An artist’s impression of Bonne Nouvelle in Bantry Bay, which is being upgraded and renovated, and will be handed over in mid-2012.

Although most of the cliff side sea-fronting blocks below Victoria Road in Bantry Bay have been completely renovated or replaced in the last three decades – giving way to some of the Atlantic Seaboard’s most impressive new developments – the 52-year-old Bonne Nouvelle at 44 Victoria Road has until recently remained in much the same condition and configuration as it was when it was built in the mid-1960s.

The block has six levels – two above Victoria Road. It has a 30m frontage to the sea and on either side there are the 10m spaces, which the Cape Town City Council originally insisted have to be left open on all buildings along this coastline.

Bonne Nouvelle is a share block scheme with six shareholders, each owning a complete floor of about 200m2. And although resales took place occasionally, for years the owners had no great desire to alter or improve the complex. The building’s position, its superb views and its general air of calm and graciousness endeared it to all its occupants.

One owner, Sam O’Leary, a financier with offices in Cape Town and Johannesburg, who had bought a unit in Bonne Nouvelle in 1999, however felt that his apartment needed a fourth bedroom. After discussing the matter with Bonne Nouvelle’s chairman in 2006, it was agreed that he should go ahead and investigate the possibilities of doing this.

O’Leary drove around Bantry Bay and other Atlantic Seaboard suburbs and noted the names of architects whose firms appeared on nearby construction site boards, assuming that local experience and knowledge would be useful.

The first architect that O’Leary approached explained that it was “actually not his area”. The second said that City Council restrictions very definitely precluded any possibility of making changes and there was no point in discussing it. The third architect’s receptionist asked to know the value of the proposed scheme, explaining that the firm had certain cut-off limits. O’Leary replied that as the scheme was not yet conceived this was impossible to state – and broke off negotiations forthwith.

The fourth architect contacted was Simeon “Simmy” Peerutin, a senior partner of Peerutin Architects. Peerutin said that he would immediately work with the owners and the City Council to come up with a design that would meet the needs of all parties – come hell or high water.

“This was the type of attitude that the owners were looking for, so he was appointed,” says O’Leary.

The City Council’s policy is that the scenic Marine Drive of which Victoria Road forms a part should offer as many views of the sea as possible. Today no new building is allowed to block these views. However, the two floors of Bonne Nouvelle that do reach up above the road had been built before the legislation was promulgated and are therefore exempt from this ruling. They cannot be extended, but any changes made within them are permissible.

What began as the simple suggestion from O’Leary to add one room to his apartment ended as a major renovation and upgrading of the entire complex, from which every owner is now benefitting. Even if they had not participated, however, as share block members they had to give their permission for all the changes. This involved O’Leary, Peerutin and the chairman in ongoing negotiations, which, along with the approaches to the City Council, took three and a half years to finalise. By August 2010 all the changes were agreed on and the contractor could be given the go-ahead.

An early hurdle to be overcome was that if certain of the units, including O’Leary’s, were to be extended, the owners would have to buy from the share block company the land – usually a section of the cliff face into which they would now reach. Assessing the value of the land that would become available was not easy. With the help of some of the estate agencies eventually the prices for four different categories of land were calculated, largely dependent on how much sea view each section could offer. On average, says O’Leary, the price paid for the land was R18 000/m2, the seafront areas going for as much as R25 000/m2.

The owners, spurred on by Peerutin Architects’ advice to “think big” and to make the most of the magnificent site, began to realise the potential inherent in upgrading and became very ambitious. Extending his unit to the east, west and southwards, O’Leary, for example, was able almost to double the size of his apartment to close on 400m2. Another owner sold his apartment to the owner above him, thereby facilitating the consolidation of a duplex apartment. He himself set about converting the 7m high void below the former ground floor into a 350m2 two level apartment with every possible feature and fixture. This apartment will front directly onto the rocks.

