range of scandals that have rocked the property industry over the last few years: unscrupulous estate agents stealing deposits that should be safeguarded in trust accounts; auctioneers rigging auctions to drive up the bids; property investment syndications such as Sharemax that have ruined thousand of investors’ lives; and property investment “gurus” who sell properties at inflated values or simply take off with investors’ money.

But there are even more scams…

Buy-to-let scamsIn buy-to-let scams, companies offer investors a turnkey solution to acquiring, renovating and managing properties with guaranteed tenants and great rental incomes. But the investors end up with derelict properties in slums, no tenants and no income, while they are left paying rates and taxes and sorting out endless property problems. Investors should be especially wary of offers of such properties in other countries, which makes it difficult for the investor to inspect the property.

This scam can also take the form of property marketing companies who use buy-to-let seminars or training courses as a means to sell their own properties, or a developer’s properties, to investors at over-inf lated values. In some cases, they might sell bargain properties that are actually located in slums, high crime areas or dilapidated areas.

Rental scams Rental scams involves fraudsters renting accommodation they do not own and have no authority to let. These properties may be for sale or untenanted for some reason, or may simply not exist. The scammers will collect a deposit and disappear without trace. This scam works particularly well with people moving to another country or town and do not have the opportunity to view the property. Another variation targets holiday makers who pay rental deposits, only to arrive at a non-existent villa or one occupied by surprised owners.

Phishing and smishingPhishing e-mails and the SMS version, smishing, are aimed at obtaining personal information such as log in detai ls and passwords, often supposedly sent by your bank or other institutions. First ly, no legitimate company will ever ask you for your password! Secondly, never give your personal information to anyone over the phone, via email or on a website that you have accessed via a link in an email or SMS.

Card skimming A global problem, credit card skimming

involves fraudsters capturing your card data on devices similar to point-of-sale devices or ATMs, which also have cameras to record the PIN code. Never let your credit or debit card out of your sight and always cover the PIN pad when entering your PIN.

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FEATURES

opportunity to spot and avoid a scam. Many scams are easy to spot if you know about them, while others may appear to be legitimate offers or bargains.

So, the only real defence against fraudsters and scammers is extreme vigilance. Investors need to be smart and savvy when selecting investments and need to keep a close watch on these investments.

The first step, of course, is to arm yourself with information about the scams that are known, so that you will recognise these the moment you encounter them. The second step is to implement stringent risk management strategies that should be applied to every opportunity you encounter.

And if it ’s too late? If you have been scammed already, it is time to take massive action and put yourself back on the road to building wealth.

General scams to watch out for:

The advance fee scam (Nigerian or 419 scam)

There are many variations on this scam but, essentially, you receive an off icial-looking email from a government or bank official, a barrister or a widow who needs money for bribes, fees, etc, which will allow them access to a large amount of unclaimed money, blood diamonds or gold. In return for your advance fee, you are promised a large share of the loot, which, of course, you will never see, along with any money you have transferred to fraudster. There are many variations to this, such as the devoted online boyfriend or girlfriend who suddenly needs money for a personal emergency or the numerous “inheritance” schemes that are doing the rounds.

The lottery scam There are countless variations of the lottery scam. Among the latest is the a l leged Microsoft Lottery, which requires you to provide your credit card information so “Microsoft” can validate your copy of Windows in order for you to claim your winnings. If you didn’t enter a competition or bought a lottery ticket, you haven’t won. And it is unlikely that you will be notified of a huge lottery prize by email or SMS.

“If you have been scammed already, it

is time to take massive action and put yourself back on the road to building

wealth.”

Investment scams

Investment scams also abound and these could involve, for example, an investment that doesn’t actually exist; or an investment offer that does exist, but your money is not invested in the investment, but in the fraudsters back pocket.

It could a lso be that the investment opportunity exists, but the returns are inflated and the risk is understated.

Will writing scamsAnother scam that is perpetrated in broad daylight on a daily basis is will writing scams. And it is not necessarily done by criminals. Individuals or organisations (even the banks) will offer to draft your will for free. They then appoint themselves executors, setting themselves up to take 2.5% of your estate in


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Trust no one - verify everything

n If you receive an investment opportunity from a well-known company, contact the company using the contact number on their website or listed in the phone book to verify the offer. Don’t use the numbers provided in the email or on the brochure offering the opportunity. n Go online and research both the company and the offer, looking particularly for feedback from other investors. n Seeing isn’t believing - remember that photos can be touched up and changed. Get in your car and check it out for yourself. n Friends and family may mean well by introducing you to an opportunity, perhaps not realising it’s a scam. Never assume that if someone is taking up an offer that he or she has done the homework. Investigate yourself. •If you are appointing a service provider of any kind - from a building contractor to a lawyer - ask friends, neighbours or family for recommendations. Get at least three quotes and a copy of the contract and insist on a detailed breakdown of costs, as well as proof that they are correctly registered and licenced. Also ask for at least three separate references and phone all of them.

Take your time

n As Meyer de Waal from My Budget Fitness puts it: “Decisions made under pressure are most often not the best decisions and are often regretted.” Don’t make hasty decisions. n Bear in mind that legitimate companies will not pester you relentlessly to make a decision. If a company or a representative is placing you under pressure to make a quick decision, beware. This is often a clear indication of a scam. n Never agree to offers or deals straight away. In particular, be wary of signing up for anything after an inspiring and rousing presentation. n Take your time to investigate the offer and do your homework. If you feel pressurised, walk away. There will be other opportunities.

investors in this way. Last year, Special Assignment exposed a multi-million rand property scandal in Mozambique. Their investigation found that Pam Golding, working with a local property developer, Braam Bruwer, sold millions of rand’s worth of land to South African investors, sales which are illegal under Mozambican law. The investors lost everything when the Mozambican authorities evicted residents and seized the property - shutting it down.

Late last year, in what may be the biggest land fraud case in South Africa’s legal history, involv ing R 2.5 bi l l ion, f ive prominent businessmen appeared in the Carol ina Magistrate’s Court on charges of fraud and theft. Ifasa Investments and Gustav Uys de Waal, Gert Pienaar, Ferdinand Odendaal, Mangisi Josia Nkosi and Pieter Visagie allegedly stole a trust deed from the Master of the High Court and removed Robert Nkosi as a trustee of the trust, which held several farms awarded to the Ndwandwa community under leadership of Nkosi, following a successful land claim. The accused then convinced the provincial Department of Agriculture, Rural Development and Land Administration that they would be making an investment of R2.5 billion in the Badplaas area and that they had been authorised by the trustees to solicit a bank guarantee.

How to avoid getting scammed

There are hundreds of ways to get scammed, but there are eight ways to ensure it doesn’t happen to you.

COVER STORYLand banking

Land banking is a form of investment in vacant land that can be acquired at a bargain price while awaiting planning permission to be granted by the local authorities. The selling point is that the value of the land will increase substantially once the planning permission is approved. Thousands of investors have found themselves proud owners of parcels of land for which planning permission is unlikely ever to be granted, because it is, for example, agricultural land or unsuitable for development.

Property acquisition scams Similar to rental scams, some investors have bought properties from fraudsters who never owned the property; or bought property that did not exist; or bought property that could not be sold legally.

One such scam was the “Johannesburg North” scam through which a number of Europeans bought properties in “Eloff Street”, “Commissioner Street” and “Market Street” at a bargain price. But instead of getting a parcel of prime real estate in central Johannesburg, they were stuck with an empty piece of veld ten kilometres outside the city, in a non-existent development.

A few years ago, thousands of home buyers were caught out by a rogue developer, Donovan Atkins who traded in the name of Theos Projects, who had sold units in new residential developments, which were never completed. The home buyers were left paying off bonds granted by f inancial institutions, on non-existing properties!

Late last year, the Gauteng Department of Local Government and Housing started to demolish almost 200 houses in Lenasia that were erected on land belonging to government and intended for government housing. The stands were apparently fraudulently sold, as far back as 2002, for amounts ranging from R2 500 to R95 000 by corrupt government officials to people who believed the transactions were legitimate and even received forged Deeds of Sale with the Department’s logo. The Gauteng Housing MEC placed the blame to the duped landowners, saying that people needed to double check with the Deeds Office to ensure that they were legitimately buying land.

But it is not only fraudsters who can scam

Trust no one - verify everything

Take your time

Do the homework

Read the fine print

Apply common sense

Get expert advice… fromindependent experts

Never hand over your money

Spend the money to safeguard yourself

8 TOP TIPS TO AVOId GETTING SCAMMEd

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FEATURES

Do the homework

n Never invest in anything without doing thorough research. n If you’re investing in property, visit the property at least once, but preferably several times on different days and during different times of the day. n If you are buying vacant land based on a future development, such as planning permission, carry out extremely thorough checks. View the land personally. Contact the local planning department to find out if planning permission has been applied for, if it is ever likely to be granted and how long it might take. n Check the title deed to ascertain the owner of a property before you buy a property. This will also alert you to any restrictions on the title deed.n If you are buying a property off-plan, research the developer and the building contractor. Don’t assume that the development is above board because the bank approved finance for your unit. And never, ever sign the bank’s “Happy Letter” which will release the payment to the developer before your unit is completed. n If you are buying a property in another country, do some research about the property laws in the country and get local, independent legal and property advice.

Read the fine print

n Never agree to any business proposal on the phone or in person: always ask for an offer in writing.n Never sign anything you haven’t read thoroughly and understand clearly. Do not allow anyone to put you under pressure to sign documents. If the documents contain any clauses you don’t understand, get a legal opinion. n Read all the terms and conditions of any offer very carefully to understand any hidden costs and to know exactly what you will be liable for if you decide to pull out. n Always keep copies of all paperwork, as well as notes of any phone or face-to-face conversations. n Check your bank account and credit card statements. Immediately report any fraudulent activity. Regularly check your credit records to ensure you are not a victim of identity fraud.

Apply common sense

n Be realistic. There are no legitimate get-rich-quick schemes. If something sounds too good to be true, it probably is. n Beware of bargains and great deals. If you are offered a product, service or property at a rock-bottom price, be suspicious.n Learn the lingo! Watch out for dead give-away phrases such as “high returns”, “risk-free investment”, “ beat the markets”, “huge commissions” and “no obligations”.n Be wary of unsolicited phone calls, emails or SMSs - rather delete them. Do not click on any links in a spam email or SMS and do not open any files attached to them. Also, never call a telephone number that you see in a spam email or SMS or reply to these emails, even to unsubscribe. n Guard your personal details closely. Never give out your personal details and information over the phone, via email or on a website, unless you have initiated the contact and trust the other party. Shred personal documents, including ATM slips before recycling the paper.n Do not pass on chain letters or take part in pyramid schemes: you will lose your money and your friends.

Get expert advice… from independent experts

n Get expert advice from independent professionals who are in no way connected to the company selling the property or offering an investment opportunity. n Unless you are a qualif ied construction engineer, get a property inspection done. This will reveal any structural problems and future maintenance issues. n An independent valuer will be able to establish a realistic value for a property. Also speak to several estate agents in the area, go online and check the values of similar properties.n Use your own attorney to check the legal documents and appoint your own conveyancer to make the proper enquiries and effect the property transfer. n If you are investing in a buy-to-let property, establish the potential rental income and find out what sort of tenants you’re likely to attract through your own research. Speak to several letting agents in the area, go online and search for similar rental properties and even speak to the neighbours.

“There are hundreds of ways to get scammed, but there are eight ways to

ensure it doesn’t happen to you. “


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out to be a scam, but speaking to experts in the industry - even if you have to pay for their time - may well open up exciting new opportunities you would otherwise not have been aware of.

What to do if it is too late…It is a sad reality that many people have been

scammed - from losing substantial deposits to paying much more for a property than it was worth to facing non-existent returns from investments.

However, if you have been scammed, it is time to up the ante and take massive action, firstly making sure you don’t get scammed again!

Don’t get scammed again!

There are a number of “property rescue” scams out there to watch out for.

Phantom help – In this scam, the supposed “rescuer” charges very high fees for basic phone calls and paperwork that the property owner could have done or simply does not deliver what was promised, leaving it too late to stop a property repossession.

Bailout – Scammers “bail ” out property owners out by helping them get rid of the house or giving them a loan on condition that they sign documents, not knowing that they are surrendering the title of the property. The owners often only find out when they are evicted from their property.

Debt review/liquidation/sequestration- Property owners are approached by consultants to apply for these processes without realising the consequences.

Property rescue scammers:

n guarantee to stop the foreclosure process;n instruct/request you not to contact your bank/lender;n collect a fee before providing any service;

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COVER STORY

n Get financial, legal and investment advice from independent professionals. They might be aware of the offer being a scam, or might at least be more objective about the offer.

Never hand over your money to anyone

n Never pay in advance for anything. Don’t pay a deposit until you have inspected the property and don’t pay a contractor until they have delivered what they promised. Being asked for money up front should set off warning bells.n Don’t fall for the 300-year old advance fee scam in any shape or form! Do not send any money or pay any fee to claim a prize or lottery winnings, or to share in any kind of opportunity, or to get any type of job.n Don’t send money to people you don’t know well personally and never give your credit card or online account details to anyone. n Never transfer money on behalf of someone else: money laundering is a criminal offence. n Be wary of investments that require you to hand over money to a third party - whether in a lump sum or monthly contributions.

Spend the money to safeguard yourself

n Spend the money you need to spend to ensure an investment is above board. Pay the fees for a property inspection, a property valuation and legal or investment advice. If the investment you are considering is so lucrative, spending a few thousand rands beforehand should be richly rewarded. If the opportunity is a scam, you will have saved hundreds of thousands of rands that you would otherwise have lost in the future. n A few thousand rands invested in a professional advice will not only save you thousands of rands if the opportunity turns

n encourage you to lease your home so that you can buy it back over time;n tell you to pay your bond instalment to anyone other than the bank;n offer to buy the property for cash at a price that is not market related;n pressure you to sign paperwork you have not read or understood.

It’s up to you

Of course, despite all the property scams, not all property industry players are unethical and most are offering a legitimate service for a fair price. But the scammers and fraudsters are out there too. Empower yourself with knowledge about the scams that are out there and use the eight tips to avoid getting scammed at every opportunity. No one can scam you if you don’t allow yourself to get hoodwinked!

Many property investors may find themselves in financial difficulty and unable to service their mortgage repayments. These investors face the banks’ call centres that cannot assist them to negotiate or restructure their mortgage payments. Some property owners have turned to debt counselling for protection, only to find that once the bank has issued a section 129 (1) letter, debt counselling will no longer offer protection for that particular debt.REIM has partnered with My Budget Fitness, an independent service provider, who will offer a free first consultation to distressed homeowners and investors. This will allow you to obtain sufficient unbiased information as to your rights and possible solutions to assist you in your particular situation. The solution may, in many instances, lie in the protection offered by the National Credit Act’s section 129 (1), which stipulates that the debtor and creditor together develop and agree on a plan of repayment.To set the process in motion, simply complete the questionnaire available on the REIM website or send an e-nail to [email protected]. The information provided will assist My Budget Fitness to provide better and faster assistance to help you salvage your financial situation.

“ Empower yourself with knowledge about the scams that are out

there, No one can scam you if you don’t allow

yourself to get hoodwinked!”

GET REAL HELP

The first annual Master Investor of the Year award aims to find South Africa’s leading property investor and to recognize and celebrate the achievements of property investors in South Africa. All potential candidates will be invited to enter and 12 investors will be short-listed but only one person will be given the title of Master Investor of the year 2013 and the fantastic prizes that go with that title.

The competition will not be judged pureThe competition will not be judged purely on the rand value of the property or the size of the portfolio. We want to know the key factors that have contributed to your investment success such as discipline, entrepreneurial flair, creativity, dedication, initiative, commitment and plain hard work that have got you to where you are today.

What are you waiting for?Please submit your entry with your investment story to [email protected] or enter at www.reimag.co.za to view the details of the competition, prize packs, judge’s profiles, and contestants. Entries close 28 February 2013.

Dolf de RoosInternational investor, author and educator

Jason LeeBest-selling South African property author and investor

ProProfessor Francois VirulyExpert lecturer and head ofproperty faculty of UCT

Gordon MackaySA author and investor

Neale PetersenPublisher of REIM

Hennie BezuidenhoutProperty developer and entrepreneur entrepreneur

Our all-star judging panel includes:

Sponsored by

WIN R50 000 in cash plus other prizes including iPads, SmartPhones, Smart TV’s, an all-inclusive Weekend away for two & many other prizes valued at over R100 000


There isn’t much good news for investors in traditional investment vehicles looking ahead to 2013. Given the current global and local economic environment, investors have been warned to moderate their expectations of the returns traditional asset classes can generate. In fact, some have suggested “accepting that consistently high returns are probably in the past is the most important investment tip for 2013”.

Experts have predicted that many asset classes will struggle to beat inf lation over the next few years by more than a percent or two. Even South African equities, which have produced good returns over the past three years are no longer a sure winner, with analysts already warning that this performance cannot continue indefinitely. Some commentators are even pessimistic about the ability of cash to deliver inflation-beating returns and others have warned income-investors seeking higher yields against the high risk this entails in a low interest rate environment. Government bonds are predicted to disappoint and even listed property, which has delivered excellent returns of late, is likely to let investors down over the next few years with lower returns and a possibility of capital loss.

The latest issue of Rode’s Report on the S.A. Property Market reveals that commercial vacancy rates are obstinately refusing to drop and market rentals that are at best showing feeble growth. In addition, weaknesses in the manufacturing and retail sectors — the two support pillars of the industrial property market — are likely to continue to place a lid on demand and, consequently, on rental growth.

BY MONIQUE TERRAZASCASE STUdIES

The latest FNB Estate Agent Survey for the 4th quarter of 2012 shows that buy-to-let buying is at a mere 7% of total home buying - a shadow of the glory years around 2004, when the percentage reached 25%.

However, the attractiveness of residential property as an investment does appear to be gradually improving. This is according to John Loos, Household and Consumer Sector Economist at FNB, and Michelle Dickens, Managing Director of TPN (Tenant Profile Network) Credit Bureau, who have teamed up to create the FNB-TPN Residential Yield dataset, which estimates the initial yields on residential properties across six main housing market sub-segments.

“The boom era yield decline ended in December 2006, when the average gross initial yield bottomed out at 6.655%, driven by rapid house price growth and good growth in the availability of properties to rent as a result of strong buy-to-let buying, which kept the rental market relatively subdued,” comments Loos. “This implied that property investors had to pay more and more for the same rental income stream, ie residential property was steadily becoming a less attractive investment up until late-2006. Thereafter, however, ongoing rental inflation in some form, coupled with a steady decline in house price growth, led to a gradual rise in average initial yield to 8.58% as at November 2012.”

While this yield is not yet blowing the lights out, it is significantly better than the 2006 low and shows that the appeal of residential property buy-to-let property investment is gradually improving.

As opposition parties beg government to intervene in the violent strikes in the Western Cape, mines are closed as the wildcat strikes refuse to die down and people are outraged by President Zuma’s statement that the companies that support the ANC will prosper - is it any wonder that our credit ratings have been downgraded?

In the face of such turmoil and unrest, the outcome of the ANC’s conference in December - which included a rejection of wholesale nationalisation of the country’s mines, a push to implement a development plan that includes measures to ease restrictive labour regulations and the election of Cyril Ramaphosa, one of the country’s richest businessman, as party deputy president - did little to reassure investors or credit agencies.

Citing “rising social and political tensions” and “the inability of the government to implement effective reforms”, Fitch Ratings recently cut South Africa’s sovereign credit rating to BBB. In October last year, Standard & Poor cut South Africa’s credit rating by one notch to BBB, with a negative outlook, just a month after Moody’s had cut the country’s rating to A3, also citing worries about labour unrest and political instability.

There has never been a more crucial time for South Africans to stand up and demand effective government. Do not do sit by and do nothing. Join a political party, join industry lobby groups and get involved! “All that is required for evil to prevail is for good men to do nothing.” - Edmund Burke

Investors & Credit Agencies Uncertain Of SA

Buy-to-let investment

regaining appealThe Good

Investment returns muted in

2013

The BadSouth Africa in turmoilThe Ugly

Highlighting the top performing suburbs in the major provinces, based on highest rate of annual inflation and indicated for e ach value band.

Mid Value : R250k – R700k High Value : R700k – R1.5mil Luxury : R1.5mil +

Gauteng Gauteng Gauteng

Cosmo City - City of Johannesburg 20.76% Refilwe - City of Tshwane 18.50% Southdowns Estate - City of Tshwane 10.60% Honeydew - City of Johannesburg 18.79% Sydenham - City of Johannesburg 17.54% Victoria - City of Johannesburg 10.50%

Western Cape Western Cape Western Cape

Summerville - City of Cape Town 26.45% Rawsonville - Breede Valley 15.17% Schoneberg Estate - City of Cape Town 16.73% South End - City of Cape Town 19.67% Milnerton Ext 6 - City of Cape Town 12.90% Nuwe Uitsig - Drakenstein 10.67%

Eastern Cape Eastern Cape Eastern Cape Alexandria - Ndlambe 25.05% Rosemount - Buffalo City 11.12% Bonnie Doon - Buffalo City 10.24% Tyutyu North - Buffalo City 22.88% Cintsa - Great Kei 9.56% Vincent - Buffalo City 7.27%

Kwazulu Natal Kwazulu Natal Kwazulu Natal

Shakaskraal - Kwadukuza 16.85% Stanger Manor - Kwadukuza 11.07% Zinkwazi Beach - Kwadukuza 11.26% Shastri Park - Ethekwini 15.56% Bazley Beach - Umdoni 9.53% Virginia - Ethekwini 6.66%

Free State Free State Free State

Merriespruit - Matjhabeng 26.19% Panorama - Moqhaka 11.97% Woodlands Country Estate - Mangaung 8.76% Phuthaditjhaba-A - Maluti A Phofung 20.48% Universitas Ridge - Mangaung 9.43% Kwaggafontein - Mangaung 5.89%

Presenting the Top 5 suburbs per area value band in Eastern Cape based on the highest rate of inflation for a 1 and 7 year period. The median represents the current median value for the suburb.

# Suburb 1 year Median

# Suburb 7 year Median

Mid Value : R250k – R700k

Mid Value : R250k – R700k

1 Alexandria - Ndlambe 25.05% R 500 000

1 Michausdal - Inxuba Yethemba 312.65% R 540 000 2 Tyutyu North - Buffalo City 22.88% R 460 000

2 Pellsrus - Kouga 281.77% R 560 000 3 Michausdal - Inxuba Yethemba 22.28% R 540 000

3 Buffalo Flats Ext North - Buffalo City 255.22% R 680 000 4 Kirkwood - Sundays River Valley 16.06% R 570 000

4 Aloevale - Lukanji 225.56% R 500 000 5 Fort Beaufort - Nkonkobe 16.00% R 530 000

5 Burgersdorp - Gariep 206.25% R 460 000

High Value : R700k – R1.5mil

High Value : R700k – R1.5mil

1 Rosemount - Buffalo City 11.12% R 870 000

1 Southernwood - King Sabata Dalindyebo 168.03% R 1 050 000 2 Cintsa - Great Kei 9.56% R 1 050 000

2 Southridge Park - King Sabata Dalindyebo 125.12% R 1 200 000 3 Abbotsford - Buffalo City 9.49% R 950 000

3 Graaff Reinet - Camdeboo 123.58% R 700 000 4 Sunrise On Sea - Buffalo City 9.12% R 890 000

4 Bergsig - Lukanji 115.18% R 1 050 000 5 Southernwood - King Sabata Dalindyebo 8.56% R 1 050 000

5 Top Town - Lukanji 113.64% R 970 000

Luxury : R1.5mil+

Luxury : R1.5mil+

1 Bonnie Doon - Buffalo City 10.24% R 2 100 000

1 Woodleigh - Buffalo City 95.89% R 1 725 000 2 Vincent - Buffalo City 7.27% R 1 500 000

2 Bonnie Doon - Buffalo City 94.93% R 2 100 000 Disclaimer: Lightstone applies advanced statistical methods to a comprehensive property data base - compiled from the Deeds Office, the Surveyor General and other sources - to generate property market data, insights, trends and forecasts. Despite the statistical and actuarial rigour applied, Lightstone cannot guarantee the accuracy and reliability of the data. Furthermore, any information provided does not amount to advice and may not be applicable in some cases. Lightstone does not take responsibility for any losses incurred as a result of any person acting or omitting to act as a result of the publication of this information.

RESIDENTIAL HOT SPOTS

EASTERN CAPE

PROVINCIAL PERFORMERS


With residential property in many South African precincts at last showing signs of slow, but not insignificant, price rises, what advice does Bill Rawson, one of the old hands of the estate agency sector and a major property investor in his own right, have for property trend-watchers?Asked this question recently, Rawson said that his often proclaimed philosophy of buying at least one home per annum to build up a property portfolio remains valid – for those who can get bonds. With interest rates at their current levels and prices still low, he said, it makes no sense to be ignoring the property market. In addition, said Rawson, now is a good time to apply for a fixed interest rate to run for two, three or even four years.

Valuable Input

Average house pr ice growth dec l ined marginally in December 2012, down 0.6% year on year and 1.7% month on month to R865,164 in December, according to the latest statistics from ooba, South Africa’s biggest bond originator.However, the average nominal house price in the 12 months to December 2012 grew 3.9% year on year, from R830,641 in 2011 to an average of R862,940 in 2012. The first-time buyer market remains in positive growth year on year. The average house price for first time buyers is up 1.4% year on year to R665,167. Month-on-month shows a marginal decline of 0.2%. The percentage of first-time buyers among ooba’s total applications increased 3.9% year on year to 52.7%.

Recent research conducted by John Loos, FNB Household and Consumer Sector Strategist and Michelle Dickens, Managing Director of TPN (Tenant Profile Network) indicates that the investment segment of the market may be improving. The reason being that more people are looking to rent in an effort to avoid the costs associated with owning a property, boosting the rental markets across the country. According to economist Mike Schüssler more than 9.2 million households rent, of which 1.6 mil l ion rent formal structures. His estimates, based on the f irst and second quarter of 2012, also indicate that around 700 000 households rent properties in the formal suburban market. Add to this figure the growing shortage of student accommodation around universities across the country and it is obvious that the rental market is sizeable.

reI residential

Positive house Price Growth Apply For Fixed Interest Now rental market Sizeable

Saul Geffen, CEO, Ooba

“House price growth is expected to continue to show moderate growth during 2013, with significant activity continuing in the first-time buyers market. Both the global and the domestic economy remains under significant pressure.”

Denise Dogon, CEO, Dogon Group

“The Atlantic Seaboard attracts some of the world’s wealthiest, most interesting and exceptional people, from heads of state to super-entrepreneurs and global celebrities. Even the lower and middle market along the seaboard continues to be popular.”

Dawie Verryne, CEO, Korbitec

“In the years since the recession, property prices have increased in the region of 7-8% year-on-year. Although this represents a figure slightly above inflation, it pales in comparison to the double-digit growth seen in the years prior to the global economic crisis.”

JP Farinha, GM, Property24

“The most critical pitfall responsible for derailing first-time property buyers is the failure to plan appropriately. So ensure that you are aware of your legal rights, as well as all additional financial considerations.”

Michelle Dickens, MD, TPN

“While the average home owner appears to place much emphasis on the value of his or her property, when it comes to property as an investment it is actually the income stream that it generates, that should really be the focus”


BY dR MARNUS WESTSTRATESMART MOVES

Every property investor knows the thrill of buying: Hearing about properties in the latest prime areas, comparing

prices, and looking at the specs professed by agents or various brochures. In short, falling in love with either the pictures or numbers of a potential property, or a bit of both depending on your measure of objectivity. But then reality kicks in, and we remember that falling in love is not enough. To make the best buy we have to compare the specs and numbers of different properties.

A basic cash flow comparison of the current property numbers is relatively easy. If you’ve been investing for a while odds are you have a standard template; but still, really visualising my expectation of a property in Excel is a feat I have yet to accomplish. Surely I have to account for changing growth rates and expected prime rate variations in the near future and how this will affect my cash flow or return on investment? And surely these parameters as well as rent escalations vary for different properties. Comparing those figures in an elaborate spread sheet is a time consuming hassle that can quickly curb

The Thrill Of A Good Buy

RESOURCES

88 Pockets

excitement. It also makes it difficult to consider these factors and truly know you’re making the best buy. But what if there was an easier and less time consuming way?

This is where Property Investment Software comes in. Property Software has been a buzzword off late, though a question seldom answered is: What do we expect this software to actually do and what real life problems is it supposed to solve? That is the question I want to address in a three part exposition on my view of what Property Investment Software is all about.

Comparing different potential properties is just one of the problems Property Software can solve. Imagine entering only minimal financial information about a property, without the worry of daunting formulas, formatting and fitting all the data on one screen, and then seeing projected and comparable figures about the property immediately. Now you can look at a standardized report on a property, for each of your properties. Sketchy information from brochures can instantly be transformed into projections with cash f low figures including hidden costs often overlooked and an all encompassing return on investment amount.

Not only that, but if the software is really nifty it can allow you to compare these key performance measures side by side.

The benefit is that this takes much of the guess work out of choosing between different properties. You can still see that one property has a lower shortfall than the other, and the effect this will have on the number of years to break-even. But, while it’s usually tempting at this point to make a decision based on cash flow alone and save the trouble of more complex calculations, you might see some unanticipated trends in the ROI and other parameters of interest with those numbers now available.

Not only that, but consider how valuable this information, kept up to date, can also be when looking at the performance of the existing properties in your portfolio. With all this taken into account, it becomes clear that Property Software is an invaluable tool for fine tuning your investment strategy and growing your portfolio successfully.

Well presented comparable numbers that are easy to obtain is the currency of informed buying when it comes to building your property portfolio; and for me the thrill of the buy is fuelled by the excitement of analysing, comparing and scrutinising various properties without unnecessary time consuming hassles. While growth estimations and prime rate projections usually remain guestimates at best, taking at least some of the uncertainty and a lot of the effort out of a buy serves to keep the excitement alive; and in the end, investing should certainly be something enjoyed.

Property Software allows for better decision making

www.propertyfrontier.com

Get started with a 30 day free trial

Jason Lee - Best selling South Africanproperty author and investor

"By far one of the most effective property software products I've used"

Full Portfolio Analysis

PerformanceReporting

Long Term Projections

Cash FlowPlanning

ScenarioComparison

Rental Tracking

NOWIN SA!

The All-in-One PropertyInvesting Software

26 www.reimag.co.za26 February 2013 SA Real Estate Investor

BY koos du toitstrategies

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P3 Property Group

Property Investment Pitfalls To AvoidSpeculating with property

One of the biggest pitfalls in property investment is speculat ing with property: buying a property with the

hope of selling it at a profit in the near future.

It must be said that some property investors have made a great deal of money through speculating, because they bought when the market was down and everyone else was buying; and sold when the market was up and everyone else was selling. In addition, the last property boom - when house prices were escalating at 25% per annum and demand exceeded supply - certainly created the ideal environment for speculating with property.

Dangerous approachUnfortunately, many property speculators got the timing wrong. Successfully speculating with property requires excellent timing, at a time of high capital growth rates, a market in which demand exceeds supply as well as the financial capacity to carry the costs of a property while a buyer is found.

In the absence of all these factors, speculating with property can be dangerous. This is because property is an illiquid asset, which means it can take time to dispose of. And during this time - which could be as long as two months in the current market - the investor is carrying the costs of the property. In addition, in the current market, capital growth rates are muted and there is still an oversupply of properties in most areas. While buyers can still be found, few can obtain finance thanks to the strict lending criteria imposed by the banks.

A superior strategy A superior strategy of property investment - focussing on income generation - allows investors to circumvent all the potential pitfalls associated with speculating with property, while still benefitting from the advantages.