The money paid into the share block for land (about R10 million) was then put into the overall building costs, with additional inputs from the owners according to their specifications. Every unit in the scheme is to an extent being upgraded and enlarged, some far more extensively than others.

The owners of the two units above Victoria Road in the end benefitted greatly and at no cost to themselves, although at first there appeared to be no way in which this was possible. This was because Peerutin Architects were able to demonstrate to the City that the lift shaft on the western side already protruded into the open space and if this was demolished and a new lift shaft built closer to the front of the building the view line from the road would be no further blocked if an additional bedroom was built onto each of the street level apartments. This was allowed by the City and adds much to the value of these units, says O’Leary.

After the lengthy negotiations between owners and the share block company had been wrapped up, it appeared that the whole scheme might founder because an initial cost estimate seemed to make the project completely unviable. However, the quantity surveyor, D’Arcy Hedding, was able to reduce the proposed costs by about 40 percent and on this basis the owners were able to put the scheme out to tender. The contract was awarded to Gordon Verhoef & Krause/Siya Zama, which had carried out concrete spalling repairs on the site two years earlier.

Although the enlarging and upgrading of the original six apartments is fairly straightforward, the main reason the project is taking 20 months to complete is the ‘mining’ required to create the space behind and under the apartments. An unusual and innovative solution designed by the consulting engineers, Hulme and Associates in association with geotechnical engineer, Mike van Wierengen, involved propping up the building with huge temporary concrete collar beams and extending the original columns. This is a very expensive and time-consuming process which would not have been financially viable if property prices hadn’t risen so much over the past 15 years.

Peerutin now estimates that when the upgraded block is finally handed over in mid-2012 the individual units will be worth more than R65 000/m2. This means that the total scheme, with its garages and communal areas, will be worth around R160 million, which is almost three times as much as its previous value of R60 million.

Under the new arrangement, three of the owners continue to own their units as part of the share block scheme and three others own them under sectional title. However subsequent buyers can convert to sectional title if they wish.

“The completed project will have some of the most sophisticated and attractive finishes yet seen on the Atlantic Seaboard and will make far greater use of wraparound glazing and balconies to enhance the indoor-outdoor flow. The scheme will have its own pool and very sophisticated security measures, as well as other facilities,” says Peerutin.

“Bonne Nouvelle is likely to compare favourably with almost any other complex on the Atlantic Seaboard, including those in the Victoria and Alfred Waterfront precinct and is already being described by some as the “jewel in the crown” on the sophisticated, expensive Bantry Bay coastline.”

Call Simeon Peerutin on 021 464 4360 or email simmy@peerutin.co.za.

The final months of the year are often among the busiest for residential rental agents, as tenants and owners contemplate ending, beginning or renewing leases for the new year. Pam Golding Properties’ Paarl office reports that last year was no different, with plenty of interest being shown in rental properties – particularly those close to top schools.

PGP’s managing director for the Boland and Overberg regions, Annien Borg, says there has been sustained activity in the local rental market throughout the year, influenced by a number of factors including job insecurity, access to mortgage finance and a generally uncertain economic climate.

“Many would-be buyers are having to rent for the time being due to lack of access to funding, and others who could perhaps buy are choosing not to tie up their available cash in long-term investments,” she says.

PGP’s area manager for Paarl, Surina du Toit, says there are other factors influencing the current high demand for rental property in the area.

“We have noted demand from families relocating to Paarl for business or lifestyle reasons, many of whom choose to rent while they get to know the different suburbs and decide where they want to buy,” she says.

“Ease of access to the N1 highway is important for businesspeople working in Cape Town or commuting to Cape Town International Airport. Proximity to leading schools is also a key factor for this segment of the market, as they want to be zoned correctly for their schools of choice, and to live conveniently close by. Another category of renters, particularly for shorter-term leases, consists of people busy doing renovation work on their own homes, who need to move out for a few months while major structural work takes place.”