When you focus on the income-generating potential of a property, you are inevitably basing your decision on the factors that will ensure good capital growth over time and ensure the property can be sold for a fair price in future should the need arise. These factors include the location and the amenities in the area, the rental demand for the specific type of property in the area, and the condition of the building and the operating costs, among others.

Focussing on incomeBut these factors are not considered with a view to sell the property at the first opportunity, but rather to gauge its potential to generate an ongoing rental income, now and well into the future. The capital growth produced by the property is secondary, because the intention is not to sell, but rather to milk an annuity income - which keeps pace with inflation as the rental increases year after year - from the property for life - and beyond, if the property is acquired in the right structure, such as a trust.

Finding the golden eggsThis strategy - acquiring property as an income-producing asset - reframes the property acquisition in a new way: a goose that lays the golden eggs. The goose is the property and the golden eggs are the ongoing, inflation-linked monthly income earned by the property month after month.

Speculating with property is buying a goose and selling it at a higher price, without realising it can lay golden eggs. Investing for income is buying the best goose you can f ind, and managing and maintaining it well, so it keeps laying those golden eggs year after year.

Capital growth: an added bonusOf course, an income-generating property will increase in value over time, especially if it was well-selected at the outset. But this capital growth is considered a bonus, an additional perk to the steadily growing income stream it provides.

This doesn’t mean an investor cannot access the equity that has built up in a property over the years. Instead of selling the property to access the equity, the income-investor rather refinances the property through, for example, a second bond. In this way, the investor retains the all-important income stream and accesses the equity as a tax-free lump sum through a second mortgage bond.

Side-step the pitfallAvoiding the pitfal l of speculating with property is more than a risk management strategy, it is, in fact, an opportunity to focus on the income-generating potential of a property investment while still benefitting from capital growth as an added bonus. It is the difference between the possibility of acquiring a lame duck - or a goose that lays golden eggs, while also becoming more valuable year after year.


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P3 Property Group

Property Investment Myths DebunkedDo the experts know best?

One of the most enduring investment my t hs i s t hat t he so-ca l l ed “investment experts” know best how

to grow your investments. The reality is that no one will take more interest in securing your financial future than you do.

The world of investments can be bewildering, indeed. Investors are faced with a wide range of investment options, each with their own pros and cons and fee structures, and are required to make choices without really understanding the implications of their investment decisions.

It is not surprising then that many investors leave the investment decision-making to their pension fund administrators, f inancial advisors or to the asset managers employed by investment companies, in the hope that these “experts” will make the right decisions and act in their best interests.

Dubious financial adviceUnfortunately, this is seldom the case. Much has been written about the fact that investors can hardly rely on financial advisors to suggest the “best” product for an investor’s specif ic circumstances, simply because financial advisors are often only accredited to sell a limited number of investment options and are, understandably, more prone to selling investment products that will earn the highest commission.

The so-called “investment experts” at the

country’s top retirement funds have themselves admitted - and quite unashamedly - that only 5% of the South Africans who have entrusted them with their retirement savings will be able to retire financially independent one day.

Asset managers, while undoubtedly experts, also cannot be relied on either to take care of your financial future. It is a well-known fact

that funds actively managed by asset managers underperform funds that passively track an index over a variety of time periods. While some asset managers do, over the long-term, outperform their peers or the investment category benchmarks, even top-rated fund managers can make poor decisions and have bad years.

Take responsibilityGiven this reality, it is never a good idea to relinquish control of your hard-earned investment funds to “experts”, because no matter how much experience and expertise they may have or how well-intentioned they may be, your financial future is simply not their main priority.

If you want to secure a financially independent future, you have to turn to the only person for whom your financial future is an absolute priority: yourself. Instead of handing over your hard-earned money to some unknown third party in the hope that he or she will make the right decisions, you need to take responsibility for your own financial security.

Simple solutionsOf course, not many investors have the knowledge, expertise and experience to manage an investment portfolio, so you need to look for simple, straight-forward investment alternatives that offer low risk but still deliver solid returns.

For example, if you do want to invest on the stock market, you may want to consider an investment like Exchange Traded Funds (ETFs), which while trading like a stock on a stock exchange - making it easy to buy and sell, simply tracks the performance of an index,

a commodity such as gold or a basket of assets like an index fund. However, this still leaves you exposed to the volatility and uncertainty that have plagued the markets for a number of years.

The best investment alternativeOur top investment choice for securing your financial future is a well-selected and properly-managed portfolio of buy-to-let properties. The reasons are numerous: buy-to-let property is a simple, straight-forward investment alternative that any ordinary South African investor can understand and implement, with very little time or effort, no qualif ications or previous experience and without lump sum investments or even large monthly contributions.

In addition, your hard-earned money is invested in brick-and-mortar, where you can see and touch it, and you can make the investment decisions with your own best interest in mind. Furthermore, if you join a professional property investment organisation for less than the cost of a meal for two per month, you will have at your fingertips a tried-and-tested system, including custom-designed software, preferential access to expert services and the most effective risk management strategies, to ensure you can invest your hard-earned money in brick-and-mortar with minimal risk, but with excellent returns.

Don’t hand over your f inancial future to “experts” - take control of your financial future by investing your hard-earned money where you can retain control - and the simplest and most efficient way to do so is undoubtedly buy-to-let property investment.

BY koos du toitsmart moves


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Daily News

Your Electricity Is Set To DoubleBut do you know why?

Eskom applied to Nersa for a 16 percent increase in electricity prices each year for the next five years. This would take the

price of electricity from 61 cents a kilowatt hour in 2012/13 to 128 cents a kWh in 2017/18.

Leading economist Mike Schüssler, CEO of economists.co.za explains: “Eskom has applied for an annual 16% rise over the next f ive years, which would mean a cumulative increase of 110% – that’s more than double,” says Schussler. Compiling data on 15 different professions, including teachers, factory workers and bank clerks, he compared the affordability of electricity in 33 countries.

The research found that workers in 18 of the 33 countries find electricity more affordable. These countries include the USA, Switzerland, Japan, France and the UK. In only 14 of these countries workers found electricity less affordable than in South Africa. From this high base it would be difficult for South Africa to compete in the cost structure of the economy.

“One could rightfully understand Eskom’s tariff request if prices were still at their previous low levels, but, due to the massive increases in recent years, we are already facing high tariffs, particularly for households,” says Ben Venter of Sasbo, which co-sponsored the research along with the Energy Intensive User Group.

Mike Rossouw from the Energy Intensive User Group noted that from 2002 the South African industrial energy prices have shot up by more than 250% in real terms, which, according to this research, “is the highest increase found anywhere in the world.”

The research shows that over the last seven years South Africa has had the highest increase in electricity prices in the world – double that of the second highest country. The proposed 110% increase over the next five years would have also been the highest over the last f ive years. “Local governments are effectively using electricity to balance their books,” says Venter. So why is this being allowed? With the rising costs of living, should the local government be allowing Eskom to further raise prices, straining household budgets to breaking point? While the parastatal energy supplier assures the public the increases are necessary, it is the consumer and businesses who will be hard hit. With an increase of this magnitude, the knock on effect will ultimately land at the consumers’ feet or be absorbed by the bussinesses bottom line. The City Press revealed last year in July that Eskom had spent R36 million on parties for its staff and their families. This followed the announcement of Eskom’s financial results, which showed a tidy R13.2 billion profit for the 2011/2012 financial year despite a modest 0.2% increase in electricity sales. So why the need for a 16 percent increase this year?

One factor which does not get much media attention is the issue of electricity theft and non-payment and whether this is in fact contributing to the drastic electricity hikes. An article in the Daily News details how one resident in Copesville, Pietermaritzburg, struggles daily with electricity theft, which often results in no power and large electricity bills, “Our monthly bills also exceed that which we would normally pay, putting a huge dent in our pockets,” explained the resident. A spokesperson for the municipality said

hundreds of the illegal lines had been removed but residents persisted in putting more up. Which begs the question, who is paying for the electricity that is being used illegally? Should the burden be borne by law abiding citizens who pay their electrical bills?

One alternative to handing over more money to Eskom is solar power. South Africa is set to become a huge market for solar energy. Not in the future - but right now. Not as a result of government programmes - but because energy prices are rising rapidly. Another factor is the tremendous solar energy resources, the growing economy and consequently electricity demand.

At the same time, the prices for solar modules and turnkey systems have dropped rapidly. Investment in solar PV systems is profitable today. Solar energy has become a competitive energy solution - without government support. Indeed, the South African market is about to boom - not only for large-scale utility projects under the government REIPP programme, but beyond that also, for roof applications in the business segment.

The rising cost of electricity is a concern for all homeowners and their tenants. The use of solar modules will not just decrease the amount of electricity you use and save you money, but you can also sell your excess electricity back to Eskom. And with more electricity increases set for this year, solar power is set to become a necessity to avoid high electrical bills.

Consumer news BY angie redmond


BY john roBertsaCquiring

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Just Property Group

Buy Or BuildWhich path is right for you?

When making your decision about buying vs. building, there is a selection of issues to consider.

Building your own home has the potential to be easier than before, particularly with so many developers offering a predefined set of f loor plans and options. Building your own home also gives you the flexibility to have things just the way you would like. But even with the added convenience of a developer, there are some drawbacks as well. Price is the most important. Currently it is on average 20% cheaper to buy than to build…

Pros of building vs buyingBuilding your dream house offers tremendous sentimental value and advantages in the long run. When you build a home, you can have everything your way from the carpets to the cabinets and everything in between, both structurally and design-wise.

There are definitive feelings of emotional fulfilment and pride in a house that has become “your baby.” Also, having everything brand-new and up-to-date is a tremendous advantage when you build instead of buying an existing home.

Furthermore, the construction materials and building code will be up to the latest safety standards. Modern society is also reflected in a newly built home: everything from wiring for high-speed Internet to the latest in spatial, acoustics and architectural trends can be added without much trouble.

If you are buying an existing home, Transfer Duty is payable on the purchase of a property from a natura l person. In the event of purchasing from a developer, the developer will be VAT registered, and the price of the property will include VAT.

The VAT is payable to SARS by the developer at 14% of the purchase price, but Transfer Duty payable on the purchase of an existing home is payable to SARS by the purchaser.

On properties costing up to R 500 000 there is no Transfer duty, but the more expensive the property, the more Transfer Duty is payable.

…and the consSpeak with anyone that has built their own home and most have horror stories about the project taking too long or exceeding cost expectations. Whether it is inclement weather, problems with obtaining the proper materials, delayed inspections or an overstretched general contractor, building your home from the ground up can come with significant delays.

Going the route of developers is popular but it often limits you to using their f loor plans. Developers will typically quote six to seven months to build a home from one of their existing floor plans.

To be safe, Plan for an additional two to three months of time before you want to actually move in. Apart from being frustrating, it may also put you in a financial bind as you find yourself getting hit twice with the mortgage or rent on your current residence and the same on the home you are building.

Some families find it to be a race against time and their bank accounts while performing double duty. Being in a new development has its advantages, but those advantages come with a price.

Certainly, there are additional homeowner fees or assessments in a development to add to your monthly nut, but especially if your neighbourhood is brand new, you may f ind yourself living among the noise of construction from other homes and loud trucks -- not to mention a parade of prospective home owners.

Cost is also a huge factor as it is almost always more expensive per square metre to build your home than it is to buy an existing home. New fixtures and upgrades can really add up, especially if you are looking to decorate your home just like the development’s models. The

personal time commitment can also be draining to your emotions and your schedule.

Consider the meetings with the developer and sifting through the catalogue of fixtures and upgrades to find just the right balance. Finally, even though you are building your own home, you may be restricted to the floor plans offered by the developer. You can easily find the right neighbourhood, as well as a lack of attractive floor plans that meet your expectations.

Owning a home is a great experience, but it is also an extremely taxing event in your life and you need to be prepared for what lies ahead.

Look into both options and take the path that is best suited for you.

if You deCide to BuYIf you decide to buy you should then decide whether to buy an existing home or from a developer in a new complex/development. If you prefer the latter:

You do not have to put up with the previous owner’s taste and have the choice of deciding what finishes you desire and make your dream home a reality.

When buying from a developer, VAT is normally included in the price.

You have a 5-year major structural defect warranty as well as a 1-year roof leak warranty from a building contractor registered with the National Home Builders Registration Council (NHBRC).

Properties in your immediate area are usually also new and still well maintained, modern, and so on, and this will have a positive effect on the increasing value of your new home.

The initial maintenance cost is low.

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BY angie redmondimproving

Home Improvementsthat add real value to your property

Your home is the biggest asset you will probably own, and by investing time, effort and money in your home, you will

reap the rewards, either through an increase in value or a home that is sought after by tenants. So when it comes to improving your home, where do you start?

With the current economical climate, money is tight and rising prices have seen the cost of living escalate, but even in tough f inancial times, there are ways to increase the value of your property that won’t break the bank.

So what is home improvement? Home improvement that adds value is not simply about adding the best f itting to your home or attaching an extension and adding square metres to your property. It ’s about choosing the right kitchen, bathroom or extension for your property. For an addition to be considered an improvement or home improvement to be considered an ‘improvement’ and ‘investment’ it must be in keeping with character of your property and it’s location or setting. Certain types of home improvement can increase the value of your home. In the current climate it is welcome news that there are ways to enhance your living space and make more money later when you decide to sell.

Scope for improvementIf you plan on selling your property at some point in the future you need to be clear on the type of person who would want to buy your house, and think about what type of additions or modif ications would dissuade a person from purchasing your property. While this doesn’t mean your home should become a show house in waiting, you should spend some time researching developments in your area and checking what the average house prices are,

this will give you an idea of the potential buyers in the future. For example if a school is being built near you, then families will be attracted to your area, if a new public transport system is being planned near your home, then young professionals will be attracted to your area.

Extend upIf for whatever reason you can’t build out, ex tend your proper t y upwards. A lof t conversion is one way to add value to your house. However, not all properties are suitable. You ideally need to have a roof height of at least 2.4m and have adequate support trusses and joint in place to accommodate the weight. Depending on the f loor space available, this new area can be transformed into a master bedroom with en suite bathroom, a home office or entertainment area. If you want to open it up and create the illusion of more space, you could install a balcony with glass doors or a big

skylight. Your first step would be to get a survey done and then appoint a registered builder/ professional. If the job is not done correctly, it could end up detracting from the value of your property and costing you more money to fix it.

Extend outWhy do most people move properties? To gain more space. But what if you don’t want to move, then you need to add more space. Adding an extension onto your property will not only give you extra square footage but also will add value to your property and increase its value. When you decide to extend, the size and style must be in keeping with the original property and others in your street. By seeing what your neighbours have done, you will get a good idea of what you are allowed to do. The actual value added to your property will depend on the square footage added and how it’s packaged. Is it one storey or two, a new living area, or kitchen?


Adding a new kitchenAccording to residential property agents, Pam Golding, people today want modern kitchens. So if your kitchen is dated, one quick way to add value to your property would be to update your kitchen. Modern units and worktops in a kitchen can rejuvenate your kitchen, and instantly make it look better. Spending lots of money on a fancy designer kitchen is not always going to add value to your home; the bespoke Italian kitchen might be suited to a modern city apartment but look out of place in a three-bedroomed terrace. You need to make the kitchen work with the rest of your home. If it is a family home, maybe an open plan kitchen with lots of warm wood and solid wooden units would suit your home. If it is more of an entertaining house, think marble and granite for countertops, with steel fittings. In the next edition of home improvements in REImag we will give you a step-by-step guide to updating your kitchen. A great way to start is to decide what you want out of your kitchen and then decide on a look and feel.

Converting your garageSo you have a garage, but it ’s f il led with Timmy’s artwork from grade one to grade

seven, Dad’s tools and Mom’s wardrobe, which she will fit into again one day. The garage is increasingly becoming a valuable space that can be converted and linked to the main house via a constructed hallway. The garage can become a new room, a guest bedroom or even a granny f lat. So what are you waiting for, there is no better time than now to clear out your garage and start planning your garage conversion.

Remodeling It is a very disruptive process for a homeowner but in areas where there is a shortage of houses, if your house dates back to the Victorian area, you may find your rooms are a bit smaller with only one bathroom or even a separate toilet and bathroom. By remodeling the internal layout you will be able to update the entire look of the house and create a living space that reflects how you live today. For example, if you take all the south facing bedrooms and relocate them to another area of the house, you could create an open planned kitchen/ living area that is south facing and possibly accessible to the garden. Renovations are about bringing your home up to date, so a great idea is to go and look at homes built recently and seeing what aspects you could incorporate into your own home.

residentiaL

speCifiCations to impress

What are some of the smaller less invasive things that could increase the value of your property?

Painting you house inside and outside

Replacing all the light bulbs and light fixtures

Clean the carpets or replace with wooden flooring

Replace curtains with blinds

Add more windows to the property

Add a pool to your garden

Check the plumbing and wiring

Put in a trellis

Re-roof

Insulate

Install double-glazed windows

Replace the front door or repaint

Change all the doorknobs

Put in a skylight

Motion detectors

Build a carport or garage

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improving

More room at the innExtra bedrooms could increase your property’s value by up to 11%. But you need to think about how you can achieve this and what you would be giving up as a result? If the house only has one storeroom, you don’t want to lose that to create another room, but you could always extend and add more bedrooms if it is in proportion to the overall scale of the building.

Get gardeningA garden is a valuable asset and is high on the list of desirables for young professionals who love to entertain or for families with pets and children. Living in sunny South Africa means braais and entertaining and a gazebo or patio could add great value to your garden.

Bathroom is bestThe kitchen and bathroom are probably the most visited rooms in your house and they set the tone for your property. So how do you maximize the value of your house? Make sure your bathrooms are professionally finished with no grout mess. While there is a growing trend towards replacing the bath with a shower, later on when you decide to sell, potential buyers might want the option of a bath or shower.

Kerb appealWhat is the first thing person see when they drive up to your house? It’s the exterior and garden, your fence or wall. If your garden is messy with overf lowing bins and the paint on the walls is peeling, people already have a negative impression of your home. It takes

someone about 15 seconds to create an impression and you want that impression to be ‘oh wow’ not ‘oh no’. So repaint the wall, keep bins out of sight and clean, mow the lawn and tidy the garden, clean the outside windows and repaint the exterior of the house.



SAINT GOBAIN ADVERTORIAL

outh Africa’s mounting energy crisis means that we all need to think of innovative ways to save electricity in our

homes and products that can help reduce our current electricity usage need to be installed. Insulation of buildings is the most effective way to reduce the consumption of fossil fuels used in the production of electricity thus protecting the environment by reducing greenhouse gas emissionsInsulat ion is of ten considered a luxury and overlooked when renovating a home yet its primary purpose is to save energy and improve your home’s comfort. It is one of the few building materials that will save you money for the lifespan of your home

Typical energy usageWater heating 35%, Space heating and cooling 28%, Food preparation 22%, Lighting 10% and Kettle 5%

Comfort in winter and summer.By installing insulation you will improve your homes comfort while reducing the energy consumed for heating or cooling. Insulation also provides acoustic comfort and will reduce noise transmission in your home.

How it worksIts properties are used to “slow down” or “resist” the fl ow of energy such as heat or sound. Thermal insulation provides a high resistance to the fl ow of heat from the warm surface to the cold surface in your home and this limits the impact of the outside temperature helping maintain a comfortable living environment. All bulk insulation materials have an R-value to determine their effectiveness. The R-value is the ability of the product to resist the transfer of heat and it is the best indicator of performance. Thus, the higher the R-value the more effective the insulation.

To properly insulate your ceiling and geyser system in a typical home costs less than 1% of the total per square-metre building costs while positively influencing 63% of your electricity consumption reducing your bills considerably.

Ceiling Insulation - A typical un-insulated home loses and gains up to 35% of its energy through the ceiling.Aerolite has a variety of thicknesses for each climatic zone that complies with the requirements in SANS 10400-XA. Geyser systems consume 35% of a typical household’s electricityIsover’s Geyser Pipe Insulation Pack consists of six 1 metre Glasswool snap on pipes which achieve an R- value of 1.00 which is required by SANS 10400-XA legislation. By insulating your hot water pipes you can save up to 37% of the energy used by your geyser system, offering a payback within 6 months. Isover’s Geyser Insulation Pack exceeds the requirements laid out in SANS 10400-XA.By insulating your geyser and pipes you can save up to 58% of the energy used by your geyser system, offering a payback within 6 months. For more information logFor more information log onto www.isover.co.za or www.insulateyourhome.co.za

SWhy insulate?


Simon Black, MD,Black Pepper Properties

“Direct commercial property investment into physical assets requires significant funding in order to maximise chances of success. Commercial property fundamentals are usually stronger than their residential counterparts due to their longer, escalating lease profiles.”

Valuable Input

Marna van der Walt, CEO, Excellerate

“While the commercial property market in South Africa remains resilient despite being under constant pressure, it is apparent that the containment of operating costs is an increasingly key priority.”

Org Geldenhuys, MD,Abacus Divisions

“Landlords are also looking increasingly at ways to attract tenants in a still-soft market and offering fully furnished offices, at cost-effective rates, is seen as an alluring option right now. Tenants see this as a way of reducing capital spend.”

Erwin Rode, CEO, Rode & Associates

“Investors still like income-producing property. This is so in spite of the pressure on cash flows owing to stubborn vacancy rates, poorly performing market rentals and fast-rising operating costs.”

Richard Roothman, Director, Werksmans Attorneys

“Project bonds, an asset class that is still untapped in this country, could be a viable alternative means of financing infrastructure projects. These bonds allow access to large international pockets of non-bank money.”

This year there could very well be an upsurge in the popularity of offices that come fully set up as disaster recovery sites – and this upsurge is likely to be in tandem with the growth in popularity of furnished offices. Org Geldenhuys, managing director of Abacus Divisions says this trend “is clearly being evidenced at office parks such as the Route 21 Corporate Park in Irene and Highveld TechnoPark in Centurion”. He said the multi-billion Route 21 Corporate Park office park – which only has three stands left for sale – is increasingly seen as a disaster recovery location. “The office park offers redundant fibre optics and is well geared from a technology point of view. We are noticing an increase in tenants who are looking to house disaster recovery sites for their clients at Route 21. Another trend we are seeing is a growing demand for furnished offices.”

JSE-listed property company Synergy Income Fund has delivered total returns of 27.69% and 27.54% for its A and B linked unitholders respectively during 2012 according to Catalyst Fund Managers. In doing so, both Synergy A and B linked units outperformed South African bonds at 16.02%, equities at 26.68% and cash at 5.55%, for the year. Paul Duncan, Investment Manager at Catalyst Fund Managers says: “The specialised nature of the portfolio is driving a focused approach to both asset and property management of the portfolio. Since listing, Synergy has improved its overall portfolio quality with acquisitions like Gugulethu Square in Cape Town and Setsing Crescent in Phuthaditjhaba. Despite some delays experienced with the transfer of the original portfolio, Synergy appears well placed to deliver attractive growth in income distributions.”

The rand slid against the US dollar recently after Fitch Ratings lowered South Africa’s credit rating to the second- lowest investment grade due to slowing economic growth, a widening budget deficit and rising unemployment. National Treasury says government is consistently making efforts to address the concerns identified in Fitch’s rating review, which is aimed at mitigating growth and socio-economic concerns. Fitch odowngraded South Africa’s long term foreign currency credit rating to “BBB” from “BBB+”, the long term local currency credit rating to “BBB+” from “A” and the short term credit rating to “F3” from “F2”. Fitch has placed the country on a stable credit outlook.Protests over poor service delivery increased to record levels in 2012 and the economy has been beset by violent strikes that have affected growth and the current account.

REI Commercial

Disaster Recovery Sites Boom Synergy Delivers Returns Rand On The Slide


BY Catherine riLeYCommerCiaL overview

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Mazars Financial Services

Your InvestmentMap for 2013Time to increase your risk appetite

Accepting that consistently high returns are probably in the past is the most important investment tip for 2013.

This is according to Marius Fenwick, Chief Operating Officer for Mazars Financial Services. “Don’t expect the returns we’ve seen, especially not from the same asset classes. And if you want higher returns, be prepared to take on more risk.”

Fenwick says listed property, which has delivered excellent returns of late, is likely to disappoint over the next few years with lower returns and a possibility of capital loss. Nor is cash by any means a good investment. Fenwick insists that investors avoid keeping cash in the bank unless they intend to spend it within two years. “Even pre-tax returns on cash are below inflation. Cash should only be a parking ground for money in between transactions.”

“Government bonds are a lso l ikely to disappoint,” he says, “and with equities we anticipate a lot of volatility going forward, although equities are still the asset class of

choice for decent returns over the longer term. For the first time since the late ‘90’s, offshore equities are expected to outperform local equities over the next 3-5 years.”

What investors should doWhen it comes to investing, there is no crystal ball, but for every type of investor, from young professionals to retirees, specific asset allocation guidelines can assist in building and preserving wealth.

The low interest rate and higher inf lation period we are heading towards will prove a difficult environment for generating strong, real returns using only conservative low risk assets. Accordingly, Fenwick says investors will have to increase their risk appetite. Even popular guaranteed income products are fatal in long-term wealth creation. The guaranteed amount that pays out after 5 years is eroded by inf lation and at 7% annual inf lation the original capital amount’s real value is almost halved after 10 years.

A challenge facing retirees is where they should put their money to preserve it and earn an income. “Retirees must continue to look at growth assets. When retiring at age 65 one must still plan for an investment horizon of at least 15 – 25 years depending on your health and family history. A typical retired investor should have an equity exposure of around 30% - 40%, an exposure to listed property of 5-10%, and the remainder in specialist income funds which includes exposure to commercial bonds and inflation-linked bonds. Of these investments, around 30% should be offshore,” says Fenwick.

Long-term conservative investors should invest around 5% in property, 20% - 30% in equities and the balance in specialist income funds, while moderate to aggressive investor should put 50% + in equities and the rest in specialist income funds with some 10% property exposure.

As a rule of thumb for offshore investing, choose offshore equity, where Fenwick says aggressive investors should have around 40% offshore exposure within their portfolios, and conservative investors should have 20% - 30%. There is also some embedded value in selected offshore property.

The above applies to lump sum investments. W hen i nv e s t i n g by w ay o f r eg u l a r contributions, much more risk can be taken on and the above limits to equities and offshore exposure can be increased by at least 50%. Rand cost averaging will ensure that over an extended period, optimum growth will be achieved. The important factor is to stick to the program and continue with the contributions even when markets drop.

Going the distanceThe key to investing, however, is really to look forward and be as long a term investor as possible.

“Returns do eventua l ly come through and even though we cannot rely on past performance to get us through investing in 2013, we can take comfort in knowing that a long-term approach will add up favourably in the long run,” Fenwick concludes.



BY james CoLBYimproving

Add Value To Your Building

Refurbish the right way

Many of us spend most of our days in commercial buildings such as offices and schools. We are expected to

productively work, socialise, and generally enjoy the time we spend in these places. It makes sense, then, that these kinds of buildings should be ‘spruced up’ every now and again. Commercial builders call this a ‘refurbishment’. A ‘refurb’ refers to any updates made to the look, feel, and functionality of a building. Refurbs can be done on a variety of scales, either an entire refurbishment from the inside out, or a smaller refurbishment.

Office refurbishment gives developers and occupiers the opportunity to optimise the value of a building without the investment risk and cost that is associated with full-scale redevelopment.

Sub-markets that favour refurbishment buildings include media and design companies, which do not have large workforces, but do value space with character, and place a premium

on location rather than the absolute quality of the building. Overall, although refurbishment might not secure the highest possible land value, it does present a relatively quick and cost-effective method of improving property values, while retaining the high development density of an existing building that planners might not permit in a full redevelopment.

The main advantages of a refurbishment project are:

Speed to market – fast construction, minimised planning and party wall issues, together with opportunities to phase construction works if necessary to manage cash flow or work around existing tenants.

Retention of the advantages of the existing building – character, development density and massing, retention of car parking.

Cost – relatively low cost, with a proportionally high recovery of capital allowances. Developers can focus expenditure on value-adding features once the building fabric is sound.

Flexibility – opportunities to tailor the extent or the timing of the refurbishment to market conditions, reducing funding costs and maximising occupancy.

Susta i nabi l it y – re f u rbi shment s u se fewer resources and create less waste than new building projects, and contribute to

sustainability by improving the performance of the existing building stock.

Defining the scope of refurbishmentThe nature and the condition of a building, its location and potential position in the office market, economic conditions and the investment timescale of the developer will determine the extent of its possible refurbishment. Buildings with inherent long-term value related to location, character, and future planning constraints or listed building status might justify significant investment in refurbishment. Buildings with a short life and a limited potential to generate increased rental streams might, on the other hand, only justify a limited investment to attract short-term tenants ahead of disposal or comprehensive redevelopment.

Minor refurbishmentsThe main purpose of a minor refurbishment is to extend economic life by up to five years. Opportunities for payback are limited with the scope of work being confined to redecoration and repair works, together with minimal alterations to building services. The focus of the investment will be on common areas. Minor refurbishment is often carried out in an occupied building, with phased working and a decant plan being necessary.

When people get bored with the decor of their house, they do things like paint the walls and replace the furniture. There’s no


resourCesPatterson Building

reason why you can’t do the same for your workplace, educational institution, or aged care facility. The first step is deciding on the style you would like your building to ref lect. Do you like the minimalist, ultra modern, heritage, or Victorian look? The key to a refurb is consistency, so you should aim to update the whole building in the style you’ve chosen. Start with the facade. Could it do with new, automatic, or bigger doors? Could it use a paint job? While the outside of a building gives the all-important first impression, the ‘look’ needs to carry on inside. You can also update the look of a building by changing the type and quality of flooring, and fitting out new furniture such as workstations.

Medium refurbishments These projects aim to renew the existing fabric and services of a building to present day standards of performance. The investment timeframe is typically 15 years and, as a consequence, fittings, finishes and elements of building services will be replaced or upgraded, taking advantage of technological advances. Limited structural alterations, including the formation of new service risers and the creation of feature reception areas may also

be involved, together with any works required to comply with statutory requirements for accessibility. These works can also be carried out in occupied buildings requiring additional temporary works, services diversions and out-of-hours operations.

Major/total refurbishments Schemes which aim to secure, for the long term, the benef its of exist ing planning consents, or to exploit opportunities to increase useable f loor areas are aimed at an investment horizon of at least 15 years. The refurbished building will need to meet modern expectations for specification and performance standards. All fittings, finishes and services will be replaced and it is highly likely that the roof and/or facade will be replaced or upgraded, together with extensive work to improve accessibility. Structural alterations may include the re-organisation of vertical circulation, the inf illing of redundant light wells, creation of atriums, or the extension of perimeter floor slabs. Works will be carried out in a vacant building, and as a result, major refurbishments should deliver projects faster than new-build.

what You wiLL need:

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Details of existing buildings and any building code violations that will need to be addressed in the new project.

Details of regional demographics of the business community and general population.

Details of any known planning applications for competition property changes or new properties near to you that could disrupt your property performance.

The zoning rules and regulations in the local area that can impact on your property.

Plans of the existing property to be refurbished. This is both site drawings and structural as built drawings.

A line sketch and conceptual drawings of the new property changes.

If necessary seek soil reports to identify soil stability and safety for the project.

An inspection of the existing property by an engineer to identify any concerns and structural issues.

Photographic record of the existing property and any key areas of structural or design concern.

Have informal meetings with the local council planning officers to identify their concerns regards the proposed development or renovation.

Be aware that the larger the renovation, the greater the possibility that the local planning office will require you to do a full building code upgrade at the same time as the renovation itself. This can be a significant cost burden that the property owner does not want.

A list of ‘must have items or targets’ that the project cannot do without.

A timeline of leases and tenant occupancy matters that need to be handled during the project.

A timeline of stages of the project that should be met given the seasonal business and climatic changes.