Du Toit says the greatest demand at present is in the price range from R6 000 to R10 000 a month – resulting in a shortage of stock in this price bracket. The most sought-after types of properties are family homes with three or more bedrooms and a garden, as well as lock-up-and-go townhouses with two or three bedrooms and excellent security. The secure lifestyle estates around Paarl, such as Boschenmeer and Val de Vie, are particularly popular.

“These estates offer an attractive lifestyle, with lots of freedom to live and play outdoors,” she says. “As a result they are an ideal first step into Paarl, particularly for those who are relocating in search of greater freedom from crime.”

Entry level prices for rentals in Paarl currently stand at around R2 500 to R3 000 a month for a bachelor flat. A two-bedroom apartment typically costs about R3 000 to R4 500 a month, and three-bedroom flats or townhouses can fetch between R4 500 and R7 000 a month. A comfortable family home with three or four bedrooms can be rented from R6 000 to R14 000 a month, depending on size, location and extra features such as a sizeable garden or a swimming pool. Larger and more luxurious homes can be rented for between R14 000 and R17 000 a month in Paarl itself, and luxury homes in the surrounding secure estates will cost between R14 000 and R28 000 a month.

Call Helena Grobbelaar on 072 199 5989, 021 871 1480, or email helena.grobbelaar@pamgolding.co.za.

Seventy-five percent of the units have been sold in the first two buildings at Park Lane Office Park, Horizon Capital’s new office development in Century City, and the developer has decided to invest a further R10 million to satisfy the demand from investors and tenants for small, top-quality sectional title office properties.

Now with sales worth about R55 million, the first phase of the development is expected to be complete at the end of 2012, and the second phase by mid-2013, says Horizon’s John.

“The development offers investors an exceptional opportunity to buy AAA-grade office property in a prime location at an attractive net yield of 9 percent. Prices start at about R2 million excluding VAT.

“New developments like Park Lane offer investors tax benefits in terms of the Income Tax Act. Section 13 allows new building owners to claim a portion of the cost of the property as a tax deduction, in addition to the usual expense and interest deductions.”

In the latest SAPOA office vacancy survey, Century City recorded decreasing vacancy levels and far outperformed the Cape Town average. Witter believes the growing popularity of Century City as an office destination is due to its convenient location, extensive public transport system, excellent security, and wide range of nearby amenities. Adding to its appeal is Century City Connect, an open access fibre network which will offer tenants the country’s fastest broadband data, voice and multi-media services.

He says Park Lane will be one of the first SA developments to provide green office space for smaller tenants, with a focus on energy and water efficiency to reduce operating costs and comply with current and future green building regulations. In addition to lower running costs, building occupants will benefit from an improved working environment, and Horizon Capital expects the buildings to command better rentals and capital values as a result.

Some of these innovations include energy-efficient lighting, movement and daylight sensors, good natural lighting and ventilation, electrical sub-metering, occupant controlled air-conditioning, water-efficient fittings, recycling facilities, and bicycle storage and shower facilities to encourage employees to cycle to work.

The sectional title office units will range in size from 80m² to 280m², with flexible leasing options. Investors can also buy or lease an entire building of about 550m².

Horizon Capital is a boutique commercial property investment house based in Cape Town. It specialises in building and managing directly-owned, diversified commercial property portfolios, with the objective of long-term creation of wealth for its clients. Witter says Horizon Capital has gained experience in the smaller sectional title offices niche market and has incorporated this understanding into the Park Lane development to provide offices that will let easily and provide excellent long term investments.

“Typical clients are successful businesspeople who want to diversify their investments to achieve a high yield along with capital growth, or retired people who want to earn a monthly income while enjoying the capital security of property investment. A full list of Horizon Capital’s service offering is available on request,” says Witter.

Call John Witter on 021 425 8586 or 082 906 2866, or visit www.horizoncapital.co.za.

A R35million upgrade and redevelopment of the Tokai on Main Shopping Centre in Main Road, Tokai is nearing completion and includes a new, state-of-the-art 3 500 m2 Food Lovers Market.