Target rentals and new lettable areas that will be created in the new renovation. Understand the minimum cash flow that you must produce from the project.

Total tourist arrivalsto SA in 2011

Africa land arrivals

Africa air arrivals

Americas

Asia & Australasia

Europe

+3.3%

+6.8%

+6.3%

-5.5%

+8.4%

-3.5%

8,339,354

5,828,128

356,191

432,890

420,666

1,275,679


BY iseLLe mCCaLmanhospitaLitY

Tourism And The Property IndustryGet unconventional to get ahead

The host ing of the 2010 World Cup certainly boosted the tourist industry in South Africa, despite the

negative publicity surrounding some of the infrastructure developments undertaken for this purpose. The fact remains that many opportunities were created through this event to further expand tourism and to showcase South Africa as a tourist destination to the world - not just the cities but many smaller towns and rural areas were exposed to the media attention.

What do the numbers tell us?Unfortunately persistent social economic inequalities remain which has a direct bearing on the health of the tourism industry. The tourism sector also faces a number of additional challenges, including:

According to global standards, a tourist is any visitor travelling to a place other than that of his/her usual environment for more than 1 night but less than 12 months, and whose main purpose of the trip is other than the exercise of an activity remunerated from within the place visited. That leaves us with a rather broad scope to analyse, especially given that ‘visitors’ from neighbouring countries cannot always be classified as tourists.

South African Tourism has developed an integrated marketing strategy that focuses on three platforms: leisure, business and event tourism. Prior to 2010, SA Tourism could only report on foreign visitor arrivals as there was no way of separating out day visitors from the overall arrivals. In 2009, Statistics SA for the first time was able to make the distinction between tourists and day visitors and started a data series for tourist arrivals that was aligned to the globally accepted definition of a tourist.

Statistics for 2011 showed that foreign tourist arrivals to South Africa grew by 3.3% (265,802) to reach 8,339,354 million. The biggest growth was from African countries with a marked decline from the traditional tourist markets of America and Europe/UK.

Although this performance is below the global average which saw a 4.4% increase in tourist arrivals, South Africa improved its ranking among global tourism destinations from 34th position to 33rd. The appreciation of the Rand against major currencies in the f irst half of 2011, as well as the f luctuating oil price and Euro crisis, were the main contributing factors having a negative impact on tourism revenue.

Inbound trafficLeisure, comprising holiday and shopping for personal use, continues to be the major reason for travel to South Africa accounting for over 57% of tourist arrivals. Holiday was the main purpose of visit for tourists from Australia while business travel was the main purpose of visit for tourists from China, India and Japan. The share

Fragmentation of tourism planning across the three spheres of government and within the local government tourism sector.

Lack of branding and marketing alignment between provinces and cities.

Lack of compliance with the Tourism Black Economic Empowerment (BEE) charter and scorecard.

Weak systems for tourism skills development and inadequate budgets for domestic tourism.

Inadequate database covering the tourism supply side, with an associated lack of reliable market information.

Lack of incentives for tourism product diversification, new investment and enterprise development.

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Travelsense

of business travellers decreased from 14.2% in 2010 to 12.8% in 2011.

The average number of provinces visited by all foreign tourists remains at about 1.2. Gauteng and Western Cape are by far the most popular provinces among foreigners and account for almost two thirds of total bed-nights spent in the country.

Domestic travelEconomic constraints remain the major barrier to taking a domestic trip which could explain the decline in domestic travel since 2007 as the South African consumer faced economic pressures due to the recession. Although there was a recovery in the economy in 2010, it didn’t translate to more trips in general, but it did translate to more holiday trips. There has also been a marked decline in business travel as well as a downgrading in the standard of business travel where companies are limiting staff to budget hotels, rather than luxury accommodation. Those who did not take a domestic tourism trip in 2011 cited economic constraints as the major barrier which has grown in comparison to previous years. ‘No reason to travel ’ was the second highest mention for people not travelling at all. Domestic tourism is also very seasonal with most of the travel occurring during summer school holidays.

Rating the serviceThe hospitable and friendly people, good service and infrastructure were the highlights for tourists to South Africa. Quite significantly, 91% of foreign tourists did not have a negative experience while in South Africa. Of those who did, 4.9% mentioned general issues of safety and security and personal safety as negative experiences. Tourists who visited South Africa in 2011 were most satisfied with South Africa’s natural attractions and accommodation.

What are the most popular activities?In addition to shopping and nightlife activities, which are conducted by all tourists in all countries globally, adventure activities, visits to a casino and theme parks as well as medical and educational visits were popular activities undertaken by foreign tourists. Wildlife Parks and natural attractions also featured high on the list. With the collection of World Heritage Sites and Table Mountain recently named as one of the Seven Natural Wonders of the

World, South Africa can increasingly compete with the best in the world in terms of natural attractions.

Effects of tourism on the property industryLooking at the stats and the tourism strategy for South Africa, one thing is clear. All actions and energies are still channelled toward the promotion of the major cities. Rural areas and smaller towns are losing out on the formal tourism market as these are being virtually ignored by the current tourism drive. Promotion of regional/rural tourism is still not high enough on the agenda. For many years the influx of foreign money, buying up Wine Estates or property alongside the Atlantic Seaboard for exorbitant prices, were accepted without much thought about the possibility of the golden goose being killed off. And with many provinces having severe financial problems, they are not in a position to spend on upgrading small towns and promoting their regions.

Fortunately there are many examples where individuals have taken the lead in the regenerating of small towns with great success. Towns like Clarens, Riebeeck Valley, Rosendal, Stanford, Darling and many more are great examples of how a neglected small town can be turned into a world class tourist destination. Internet marketing and social media have made it possible for even the smallest of destinations to promote themselves to the world, and the rest of the country, without having a large marketing budget.

The resulting real estate gains are quite spectacular and these towns have become sought after property. Property values in the Riebeeck Valley more than tripled in 10 years and are still increasing. Recently ‘discovered’ places l ike Philadelphia, went from an unknown town between Cape Town and Malmesbury, to a vibrant artist community in a few years with Capetonians f locking there over weekends to see and be seen. Many city-dwellers buy second homes in these towns as weekend get-aways. In turn these places become attractive to tourists and a whole new investment culture has emerged resulting in a good mix of local and foreign investment.

Future of tourism in South Africa - what lies ahead? The uncertainty in Europe has the potential to disrupt the global balance even further. The Eurozone region is showing negative GDP growth due to continued uncertainties about the future of the euro debt levels. Austerity measures implemented in many European countries are also severely affecting tourism flows as disposable income drops and unemployment levels increase.

South Africa cannot rely on its traditional tourism markets any longer and will be forced to relook its marketing strategy in coming years. Although there will always be place for conventional marketing, promoting shopping and nightlife - incorporating ‘rural tourism’ can be an important growth factor and should be encouraged. The revival of towns could in future form the basis of a new dimension of tourism marketing. Tourism and related investment spin-offs can have direct benefits to rural areas and the well-being of provinces.

CommerCiaL

resourCes

Step

Total

CONSTRUCTION COST PROJECTION

VALUE LAND COSTS:(available bulk) X (bulk rate per square metre)

VALUE IMPROVEMENTS:(gross size of development) X (construction cost rate per square metre)

ADD PROFESSIONAL FEES:(improvement cost) X (professional fee rate, expressed as a percentage of improvement cost)

ADD HOLDING COSTS:(monthly holding costs) X (number of months during which the development shall be held prior to completion)

ADD FINANCE COSTS:(amount to be borrowed) X [(annual interest rate/12) X (number of months from drawdown to completion)] X drawdown factor

Add components 1-to-5 to derive your total construction cost

MARKET VALUE PROJECTION

PROJECT GROSS INCOME:Using the current gross market rate, project the annualised amount of all tenant, parking and additional income that shall be reasonably derived from the your project

PROJECT OPERATING EXPENSES:Using current market costs, project the annualised amount of all of the operating costs (including a provision for maintenance and upkeep) that shall be reasonably incurred

DERIVE YOUR ANNUALISED NET INCOME:Subtract your annualised operating costs from your annualised gross income to derive your net operating income for the �rst year

SELECT AN APPROPRIATE RETURN:This return (termed a capitalisation rate) is the current market return which new developments of a speci�c nature and in a particular node shall currently trade at

ADD A RISK PREMIUM, IF NECESSARY:This may not be necessary but, if your development shall be initially vacant or is to be located in a high-risk area, it is appropriate to add a risk-premium to your core-capitalisation rate

CALCULATE THE MARKET VALUE:By dividing your annual net operating income by the risk adjusted capitalisation rate, you will calculate the market value of your proposed development


BY jonathan CourtweLLgetting started

Your How To Guide:Developing New Commercial Properties

Readers of Real Estate Investor Magazine w i l l reca l l that in l a s t month ’s edit ion, I descr ibed the contents

of a bankable business plan within the context of real estate. We now extend our consideration of investment in commercial property by thinking about the development of new properties aimed at growing and strengthening our property portfolio.

A helpful manner of identifying the key components of a fixed property development plan would be to list these elements according to eight categories.

1.High-level feasibiltyAssuming that you have conceptualised a new property development, the first material action step is to perform a high-level financial feasibility so as to determine whether your development might be feasible within current market conditions.

A useful way of doing this is to develop a side-by-side feasibility model as depicted below:

If the projected market value of your new development is higher than the projected total construction cost, you may have a viable development opportunity available to you and it may be prudent to proceed to the next development plan component.

2.Obtain control of the land portionBefore incurring the substantial preliminary expenditure associated with components 3 and 6, below, you should sign a suspensive purchase agreement over the land portion(s) suitable to your proposed development. First prize in this regard would be to obtain an effective open-ended or lengthy option to purchase the land portion(s) but it is more likely that a seller will grant you about two months to perform the tasks listed in components 3 and 6, below.

If you are fortunate, you wi l l be able to purchase a completely vacant, as yet undeveloped land portion large enough to accommodate your proposed development. However, quite often you will be faced with the prospect of having to (i) purchase several land portions, (ii) to clear these of their current structures and to (iii) consolidate the land portions into one consolidated land portion with the associated necessary development rights.

Component three requires a prospective property developer to perform a detailed market study in preparation for the occupation of your development.

3.Perform a market surveyKnowing that you will be able to let your new property is of the utmost importance as this will provide the necessary comfort to your bankers for them to advance you the required development capital in the form of a mezzanine (short-term) loan and the required loan capital

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Courtwell Consulting

(long term) to pay the construction costs off over a ten-to-twenty year period.

Surveying the market means identifying the optimal tenant mix and targets, providing these targets with a meaningful brochure of your development and obtaining their intentions to occupy your development. Letters of intent and carefully worded, binding offers to lease should be used to obtain the support of a sustainable tenant base.

A market-survey will also include performing a socio-economic survey if your proposed development is large enough to warrant determining its impact upon the economic development of the node in which it is to be built.

Component four comprises approaching a selection of banks to obtain their support for your development.

4.Obtain loan financeYou may wish to again read the last edition of REIM wherein I mentioned the contents of a bankable business plan for presentation to your bankers.

Using these contents – and populated by the information compiled during your high-level feasibility and market survey – you should now approach several different banks to obtain their support for your proposed development.

An important consideration is that you should calculate your weighted cost of capital as each bank submits their proposed funding structure and compare this (capital) cost to the capitalisation rate (return) which you selected during category 1, above: if your cost of capital exceeds your return, then your development remains unfeasible in principle.

Please do not forget to describe your proposed management plan to your bankers: they will place great importance on this.

Although component five – appointing and instructing your project team – is an enjoyable step in the property development process, it has to be carefully performed as the ultimate success of your scheme rests upon your project team members’ ability to execute their respective functions accurately and on deadline.

5.Instruct project teamAbout thirty specialists will comprise your project team and each member needs to work in conjunction with the others which requires careful coordination of their tasks.

The first task of the team will be to design your new development and to list the components, features and construction material so as to enable an in-depth cost projection.

A costly exercise comprises component six of your development plan: obtaining the municipal and environmental permission and cooperation for your proposed property.

6.Obtain municpal approvalMany readers will know that the town planning and environmental approval process is complex and requires careful planning as well as the compilation of intricate material. In March’s edition of REIM, I will elaborate on this process in an informative and helpful guide to preparing these applications.

The process of obtaining municipal and

environmental approval requires compiling and submitting a complex set of documentation (such as plans, technical specif ications and municipal requirements) is aimed at converting your land portion into a correctly zoned and serviced property capable of sustaining a building of the nature which you envisage will comprise your completed development.

The relevant local authority shall have to be convinced of the need for your development, the benefits of your development as well as its positive impact upon their social requirements.

Having commenced the municipal and environmental approval application process and obtained the conditions of establishment from your local council as well the (positive) record of decision of your environmental application,

you will, subsequently, be able to proceed to component seven of your development plan: the performance of an in-depth financial feasibility.

7.In-depth feasibiltyEveryone – that is every stakeholder in your development – will now be awaiting their respective bottom lines: your shareholders will want to know their required contribution and return, your bankers will want to know their required loan amount and repayment f low and your project team will want to know their workload and associated fees.

This means that you will have to develop an complex set of construction cost forecasts, income and expenditure projections and market values.

The result – an in-depth financial feasibility – should become the basis of your construction plan and updates thereof should be sent on a regular basis to your investors, bankers and other stakeholders.

Component eight of your development plan

provides an opportunity to see a meaningful result of all your hard work to date.

8.ConstructionThe under- and above ground construction begins and follows a six to twenty four month programme of preparing the ground, installing the municipal supply connections and laying the foundations as well as f loor-by-f loor construction of your new building.

As your improvements r ise out of the ground, so you will have to manage both the contractors and the cash f low against their original timetables and the f inalised cost projections respectively.

And, f inally, as your tenants move in one by one, their fit outs are completed and your property management team takes over the day-to-day administration of your new f lagship development, you enter the holding phase which requires you to asset manage your development for value during the years to come.

CommerCiaL


ADthe London property specialists

Whilst every care has been taken in preparing these particulars, Smuts and Taylor Ltd and the respective landlords/vendors give no warranty, express or implied, as to the completeness or accuracy of the information contained herein. These particulars are subject to errors, omissions, change of price/rental

or other conditions, withdrawal without notice, and any special listing conditions imposed by our principals. Smuts and Taylor Ltd will not be liable for negligence, or for any direct or indirect consequential losses or damages arising from the use of this information. You should satisfy yourself about the

completeness or accuracy of any information or materials. The information contained herein does not form part of an offer or contract.

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Tony Clarke,MD, Rawson Property

“We can expect to see a sharp rise in property investors in the US, due to extremely low mortgage rates and a sharp decline in home prices.”

Valuable Input

Mike Smuts, MD, Smuts & Taylor

“Whilst the rest of the UK, Europe and the United States are generally showing, at best, weak economic growth, the Central London market rose by a very healthy 9.4 per cent in 2012.”

Paul Kruger, Franchisee, Pam

Golding“The Namibian real estate market is evolving into a more mature, modern landscape, combined with a growing economy and political stability.”

Dr Andrew Golding, CE, Pam Golding

“The London market still confounds the critics with its impressive growth both in terms of capital values and rental yields. Underpinning this of course is demand outstripping supply.”

Craig Illman, CEO,Propwealth

“Invest in residential property in the UK by finding added value in below market investments. Properties must generate cashflow, have a supply of tenants and the investment must have a viable exit strategy”

1. Inventory and home prices. The key question this year is whether home prices will be high enough to encourage new construction or homeowners to sell.With home price indices hitting bottom in 2012 and pointing to higher property values, the regime of affordable housing is also about to end. 2. Home ownership versus renting. Trulia.com’s chief economist notes that the era of affordable home ownership may see a decline in 2013 especially in expensive markets like New York, San Francisco, Miami and Seattle.3. New Mortgage Rules. The Dodd-Frank Act which created the Consumer Financial Protection Bureau will set new mortgage standards.

House prices in Namibia have increased by 20% since the beginning of 2012. Price movements in the central and coastal markets were largely responsible for the accelerating house prices as an increased supply of new properties in the middle to upper price segment pushed up overall prices. The value index rose by 7.6 basis point through August, but because it came off a relatively low base, it was unable to minimise house price inflation. Elisenheim, Omeya and The Dunes in Swakopmund were the most notable drivers of volume growth. Central property prices continued to rise as house prices increased by a further 6.5% month on month. This has accelerated the year on year growth of central house prices to 39% in August 2012. With 2012 seeing a year of growth the property market in Namibia looks set to grow this year.

The prognosis for Africa’s projected economic growth is positive, as commonly reported in the media. At a time when western economies are faltering, the positive statistics make particularly attractive reading, says Florence Menson, JHI Ghana’s centre manager of Marina Mall in Accra, the capital city of Ghana. Menson explains that the death of President John Atta Mills in July 2012 was mentioned in news bulletins around the world but did not become a cause for political unease. Power passed to John Dramani Mahama without fuss and was seen as another positive indicator of Ghana’s stability, she says. In 2011, Ghana was at the top of the world economic growth charts with a whopping 14.4 percent, boosted by new oil production and helped by the construction sector. Ghana is expected to achieve around 7.5 percent in 2012 and again in 2013.

REI Offshore

3 Challenges For The USA Housing Market

Namibia 2012 Results Show Growth

Ghana’s Projected Growth Positive

48 www.reimag.co.zaFebruary 2013 SA Real Estate INVESTOR

RESOURCES

Propwealth

The United Kingdom Buy to Let property market is growing and it can be a minefield to find exactly where and

how to invest. Liverpool is set to be the next hotspot in the UK according to UK investment company Propwealth.

There are so many aspects about Liverpool that make it a viable property investment venue. Tourism in the city has capitalized on its world-class ar t ga l ler ies, unique landmarks, museums, and genuine cultural wonders. Liverpool is also in music history as the historic origin of the 1960s legendary band, The Beatles. As many tourists come here for various purposes, the real estate sector has grown significantly, extending its impact to basic tourism-related businesses like restaurants, hotels, and clubs. Liverpool investment property remained lackluster from the post-World War II period until 2003. In June of the same year, investment properties in the city received a huge boost when Liverpool won in its bid to secure sponsorship for the 2008 European Capital Culture. Properties have increased in value since then and will continue to do so.

Compared to other parts of the country, Liverpool has always been a high yielding city for rental income due to the fact that house prices are quite low and the rental is quite

high, so it’s always been a safe investment. There is a good mixed rental across the board in Liverpool. Therefore, whatever an investor wants to achieve from an investment property, they can certainly achieve it in Liverpool.

Looking forward, Liverpool has lots of development in and around the area with the housing market renewal schemes, which is an ongoing 12-year project. There is also a major overhaul of the Liverpool docks, with billions of pounds spent by Peel Holdings on a new floating container terminal, which will bring a lot of infrastructure to North Liverpool with regards to jobs.

“ With renting becoming the only option for many people, there is a current boom in buy to let ”, says Anthony Doyle, co-founder of Propwealth.” As with any investment one has to follow strict due diligence procedures and based on this we currently invest in Liverpool and Greater London,” he continues.

The current general market gross yields are around 6-7% but because the properties are

sourced directly from banks and auctioneers, and subsequently upgraded, the gross yields are a minimum of 9% and up to as high as 15%, making the properties very attractive cash generating investments and far more than banks are offering. The latest industry property report issued in December 2012 states that the area of Greater London and the North West (Liverpool and Manchester) will be enjoying excellent rental demand for the next 7 years. This only bodes well for those who get in now.What makes these investments so attractive for South African buy to let investors is the low entry level. One-bed flats sell for £ 36000 with 10% to 11% yields and entire properties offer a 9 to 12% yields with prices from £ 66950 upwards. All are in high tenant demand areas, with many properties waiting for tenants on transfer. All properties are totally upgraded and have full management in place making them ideal long distance investments.

“ We are excited about the next few years in Liverpool as it offers us a unique opportunity to invest in affordable properties, that are fully managed with great yields,” comments Doyle. “ Cash is king. We can only imagine what will happen when the capital growth cycle begins again,” he concludes.

BY CRAIG ILLMAN UNITED KINGDOM

Liverpool

The next UK hotspot

“Liverpool has always been a high yielding city

for rental income”

www.reimag.co.za

PROPWEALTH is a UK based property investment company, run by South African investors living in the UK.

CASH POSITIVE

INVESTING IN THE UNITED KINGDOM

We offer bespoke property investments that are ideal for distance investing

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*All investment properties are fully managed and tenanted

*Non UK resident mortgages available with 70% loan to values at 4%

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*Limited company structures and tax advice

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*Advice on Property Investment portfolio development

SIGN UP FOR YOUR FREE ONLINE COURSE “INVESTING IN THE UK” - www.propwealth.co.uk

Meet us in Cape Town on the 30 and 31 January, Bloemfontein on the 14 February and Johan-nesburg on the 20 and 21 February. To book please e mail us on [email protected] or call/text our SA cell from 22 January on +27832500388.

www.reimag.co.za50 www.reimag.co.zaFebruary 2013 SA Real Estate INVESTOR

BY SCOTT PICKEN USA

Benjamin Franklin said “The man who trades freedom for security, does not deserve nor will he receive either.”

Investing in property is not without risk and reward, but with the proper advice your investment will have less risk and a lot more reward. Here are six lessons to get you started on your investment journey.

Lesson One: People vs propertyMost investors in property want to use their gut feel to invest in property. They focus on their knowledge and experience to make these decisions and over time they build up a successful track record in purchasing great investments properties. Then they want to invest overseas and they fly over to a place like London, Sydney or Atlanta and they try to use the same tried and trusted technique to acquire an investment property in a week. I always ask people, “How successful would an American be if they arrived in Johannesburg and tried to buy an investment property in a week?” If they are honest with themselves they would agree that there is no chance. Therefore when you are investing overseas you need to change your strategy and if you don’t, you will be part of the 80% of South Africans who lose money when they invest overseas. The focus has to change from the property to the people. You invest in people and if you have the right partners they will ensure that you are investing in the right areas, buying the right type of properties for your investment criteria and, most importantly, they will ensure that they can manage and

maintain your asset – ensuring the long-term sustainability of your investment. If you don’t have the right partners you could end up with properties in dodgy areas and a nice marketing angle (like 50% LTV and 8.2% financing) and you will be none the wiser until you learn about your mistake over time. An example of this is being offered in South Africa at the moment and both I and two of our clients went to look at these properties on the ground and everyone was shocked by the area, the fact that the value of the properties was $30k and they were being sold to South Africans at $66k. At IPS we invest in people and we pride ourselves on having the best of breed partners on the ground. When we did our due diligence, RJ who reviews over 5000 investment properties a month in Atlanta, gave us his views on these properties and basically said, “You can sometimes put lipstick on a pig, but it will still be a pig!” In international property, the people or partners you work with will determine your success in the long term!

Lesson Two: Scenario planning

I often have debates with people whether it is better to invest locally or offshore. I maintain that as a positive and passionate South African there are great opportunities in South Africa and it is far easier to make R9 than $1, as we know the market, can manage the risks and exploit the opportunities. However once we have made some money, it is both prudent and imperative to invest in first world assets, currencies and income. Most people again use their gut feel, but I am currently working with Clem Sunter on a modelling technique to take his scenario planning and help us know where to invest – local or offshore, which countries to invest in and what to invest in. Nothing is perfect, but it provides a framework for you to make educated and informed decisions, based on facts. In conjunction with the modelling technique with Clem, I am also writing a book, to help you understand how you can use the methodology to make successful international property investment.

The Most Important Lessons To Learn

When it comes to offshore investing

Year Aus Dollar Change to Pound Change to US Dollar Change to now now now

2007 5.98 54% 14.14 0% 7.04 26%

2008 7.47 23% 15.54 -9% 7.81 14%

2009 6.23 48% 12.73 11% 7.74 15%

2010 6.47 42% 11.41 24% 7.63 17%

2011 7.25 27% 10.85 30% 6.77 31%

2012 9.2 0% 14.13 0% 8.89 0%

www.reimag.co.za 51February 2013 SA Real Estate Investor www.reimag.co.za

USA

Lesson Three: Long-term investmentOne of the overriding components which South Africans have to take into account is the devaluation of the Rand and the impact this has on our global wealth.

The graph above shows you how the Rand has changed against the major currencies and the returns IPS investors have made in Rand terms, based on the timing of the investment. For example if you bought a property in June 2009 in Australia, you have made a 48% return on currency, independent of what has happened to the property market (see the table on previous page).

I work with a gentleman called James Paynter to understand the Rand. He has been analysing the Rand and predicting the future using a technique called Refined Elliott Principle. Since 2005 he has had an 81% accuracy on

predicting where the Rand is going. He does this analysis for the US Dollar, Pound and Euro against the Rand. We analyse his reports, which show that the Rand is going to be between R9.50 to R10.40 to the US Dollar in

the next few months and R14.00 to R20.50 in the next few years. Scary stuff, if you haven’t planned for it.

Basically, when investing overseas, you need to take at least a 5-year view on your investment.

Lesson Four: Information and financing USA propertyAs we say there are only two components which are necessary to be successful in international property investment: the RIGHT Information and the RIGHT Partners. As explained already the option of f inancing in USA is a classic example. I have had a number of clients excited

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about getting 50% LTV and 8.2% financing in USA. However when proper due diligence was done it was found the properties were being bought for less than half the value they were being sold for and then the clients were being asked to put down a 50% deposit and finance the rest. Not only was this very dodgy, but these properties were in the worst suburbs and so offer no real prospect for the future. Through our partners, who have 82 off ices around the US and specialise in f inancing property from the banks, I can show you how I am getting financing for 4.5% fixed for 30 years at a 70% LTV with complete transparency on the purchase price and no balloon payments. No brainer when you consider the net yields on most of the properties is more than 10%.

Lesson Five: Tax & structures vs property

We have been working with Grant Thornton (top 5 accounting firm in the world) to make sure that we have all the right answers for the tax, structures and compliance of owning property in USA. We have invested over R120k in getting this right and it has taken us over 6 months.

However in places like Atlanta the market has increased by 40% in those 6 months. As a mentor of mine, Dr Hannes Dreyer teaches, it is far better to buy the right property in the wrong structure, than to buy the wrong property in the right structure.

In US, although I am pleased we now have the right answers for the structure, in hindsight we would have been better off just buying the properties right away as what we might have lost in tax, we would have certainly gained in the movement of the market. This is especially true in the US where there are no transfer fees to move property from your own name to a structure or from different structures. For this reason in October, we made the executive decision to stop waiting for the structure and to get involved in buying as many properties as we could.

“The Rand is going to be between R9.50 to R10.40

to the US Dollar in the next few months and R14.00 to

R20.50 in the next few years”

IPS Invest


BRAZIL BY ANGIE REDMONDBRAZIL

The Soccer World Cup will be hosted in Brazil in 2014, providing the perfect opportunit y for investors to buy

property before the boom and take advantage of the countries burgeoning economy. Investment in property in Brazil has been on the increase as the market grows and offers more opportunity as a result of worldwide attention and consumer spending. Brazil is Latin America’s largest country. It covers almost half (47.3%) of South America’s territory, totaling an area equivalent to 8,547,403 square kilometers. It is the world’s fifth largest country, following the Russian Federation, Canada, China, and the United States. Except for a minor number of islands, the Brazilian territory extension is uninterrupted and continuous. The Equator line crosses the northern country, next to Macapá, while the Capricorn Tropic crosses the southern country, next to São Paulo.

The 2014 World Cup is expected to generate over US$ 30 billion in direct taxes,

US$ 10 billion in additional indirect taxes, and an increase in consumption of Brazilian goods and services by over US$ 3 billion for the period leading up to and during the 2014 World Cup. Approximately 600 000 international visitors are expected to travel to Brazil, which alone could generate over US$ 2.5 billion for the Brazilian economy. In addition, approximately 3 million Brazilian tourists are expected to travel throughout the country, potentially generating an additional US$ 3.5 billion or more. With more tourists come a need for accommodation during both the World Cup and the Olympic Games. Now is the perfect time to invest in property in Brazil.

Boosted by the upcoming 2014 FIFA World Cup and the 2016 Olympic Games, major infrastructure works are sprouting like mushrooms in Brazil’s metropolitan areas. In the past few years, major investments have been made throughout every sector of the country’s

construction industry: transport links, such as roads, railways, airports and seaports will be improved and expanded, new power plants are planned to cater to the increasing demand for electricity and programmes have been implemented to overcome the constantly growing shortage of housing.

In 2011, construction increased nationwide by 4.8% and, according to the Brazilian Construction Industry Board (CBIC), it is expected to jump further to 5.2% in 2012. Moreover, millions of new jobs have been created - about 250,000 were added in the period between January and October 2011 - drawing more than $60bn in foreign investment in 2011.

Brazil’s cities are changing, featuring more and more remarkable architectural designs and structures. One expected contender for the official symbol of the country’s boom is the nearly completed Pátio Victor Malzoni office building, located on Faria Lima Avenue in São Paulo, the city’s response to New York’s Fifth Avenue.

The table-shaped 786,000 square feet building is fully covered with black mirrors and consists of two 19-storey towers which connect on the 11th f loor, supported only by concrete and metal. Owned by shopping-mall developer and real estate firm Malzoni Group and designed by Botti Rubin Architects, it features a black-and-white marbled indoor reception area and an outdoor pool, and is designed to allow rooftop helicopter parking.

Google will be one of the main tenants of the building, which is scheduled for completion within the next few weeks. For that, it will be fitted with special dog-hair-resistant air-

Buying In Brazil

Ahead of the property boom


a lawyer to help you with the purchase.Land registry costs, can vary depending on

the state the property is purchased in. Stamp Duty Tax (or Registration tax) is around 2% of the purchase price (payable to the notary).

Taxes can vary (only by fractions of a percent) depending on which State you buy your property in.

With the upcoming FIFA Cup and the Olympic games, the property game in Brazil is changing, and the best time to invest is right now.

OFFSHOREOFFSHORE

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Property Bond Brazil

conditioning filters, a climbing wall and trees - and will be one of the world’s priciest pieces of real estate.

Another spectacular example of the booming industry is the £22m cable-stayed bridge at the entrance to the 2016 Olympic city Rio de Janeiro. Designed by Alexandre Chan, the creator behind Brasilia’s famous Juscelino Kubitschek Bridge, and built by construction company Queiroz Galvão, it is not far from Rio’s airport, Galeão - Antonio Carlos Jobim, which is also undergoing an expansion in the run-up to 2014 and 2016. The structure, called Bridge of Knowledge, is 780m long and links the Federal University to one of Rio’s most important motorways, the Red Line. It features a 96m-high concrete pillar which ties up 15 frontal and three rear stays, arranged in a fan-harp design.

Elsewhere, preparations for the sporting events are in full swing. While Brazil will take on some of the temporary venues of the London 2012 Olympic Games, many of the already existing arenas will have to undergo extensive renovation to comply with fire and safety requirements.

One such venue is the legendary Maracanã football stadium in Rio de Janeiro, which will host the World Cup Final in 2014 and also be the venue for the opening and closing ceremonies of the Olympic Games. This makes Rio de Janeiro a key city to invest in.

With a l l the new infrast ructure and improvement being made in Brazil, the property industry will see a major boost and the best time to buy is ahead of that property boom.

Important buying information Legal assistanceWe advise you to use a trusted client lawyer when purchasing who will ensure your interests are protected. We recommend that you use a Brazilian Lawyer who is registered with the

OAB (Ordem Dos Advogados Do Brasil) which is the equivalent to the Bar in the UK.

Foreigners owning land / property

The Brazilian authorities encourage foreign investment, as such there are no major restrictions on foreigners to buy and sell residential or commercial property in Brazil. There are however some limitations and/or fees applicable for specific areas such as marine land, islands, agricultural land and areas near Brazil’s international borders.