Colin Anderson, a director of the Rabie Property Group, says the building work has been completed and final touches are now being carried out.

He says the Food Lovers Market accounted for the bulk of the redevelopment, which included raising the roof to bring in natural light, with five other shops being closed or relocated to make way for the enlarged store.

“The Food Lovers Market group’s largest store in the Western Cape opened in December and has been trading way ahead of expectations attracting customers from far afield. It offers a huge variety of fruit and vegetables as well as cheeses, meat, fish, chocolates and pasta. There is also a general grocery department, a bakery, a deli, a sushi bar, a coffee shop, a biltong bar, a wood burning pizza oven and a wine bar,” says Anderson.

“The remarkable support from local shoppers justified the upgrade as there has been a pent up demand for genuine convenience retailing in the area. And the increased foot count the new Food Lovers Market is drawing to the centre will no doubt improve trading density for all the tenants.”

Graeme Liebenberg, group property and business development manager of Food Lovers Market, says sales performance at the new store has exceeded all expectations.

The Tokai on Main shopping centre, which is managed by Rabie Property Administrators, includes Baby City, Sportsmans Warehouse, Super Plants, Postnet and Dial a Bed. The centre as a whole has had a facelift and work is nearing completion.

Anderson says the redevelopment has also improved the parking flows while still retaining more than 370 parking bays.

“The redevelopment of the shopping centre, along with other large urban renewal projects in the neighbourhood including the upgrade of the nearby Blue Route centre, is helping to reposition the area as a strong commercial node and there has also been an increase in inquiries for the adjacent offices in recent months,” says Anderson.

Construction is underway on the first phase and a second phase has already been launched at The Village, the new residential development that is taking shape on the Diemersfontein Wine and Country Estate, in the Wellington Valley.

The secure estate is 45 minutes’ drive from Cape Town, and is renowned for its scenic setting, country homes and award-winning wines, which have been recognised at the Michelangelo International Wine Awards and SA Terroir Wine Awards.

Pam Golding Properties is marketing the new phase of 31 units at The Village, which offers buyers a choice of off-plan home designs. The properties are priced from R699 000 to R1.47 million, including VAT and transfer costs.

PGP’s project manager for the development, Louise Varga, says 17 of the 19 erven in phase one have already been sold since the launch in September 2011. Homes are under construction on seven of these erven and another four owners are due to start building in the next few weeks.

“More than half the buyers are Boland residents, most of them from Paarl and Wellington,” she says. “It’s clear that locals jumped at the chance to buy homes in this estate, recognising the superb lifestyle on offer and the potential for return on investment. Thirteen of the buyers intend to make Diemersfontein their primary homes, and the others bought their properties for holiday and investment purposes. Most are in the under 40 age group, which is not surprising as this environment is ideal for young families. The on-site English medium private school, Wellington Preparatory is a key factor for buyers in this category, and the estate’s excellent security is another drawcard.”

The erven in phase two range in size from 238m2 to 488m2, and there are eight different designs for two- or three bedroom homes to choose from. Buyers can customise their homes with a broad selection of finishes and design options. Design guidelines ensure all buildings blend harmoniously with the environment.

When completed, The Village will consist of 114 homes, with additional phases to be rolled out at a later date. All residents will have access to the full range of estate facilities, including a restaurant, a spa, guest accommodation and a gardening service. The Village has its own swimming pool, and residents have access to an extensive network of hiking, cycling and horse-riding trails through the surrounding forests and vineyards.

Call Leree Bosman on 083 658 4414, Lynette Kannemeyer on 082 672 1022 or Erika Odendaal on 082 412 6964.

Properties on Cape Town’s Atlantic Seaboard continue to retain their value, regardless of fluctuating market conditions according to Pam Golding Properties, pointing to the appreciation in value of apartments in one iconic building as a prime example.

The President occupies a front row position in Bantry Bay, with spectacular sea views from every unit. PGP is marketing a penthouse at R28 million, and the company says it’s worth every cent for its long term growth potential.