Land registryProperty is registered in Brazil via private notary publics, under justice control. The real estate registry in Brazil is such that each property can only be registered at one registry which stores the entire transaction history and physical identification of each property. The access to all information of a property is public. Thus many Brazilians buy and sell property without a lawyer. We recommend that you use

FAST FACTSBrazil has the 10th highest number of vehicle owners in the world.

The world’s best and most delicious coffee is produced in Brazil.

Brazil has the biggest rain forest of the world, the Amazon forest.

Almost 200 million people live in Brazil, which makes it the fifth largest country in the world in terms of population.

About 1 million people who live in Brazil are Asian.

Brazil has won the Soccer World Cup five times.

Brazil has one of the New 7 Wonders of the World.

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LEGAL CHECKLISTDo the current owners have the correct entitlement to the land and debts?

What are the obligations for both parties according to the contract?

What is the payment process and what general legal issues that might arise?

Is the land registered in your name correctly at the end of the process?

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BY COLLEEN MAYNAMIBIA

Namibia offers a wealth of business and property investments opportunities. Namibia has a natural and diverse

landscape, next to South Africa and Botswana; it has a moderate temperature and an abundance of natural resources. The economy is centred on agriculture, fishing and mining, as well as diamonds and uranium. Namibia has become a new international property hotspot with new developments and construction projects.

Over the last few years more and more investors have turned to property in Namibia as a sound investment, but before you invest in property in Namibia, you need to understand how property investment in Namibia works.

Getting startedThe f irst step in any property search is to research. As the saying goes, buy in haste, regret at leisure, so do your homework. There are numerous websites that will give you helpful information and a basic framework. When buying the property you need to decide if you

are investing for the long term or if you would rather have a holiday property that can double as a buy-to-let property? If you are buying for holiday and letting purposes, try and find a property with something, a wow factor, be it a special view, large trees, a rich history, sea front or water rights. Be creative when you are looking for property, look for the factors that will increase the curb value. Besides location there are other factors that are also important, such as space and the actual property. If you go for the best, your returns will be higher. Think of it in terms of sea facing property, which would you rather stay in, the one closest to the beach or the one just behind it in the second row?

If you are looking for a long-term investment, try to find a piece of land in an area you know will become valuable in the future (10 – 15 years time). Without a building on the land your rates and taxes will be fairly low. A few investments like this at low prices can make you money in the future, areas that are being developed are a good place to start, look at the surrounding

areas and what is in the vicinity or is being proposed in the future, for example shopping malls and complexes.

Namibia has a highly competitive and fiscal regime, which adds to its attractions for foreign investors. The cornerstone of this is the Foreign Investment Act. The Act and its provision for a Certif icate of Status (CSI)and the Special Incentives for Manufacturers and Exporters. Besides the granting of a CSI, the Act further provides for liberal foreign investment conditions with equal treatment of foreign and local investors, openness of all sectors of the economy to foreign investment and protection of said investments.

Real estateReal estate in Namibia covers a vast range of properties including residential properties, lodges, resorts, hotels, farms and seaside properties. They range from affordable to luxury properties. One of the many attractions of owning property in Namibia is the fact that property values (capital growth) remains steady at 18% per annum and property can be registered in the name of a private person as well as in the name of legal entities such as corporations and companies.

What sort of property are you looking at buying? You need to decide what kind of investment you wish to make, how much can you afford and what does the property need to have, and most importantly, where must the property be situated? Coastal or inland is the first decision; from there you can look at different areas and the prices of property in those areas, as well as population and tourism. While research can get you quite far, at the end of the day you need to plan a buying trip, and look at properties and areas, another important

Namibia up close

Understanding how investment works


OFFSHOREfactor when buying a property is what the area will look like in 10 years time. Research on the recent and future infrastructure as well as construction projects in the area can be very useful. The demographics of an area can change quite rapidly.

The Namibian real estate market is evolving into a more mature, modern market and the provision of innovative, new solutions to the more sophisticated and discerning client is both needed and catered for in most instances. One of the new trends confirming this phenomenon in the Namibian market is the development of lifestyle estates in the residential market and turnkey products for clients in the retail and commercial sectors. Further evidence to this is the development of two new mixed-use facilities (residential, commercial and industrial), one in Windhoek and another in Swakopmund, with the first two regional shopping centres as the core focus of these projects.

Namibia’s median house pr ices va r y considerably, depending on location and level of development. Due to the growing demand for property and the undersupply of land for development, house prices have shown steady growth over the last few years. Median house prices vary from N$ 317 000 for a small property in the south, N$ 510 000 for a medium sized property in the north to N$ 1 100 000 for a large property at the coast. Prices for properties located in the more upmarket areas in all the larger centres differ considerably from the median house prices.

“The three major centres in Namibia namely Windhoek, Swakopmund and Walvis Bay are the hot spots in the residential market, while resurgence in development in some smaller towns with specific character like Tsumeb, Otjiwarongo and Omaruru is also attracting interest. Agricultural land remains in high demand, especially game farms, as well as farms suitable for livestock and irrigation says Paul Kruger of property specialist company Creatif.

“From a commercial perspective, Windhoek, Swakopmund, and Walvis Bay are also the three largest commercia l centres, while development and investment in the north with Oshakati and Ondangwa are growing rapidly. New retail developments in Keetmanshoop in the south and Otjiwarongo in the north funded by GIPF (Government Institutions Investment Fund) will undoubtedly contribute to growth in these areas. Industrially, both Windhoek as a growing capital city and Walvis Bay as the main port with planned upgrade

and expansion to its container terminal offer various industrial investment and development opportunities,” he adds.

Says Kruger: “As part of a typical bond agreement the applicant will be limited to allocate a maximum of 30 percent of his/her disposable income to service instalments. The interest rate available on a typical loan is currently 9 percent over a 20 year period. On sectional title and single residential homes a deposit of 10 percent is the norm while a deposit on vacant land is 30 percent. Although the property market has shown an annual growth of 20-25 percent over the last few years, the banks have increased their lending criteria. Mother bonds are available to property developers after securing 80 percent pre-sales on developments. Other financial institutions like Old Mutual invest and fund commercial and residential property developments in Namibia, while alternative funding is available through various

institutions like the Government Institutions Pension Fund (GIPF) to f inance targeted property development projects.

“The potential for growth in the real estate sector in Namibia seems endless. One area with exceptional growth potential is property developed for the low to medium income bracket in Namibia. At the current rate at which Namibia is addressing structural supply shortages, it will take at least another


NAMIBIA

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720 years for the country to exhaust all available municipal land.”

As at August 2011, municipal areas across the country were found to hold a capacity of 3.6 million houses, 1.6 million of which would f it into Windhoek and its newly extended boundaries. At present, the capital contains 83 000 houses, and while current population growth requires the mortgaging of around 300 stands per month, only f ive stands are mortgaged on average monthly. Kruger says while these figures accentuate the demand for low to medium cost housing they also indicate the need for housing as well as infrastructure across all sectors. Further demand and growth is expected with the anticipated growth in the mining and resources sectors as the mining of uranium and oil reserves occurs.

Investment opportunitiesKruger says currently the residential market segment with the most activity is represented in the pr ice range of N$ 450 0 0 0 to N$ 1.6 million. As prices increase, activity dissipates and the market segment with the least activity is in the price range above N$3.5 mil l ion, a lthough activity in this segment remains vibrant. Sectional tit le

units are a popular local investment with an average price between N$ 750 000 and N$ 1 800 000 for two to three bedroom units which generally offers a rental return between N$ 7 500 and N$ 13 000 per month.

Investment areasWindhoekWindhoek, the capital of Namibia, is located in a basin between the Khomas Highland, Auas and Eros Mountains. It is 1,680m above sea level, 650km north of the Orange River and 360km from the Atlantic seaboard. Whether due to pure luck or a brilliant stroke of Germanic planning, the city is almost situated in the countries epicenter. Windhoek is home to approximately two hundred thousand people, an extremely small capital by global standards. This number is growing rapidly at present mostly due to a lack of employment in rural areas.

SwakopmundPalm-lined streets, seaside promenades, fine accommodation, a pleasant summer climate and decent beaches. Welcome to Swakopmund - Namibia’s premier holiday resort! During the summer holidays and long weekends,

thousands of Namibians flock to the coast, and this human migration happens for a number of reasons. Swakopmund has a real holiday feel to it and everyone wants to be there; during the December holidays, the cool Namibian coast offers relief from the intense heat of the interior; and more importantly as far as the tourist is concerned in these modern times, Swakop has changed, and has become the country’s leading adrenaline destination, with a wide range of activities to suit all ages and (most) egos.

T he a rea of Na mib Deser t a round Swakopmund is named the West Coast Recreational Area and recreation is the town’s number one draw card. There are countless pursuits to help you spend your time, and money. For those interested in adventure activities Swakopmund offers sand boarding, quad biking, dune carting, parachuting, hot air ballooning, shark fishing, deep sea fishing and beach angling to name but a few. For the more sedentary there are restaurants, cafes, art galleries, museums, a snake park and aquarium. This tourist destination makes an ideal investment if you are looking to own a property which can be rented out at certain times of the year and used as a holiday house at other times.

Walvis BayA place of rare beauty and windswept dunes, stark landscapes and jagged coastlines - a world of untamed natural beauty, Walvis Bay is situated on the south west coast of Africa at the edge of the Namib desert and is Namibia’s principal port and growth centre.

Walvis Bay’s rich natural resources and strategic location provide the basis for tourism and industrial development. The existing environment of growth and prosperity has already contributed to unprecedented interest both nationally and internationally. Seen as the gateway to central and southern Africa, Walvis Bay is on the threshold of a prosperous and dynamic future.

The municipal area covers 1124 km square and boasts 60 km of Atlantic coastline. On the landward side, Walvis Bay is enclosed by 23 000 square km of conservation area that includes high dunes, wetlands and Kuiseb River delta.

Walvis Bay’s population of 55 000 people is composed of a variety of ethnic groups of different religious and cultural backgrounds, and together they lend Walv is Bay a cosmopolitan appeal.


After successful seasons at the Artscape Theatre Centre and the National Arts Festival, Shakespeare’s best loved comedy returns by popular demand to Maynardville. Filled with magic, humour, spectacle and romance, Dream is perfectly suited to the starlit, sylvan setting of Maynardville.Date: 21 Jan 2013 - 16 Feb 2013Time: 20:15 - 22:30Venue: Maynardville Open Air TheatreLocation: Wolfe Street | Wynberg Park | Email: [email protected]: R110p/p - R160p/pPhone: +27 (0)861 915 8000Website: www.maynardville.co.za

Shakespeare In The Park

The Mexican-American songwriter known simply as Rodriguez – but more commonly as ‘Sugar Man’ - is confirmed to play live in concert in Cape Town at GrandWest on Saturday, 9, Sunday, 10, Wednesday, 20 and Thursday, 21 February 2013 as part of a summer South African tour. Locals have always had a sweet spot for the otherwise obscure and now aged musician, but thanks to the recently released Swedish-made documentary ‘Searching for Sugar Man’ – a film detailing the journey of two South African fans who set out to discover their hero’s fate – the vocalist and his career are now in the throes of an impassioned revival.

Lovers Rock Family Resort in Magaliesberg, Gauteng is once again proudly hosting the 2013 annual Vintage and Classic Car Show on the first Sunday of February. Come and see the display of between 150 and 200 of the finest motor cars. Times: 08h00 to 18h00Venue: Lovers Rock Family Resort, Rustenburg Road (R24)Tickets: Adults - R60 per person, Children under 12 - R30 and Parking - R30 per vehicle (display car and driver are free of charge)

This year the Energy Indaba will be held from 19-21 February 2013, at the Sandton Convention Centre, in Sandton, Johannesburg, South Africa. The conference continues to grow and has become the foremost forum for debating Africa’s energy solutions and focuses on: African power suppliers; alternative and renewable energies; oil xand gas; the legal and regulatory framework, and investment opportunities in African energy projects. When: Tuesday, 19 February 2013 to Thursday, 21 February 2013Where: Sandton

Find all the inspiration and suppliers you need for your home all under one roof. It is the country’s largest and most representative home improvement exhibition and in 2013 this event also sees an exciting expansion of products and services. Not only showcasing the vast range of home lifestyle and home improvement products, the expo also highlights the latest in home trends with some exciting new features. When: Thursday, 28 February 2013 to Sunday, 03 March 2013Venue: Coca Cola Dome, North Riding, Randburg

The lovers’ holiday traces its roots to raucous annual Roman festivals where men stripped naked and spanked young maidens in hopes of increasing their fertility. The annual pagan celebration, called Lupercalia, was held every year on February 15 and remained wildly popular well into the fifth century A.D.- at least 150 years after Constantine legalized Christianity in the Roman Empire. The church then pegged the festival to the legend of St. Valentine a priest who flouted Roman Emperor Claudius II ban on young men marrying, and for this was killed. Today it is the day of love, with 1.2 billion roses sold worldwide.

REI Lifestyle

Sugar Man SA Tour Vintage & Classic Car Show

Energy Indaba Homemakers Expo 2013 Who Was Valentine?


BY ANGIE REDMONDwEALTH MONITOR

Clifton is an affluent area, home to the most expensive real estate in South Africa. With four famous beaches,

many famous residents and one famous road – Nettleton Road – it is only a very privileged few who get to call the suburb of Clifton in Cape Town, home.

Due to the scarce supply of land in the area, ongoing high demand for “priceless and cannot be replaced” properties with strict building restrictions, Clifton is also an ideal investment

opportunity. Prices have only escalated since the bungalows of old were brought on to the open market (previously these were on 99 year leases, some at R1 per year and lovingly lived in by WW2 veterans.)

The small size of the properties on which bungalows are built between Fourth and Second beaches is attributable to the fact that the area was laid out by the City of Cape Town for returning soldiers who had fought in World War I. The original bungalows, now all but

replaced by new structures, were built from the packing cases that conveyed imported motor cars during the 1920s and ‘30’s. Narrow flights of stairs run between Victoria Road and the various beaches. These houses now fetch very high prices on the housing market, despite the fact that they can only be reached by stairs, and, in most cases, have no garaging.

Clifton was rated as one of the Top Ten Beaches by the cable and satellite television networks Discovery Travel Channel in 2003 and 2004 and has received Blue Flag status. In 2005 and 2006 it was rated by Forbes at number 8 in the Top 10 Topless beaches in the world. However, Clifton was also one of the only suburbs in South Africa that was unable to receive cable or satellite television until recently when Smart Village, a MultiChoice owned company, installed a f iber optic network in Victoria Road.

The upmarket suburb of Clifton lies just beyond Bantry Bay, between Sea Point and Camps Bay, in one of the most superb settings against the backdrop of Table Mountain. The beaches are divided into four distinct coves by stretches of granite boulders and, whilst they may not be very imaginatively named, 1st, 2nd, 3rd and 4th, their beauty makes names rather superfluous.

Each of the beaches is reached by a flight of stairs down from the road on which parking can sometimes be extremely diff icult. This

Most Expensive

Clifton commands world class prices

Real Estate In South Africa


doesn’t hinder the crowds during peak season or in the evening when throngs of people head down to Clifton to partake in traditional sundowners in the presence of one of Cape Town’s legendary sunsets.

What makes Clifton the most expensive real estate in South Africa? Clifton is one of the most beautiful spots in Cape Town and that coupled with the limited space, makes the area both desirable and exclusive according to Denise Dogon, owner of Dogon Group Properties. Clifton is more than just a property, it is in effect a brand, sought after for the views and stunning properties located in the upmarket suburb, with properties in this area achieving record sales prices.

The country’s most exclusive Clifton address is on the market for just shy of R50m. Along with Coronation Road in Sandhurst in Sandton, Clifton’s Nettleton Road is the most exclusive and expensive road on the African continent, commanding average rates of R100,000/m², says Seeff Atlantic Seaboard agent, Lance Cohen.

While Coronation Road has seen prices contract over the past four and half years, property values in Clifton, and especially in Nettleton Road, have continued to grow, he says.

This is largely due to the fact that Clifton is an international destination, while Sandhurst is not, says Cohen.