“The President was built in the early 1990s by Sanlam,” says PGP’s area manager for the Atlantic Seaboard and City Bowl, Basil Moraitis, “and at the time, its 58 apartments were priced from R5 000 to R10 000/m2. That pricing held steady for about five years, then increased to around R12 000 to R15 000/m2 in 1998. Prices again held steady for five years before going up to around R20 000/m2 in 2003. By 2006, the cost had leapt to about R40 000/m2, and it continued escalating to over R55 000/m2 by 2008 and R60 000/m2 by 2010. Despite the current market conditions, this top-end pricing has held steady, and last year, some units were sold for R50 000 to R60 000/m2.

“Steadily increasing value is not the only good reason to buy at The President. It is one of the best-maintained buildings on the Atlantic Seaboard, with manicured gardens including a rose garden and a cluster of swimming pools, as well as ample visitor parking. With 24 hour manned security, the building is the ideal home for buyers who want secure and convenient lock-up apartments for holiday or permanent use.”

The 518m2 top-floor penthouse for sale is one of three in the building, and one of only two with north-facing aspects, looking directly over the sea as well as back towards the mountains. All three bedroom suites open out onto terraces to maximise the panoramic views. Other features include a private swimming pool, direct lift access, staff quarters and two private parking bays.

Research shows that today’s buyers want to live within walking distance of the schools their children attend, says Mark Upton of Upton Properties.

“Environmentally aware parents of schoolgoing children are investing in their carbon footprints by moving to homes where their children can walk to and from school. Petrol prices increased by 15 percent in 2011 and the future price of fuel is largely unpredictable, and then there is the huge increase in traffic to take into account – few parents want to spend hours in peak traffic.

“Parents can spend up to four hours a day transporting their children to and from school and extra mural and sport activities. The Automobile Association says in town driving uses excess fuel, which contributes to your carbon footprint.”

Upton says the trend is now to live close to schools, ideally where there are no major roads to cross. With Cape schools again achieving the highest matric results and given the region’s attractive lifestyle, he expects there will be a influx of upcountry migrants, which will exacerbate traffic pressure resulting in delays and increased fuel pollution.

“A recent study on attitudes to climate change, climate change conferences and environmentally friendly activities by TNS, a leading marketing and social insights company, showed that 45 percent of participants under 24 cite climate change and other environmentally friendly activities as a pressing issue, dropping to 30 percent among those aged 60 years and older.

“Modern, environmentally conscious young families want to be close to the schools their children attend, so properties in these areas are in demand,” says Upton.

The picturesque West Coast villages offer a selection of budget beating holiday home buys, according to Seeff West Coast licensee, Pierre Germishuys.

Accessed via the R27 West Coast Road, the region is characterised by unspoilt beaches, fynbos, Strandveld and a rugged coastline that turns into a flower carpet during spring. Famous for its crayfish, story-telling and respect for the sea, the area charms visitors into returning again and again and buying a holiday home here often becomes a priority. Traditional white-washed fisherman’s cottages set among the fynbos, he says remain a popular option.

“Small cottages are priced from under R1 million and vacant plots from about R500 000 depending on location and size. Larger beach homes range between R1.6m and R2.5m and luxury houses are priced upwards of R4.5m. The area is popular with Capetonian buyers, but is attracting increased attention from other metropolitan areas such as Bloemfontein and Gauteng. Although many are bought for the use of the owners, large numbers are rented out during the holiday and flower season given the steady, year-round rental demand.

“The small village of Yzerfontein is about half an hour’s drive from Cape Town. Vacant plots here are priced from R490 000 and cottage prices start at around R1.5m. For more discerning buyers, the nearby Jakkalsfontein Nature Reserve coastal development offers architect designed clusters that blend into the environment near the beach,” says agent, Cynthia Cousins.

“Priced at around R5.95m, the estate facilities include a resort centre with a swimming pool, tennis and squash courts as well as cycling, horse riding, walking and hiking.”