The suburb has become the summer playground for Europe’s super-rich and is the southern hemisphere’s equivalent of St Tropez on the Côte d’Azur.

The suburb has the highest average house price in the country at just under R18m, says Cohen. In Nettleton Road alone, more than R230m in real estate has sold over the past three years at record prices upwards of R30m including a 1,200m² plot that has just sold for over R34m.

Capital appreciation rates have ranged from 10% for 34 Nettleton Road, which sold twice over a four-year period to 18% in just fewer than four years for 9 Nettleton Road, he says. It is also here that the only cranes are visible on the Cape Town city skyline as investment continues with projects creating homes valued at around R100m each.

According to Cohen, number 1 Nettleton Road will set you back R49.95m.

Set on a plot of just 784m², this showcase triple-storey villa was designed by Peerutin Architects to blend into the mountain backdrop and to provide panoramic views of the ocean and neighbouring nature reserve.

A private lift ensures easy access to all the levels. Luxurious finishes and living spaces are evident throughout.

Large glass windows and sliding doors open onto balconies and terraces including a large Balau deck with an under-roof entertainment and open sundeck area that overlooks a heated swimming pool and the ocean.

The interiors, undertaken by Cecile & Boyd, are inspired by the surrounding landscapes with a colour palette of mountain blue-greys, olive-greens, bottle-greens, turquoise and golden-brown hues.

Finishes include quartz-stone walls, pebbled f loors, woods and resin, granite and marble. Doors are also fully retractable to seamlessly connect the living spaces.

The open plan living areas are located on the second f loor and include two lounges and a dining room with an intricate glass chandelier that runs the length of the dining room table.

The euro-chic kitchen offers the latest design and stainless steel and black Caesarstone finishes. There is also a fitted bar and study.

Three bedroom suites are located on the upper level and a guest suite on the lower, pool-deck level.

The property has under-f loor heating and air-conditioning, state-of-the-art security and garaging for three vehicles.

LIFESTYLE

RESOURCES

Dogon Property Group

60 www.reimag.co.zaFebruary 2013 SA Real Estate INVESTOR www.reimag.co.za

BY SIMON T. BAILEYINSPIRATION

Simon T. Bailey’s purpose is to inspire 10% of the world’s population to brilliant action.

He is author of Release Your Brilliance. Visit www.simontbailey.com and follow him on

Twitter, Facebook, and Youtube.com

RESOURCES

Welcome to the greatest year of your life! The events that will shape you are yet unknown, the global

economic climate is uncertain, and everything outside of your control may seem unstable.

That is incredible news. There are several things that you could do but most importantly, I invite you to focus and execute. A teacher was working with his students in the art of archery. He put a wooden bird as the target and asked them to aim at the eye of the bird.

The first student was asked to describe what he saw. He said “I see trees, branches, the leaves, the sky, the bird and its eye.” The teacher, told him to wait right here. Then he ask the second student the same question – what do you see? He said “I only see the eye of the bird”. The teacher said very good, then shoot. The arrow went straight and hit the eye of the bird.

Until you focus you cannot hit the target. As you think about your life, business, and career, here are four ways for you to be focused and confident.

Welcome to the recommendation eraWith the rise of Yelp, Tripadviser, Google and LinkedIn people organically recommend, like, and share their personal opinions. The Internet has made word-of-mouth feedback digitally verifyable. As we shifted with just a touch, swipe and few clicks anyone in the world can find out what others are saying about you, your brand, and the experience with your product.

According to the Local Consumer Review Survey approximately 72% of consumers surveyed said that they trust online reviews as much as personal recommendations, while

52% said that positive online reviews make them more likely to use a local business. Focus on how you will create a brilliant moment for every person that crosses your path. Then ask them to give you a recommendation that you can use online.

Shift into customer science Jim Clifton, Chairman of Gallup, says “what customers at any level really want is somebody who deeply understands their needs and becomes a trusted partner or advisor. In other words, know more about your customer than anyone else.” I love his book The Coming Jobs War. It’s a must read.

This is concept is a lso proven in the competitive New York City restaurant industry. In a recent NY Times article “What Restaurant Knows (About You)” it is said “hundreds of restaurants are now carefully tracking their patrons tastes, how much you ordered, tipped, and where you were a table hog who lingered long after dessert.” This information is vital in a cutthroat industry. The purpose is to make the customers feel “the love” and create an environment that they will tell everyone about.

“Bring it” economy Average is dead. History. Gone and never to be seen again. May it forever rest in peace. Average had a short life span. It has now been replaced by “Bring it” which means stop talking about what you are going to do. Find your inner “Madagascar” and move it…move it…get to it. Simply put, Be you. Be more. Be Brilliant.

Put yourself on the line. As the athletes would say, leave it all on the field. In the “Bring it” economy, in the words of Seth Godin, “small is the new big”. Focus on better by taking small steps everyday instead of racing to get bigger.

Focus and execution is possible when you decide to be confident in the midst of uncertainty. How? By protecting the most important economy – the one between your ears.

2013

3 Ways to Be Confident in the Midst of Uncertainty

Is Your Year

61February 2013 SA Real Estate Investor www.reimag.co.za www.reimag.co.za

3 Ways to Be Confident in the Midst of Uncertainty

BY RUSSELL BENNETTMOTOR TALK

KIARESOURCES

If there’s a car on the market today with a model name which perfectly matches its on-road demeanour, it’s the achingly funky

Kia Soul. This little Korean gem takes slightly lumpen, ungainly proportions and makes an asset of them, with a high-shouldered stance that reflects a lot more attitude than a car of this nature should in all honesty be capable of.

However, it has always lacked any measure of f irepower to support this unexpected passion. The little 1.6-litre petrol engined model is frustratingly sluggish if you’re used to some performance. Enter the Kia Soul 2.0, sporting a naturally-aspirated 2.0-litre engine developing 122kW and 200Nm. Think of it as the Soul GTI and you’re thinking in the right general direction.

Immediately, the new 2 .0 takes the irrepressible go-getter attitude of the Soul and cranks that right up to the infamous 11 mark on the volume knob. The styling tweaks include slightly lowered suspension, a gorgeous set of 18” alloys wearing low-profile 225/45 rubber, privacy glass at the rear accentuating the distinct wedge shape, LED running lights front and rear, and subtly bulging arches which together make this Soul seem like it’s giving in to its inner werewolf and mid-metamorphosis from mild-mannered house dog to full-bore raging killer beast.

Inside there’s a higher spec to go with the increased engine capacity, with full leather upholstery, automatic headlights and climate control, cruise control, an updated audio system, and a rear-view camera to help you park it safely every time. It feels like a properly range-

topping model now as well, thanks largely to all the dead cow spread over every surface possible.

If anything, the new motor has even more character than the cock-sure body. It fires to a meaty, slightly lumpen idle and then proceeds to rev hard, hitting that peak power figure at a heady 6500rpm, accompanied by a raspy roar which will bring smiles to the faces of any of us old-timers for whom the hot-hatch and a circa 2-litre nat-asp petrol four are simply synonymous.

Driven with gusto, with plenty of acceleration through traffic and a commitment to the throttle out on the highway dragging the speedo past the 160km/h mark on a regular basis, this sportiest Soul will go through more than half of its titchy 48-litre tank on one 160km journey. Driven like this, there’s no way you’ll even see 300kms on a full tank, which is pretty shocking.

In fact, even if you dial your right foot back to more reasonable levels, the Soul 2.0 still likes the expensive pink drink. I never managed to drive the average fuel consumption below the 12l/100km mark! On the highway, because of the boxy shape wrecking the aero and the

gearing making sixth useless for anything but cruising, combined with the eager-beaver nature of the car urging you to push it a little harder, it takes inhuman levels of control to avoid f lattening the tank chasing the elusive 180km/h notch on the speedo.

Sure, the Soul 2.0 is def initely a faster, harder and more serious contender than the underpowered 1.6, and at R233K for this manual version, looks like good value to boot. But when you consider it in more detail, it’s actually even better value, because you’re now getting a Soul plus all the latest must-have in-car gadgetry and trimmings, for just R40K more than the base model.

The only real drawback, is that you have to take the enjoyable but petrol-gulping 2.0-litre motor along with it. As much as I love power, this spec level with the gutless 1.6 would be my ideal Soul mate.

Version 2.0

Soul Searching...

KEY FACTS: KIA SOUL 2.0 MAN

Pricing: R233 995Engine: 1995cc four-cylinder petrolPower: 122kW @ 6500rpmTorque: 200Nm @ 4800rpm0-100km/h: 9.6sTop Speed: 185km/h Transmission: 6-speed manualConsumpt. (Claimed): 7.7 l/100km (combined)Consumpt. (Tested): 12.1 l/100km (combined)

“Think of it as the Soul GTI and you’rethinking in the right

general direction.”


Are you sick of the commute to work everyday and the long hours spent in traffic coupled with the rising cost of

petrol? Why not work from home? Whether you want to transfer your office to your home permanently or simply create a space that is conducive to work now is the time to start planning and create a space that is completely separate from your home environment.

A space that is separated from the hustle and bustle of your home life will boost your productivity. Studies have shown that it helps you prepare mentally for the task ahead of you, and by separating your work from your home

space, you are less likely to be disturbed by family interruptions. Integrating workspace into your home can be as simple as converting a spare room in your house, or building an extension or changing an outbuilding to a studio.

Certain structural alterations to your company will require planning permission, if you are not sure what you are allowed to do make discreet inquiries with your local planning department.

Workspace requirements?Office with storage spaceIf you are a field-based sales rep, freelance writer

BY ANGIE REDMONDDIY

or designer, you will need some storage space for props or products. If this is a permanent base you may need to accommodate files for work. One way of creating an office space with extra storage space is adding a mezzanine to your garage for office space and then using the ground floor as storage space. Alternatively you could modify a basement or small room. TIP if you use roof space to create an office, large glass windows can open the space up and provide you plenty of natural light.

Portable, flexible and mobile spaceIf you require a portable or flexible workspace to connect to your company server or for checking emails, or are setting up an Internet or tele- marketing business, all you need is a desk and computer. Building a home office suite under the stairs or simply adding an all-in-one unit to a redundant corner of your home can achieve this. By using wireless Internet you can keep the space tidy and free from clutter. Your mobile space could also double up as space to conduct personal business or for your children to do their homework.

Public safetyDoes your work involve other people, such as childcare or hairdressing or physio? If so you will need to consider your neighbours’ privacy and the health and safety of your clients. By making safety a priority, you wil l ensure that work–related accidents don’t occur on your premises. If you intend to practice work with the public from your home, you may be

Create The Perfect Office

In your home


LIFESTYLE

subject to work hour restrictions or layout restrictions in terms of the space used to conduct the business. TIP Make sure your current building and contents cover is adequate to cover you working from home and enquire whether you need additional policies to cover clients/ customers.

Workshop spaceIf your job is more manual, along the lines of logistics, handicrafts or painting and framing, you may need to consider building an extension onto your property. The size of the extension will depend very much on your current requirements and business plans for the future. If your needs are short term, then you might want to convert a basement or garage or outbuilding. If you are considering building an extension on your property or altering your property to meet your work needs, you may require planning permission.

Step by stepRoof SpaceThe extra space achievable from a roof conversion depends on the style of the property and how the actual roof was constructed. In most cases you can expect to get one good-sized room, which is ample for a home office or small studio. By integrating roof windows, you will flood the space with natural light and make the room look bigger. Bear in mind that computers can give off quite a bit of heat during the day when in use and if the room gets a lot of sunlight already, you may need to think of ventilation and possibly an air conditioner (or heater in winter). You also need to decide if you want to make your roof office accessible from the outside. You may want to consider a staircase running down the side of the property, allowing access to your roof office and keeping your office and home space completely separate.

GarageThe va lue of a garage should never be underestimated. If you have a high or peaked garage roof, you could consider building a timber or mezzanine structure to form office space. If you have a double garage, why not partition it off and use half of the garage as a

workshop? Most garages are structurally sound and dry and make ideal storage spaces. If you wish to use the space entirely as a habitable space you may need to insulate it and provide some form of ventilation.

ExtensionAn extension is a space that is designed to meet your specif ic requirements. It is permanent and adds square footage to your property and thus adds value. If your proposed extension requires planning permission to be approved, you will need to submit your proposed plans and drawing plans before going any further. A good extension is one that works in conjunction with the original property and respects the character and appearance of the surrounding area.

Outdoor roomOne way of getting additional space without the cost of converting your property is an outdoor structure. Outdoor rooms are available in various sizes and can be designed to be permanent or portable, they can be positioned anywhere in your garden and from a planning perspective, they can be erected without permission. You can have them custom-built or buy them off-shelf, or buy a kit and make your own. You can also have them plumbed and wired for heat, electricity and sanitary systems.

With the technology available today going into the office everyday is not the necessity it once was. Remote servers, high speed wireless Internet and networking have made working from home much easier and a more attractive option. Working from home lowers your overheads, reduces your commute and allows you to set your own hours.

BY RUSSELL BENNETTTECH

Global supercomputer giant IBM has just announced some pretty interesting predictions for where

computing is going over the next 5 years. In this relatively short space of time, this forward-thinking company seems to believe that our digital “friends” will be developing the same five basic senses that characterise living animals in order to better understand and interact with the physical world around us.

Of course, it’s largely already possible for a computer to be able to see, hear, feel, taste, and even smell. The Mars Rover can do pretty much all of this, and go a whole lot deeper into the physical besides. So all it will take to fulfill this prophecy is the improvement of the cost-effectiveness of these systems, and the reduction in their size, before we can start seeing these senses being implemented in the realm of personal computing.

However, even those large brains at IBM have been known to be wrong from time to time, and on this one I believe they may be slightly off the mark. Not because the technology isn’t there to support the theory - it certainly is - but due to the fact that as much as technology likes to think it is advancing for technology’s sake, it actually only moves forward based on the needs of the user. And I don’t think the user today or any time in the next five years, is actually going to want a cellphone that can tell them what their prime cut of steak smells or tastes like.

What we do want however are further evolutions of what we already have.

Smaller, more powerful, boasting higher capacities and speeds and resolutions in an even more conveniently mobile form.

This mobility is key, as the explosion of sales in the smart phone and tablet spaces absolutely prove, and by far the majority of development moving forward is going to entirely sidestep the old desktop computing paradigm.

The first major changes are likely to be in the format of the device itself. For improved mobility, f lexible displays are going to be a must. Think fabrics which are also screens, or miniature projection technology turning the air before your eyes into your display area, or a conveniently flat nearby wall. Within the 5-year time frame, both are certain to be retail realities.

Next up is the user interface. Although the touch screens of our current coolest devices are doing the job today, this input method isn’t going to last. It’s a small step from this point to gesture-based input, technology which is already readily available in consumer gaming platforms like the XBox Kinect and PlayStation Move as wel l as f lagship smart phones. Voice control is also coming along nicely, as evidenced by the impact of Apple’s Siri, which in conjunction with gestures makes for the most natural combination of control inputs possible.

Finally, local storage requirements are also due for an adjustment in priorities. While today the largest possible amount of storage on your new tablet is a key purchasing criteria, the growth of cloud solutions is likely to reverse this trend, in conjunction with connectivity to the

cloud which is faster, more reliable, and above all cheaper.

Immediately, by removing the screen today necessary for both interaction and user input, and then deleting the storage requirements, technology companies could produce a device right now small enough to be embedded into everyday items like your watch but still offer all the mobile computing functionality you’re becoming reliant on in your tablet.

After all, who really wants a mobile that can tell them just how the piece of fabric they’re holding in their hands feels? The highly technologically advanced nerve-endings in our f ingers already do an impeccable job of this for us.

But a wearable item, a piece of jewellery for instance, which can also project a display with full interactivity and control onto any nearby surface, or merely into the air before our eyes, giving us access to the full range of functionality already in the smart phones we carry around daily? Now that is a product which will sell every single unit the manufacturer can produce.

Beyond 2013Mobility will be key

64 www.reimag.co.zaFebruary 2013 SA Real Estate INVESTOR

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Real Estate Investor Magazine February 2013