A short drive further lies Langebaan with its turquoise lagoon. The town is a haven for water and adventure sports and a world renowned kite surfing spot. With a golf course, a casino and a wide range of leisure facilities including the nearby West Coast National Park with its diverse wildlife and bird species, it is among the more popular of the villages, say Seeff agents Jaco Coetzee and Louise du Plessis.

Prices for small cottages here start at about R800 000 and range up to R1.5m, and large holiday homes cost over R3.5m. The homes are all within minutes of the beaches, shops, boutiques, cafes and restaurants.

Further along the coast, lies the village of Jacobs Bay. Here, buyers can expect to pay around R800 000 for a vacant plot, says agent, Elma Steyn, but a prime sea front location costs around R2.3m.

A short drive further, lies Paternoster, the oldest fishing village on the West Coast. Here, says agent Marina Enslin, it seems as if time has largely stood still. Popular with photographers keen to capture a piece of this paradise, the village offers vacant plots priced from R490 000 and holiday cottages priced from around R850 000. Fisherman’s cottages are sought after and consequently now fetch prices of between R1.85m and R2.3m.

Around the corner is St Helena Bay, discovered by Vasco da Gama in 1497. Here, buyers can expect to pay between R500 000 and R1m for a plot and cottage prices start at under R700 000. The nearby Velddrif is at the mouth of the Berg River, with an estuary that is home to large numbers of flamingos and other birds.

Small fisherman’s cottages here are priced at around R855 000, says agent Michelle Tiedt. The West Coast Route 27 ends at Lambert’s Bay, which is regarded as the crayfish and snoek mecca of the West Coast says agent Annerine Hayes. With its quaint harbour lined with small fishing trawlers, the town offers a picture perfect selection of fisherman’s cottages priced from R750 000.

Call Pierre Germishuys on 082 446 4625 or visit www.seeff.com.

Dipula Income Fund (JSE:DIA/DIB) recently announced its R247.8 million acquisition of three strategic retail properties.

Increasing its retail portfolio exposure to low-income households, which are expected to outperform higher-income households in terms of growth in the short- to medium-term, Dipula has acquired Bochum Plaza and Blouberg Plaza, adjacent retail centres totalling some 12 500m2 in Bochum, Limpopo, and the 15 000m2 Nquthu Plaza in Nquthu, KwaZulu-Natal.

Bochum and Blouberg Plaza are near a commuter taxi rank and anchor tenants include Pick ‘n Pay and Cashbuild. Nquthu Plaza is anchored by Shoprite and Cashbuild. Both properties are fully let.

“These strategic acquisitions will grow Dipula’s portfolio and achieve the increased quality, average size and geographic diversification of our portfolio,” says Dipula Income Fund chief executive, Izak Petersen.

Dipula Income Fund, which offers an A and B unit structure, listed on the JSE in August 2011 with excellent BEE credentials thanks to a black-owned asset manager, a sizable stake in the fund by management and a highly acquisitive growth strategy targeting income-enhancing assets.

The company owns a diversified property portfolio, located throughout South Africa, with a retail bias to low income households. The Dipula portfolio consists of over 170 properties representing good sectoral and geographical diversification.

The new acquisitions will grow the portfolio to 178 properties valued at over R2.3 billion and spanning a total of 463 000m2.

McCormick Property Development, developer of all three properties in the transaction, will continue as appointed property and rental manager of these properties.

The acquisitions remain subject to a number of conditions, including competition authorities’ approval and Dipula securing financing, which may be done by way of debt or equity funding.

“We continue to build a portfolio that will deliver capital appreciation and annuity income growth to investors in the long-term, while increasing our asset quality and diversification. These acquisitions will have financial effects on Dipula’s performance, which will be announced in due course,” says Petersen.

The Constitutional Court’s order of invalidity came about as a result of the City of Johannesburg challenging the Development Facilitation Act in a dispute with the Gauteng Development Tribunal, which centred around whether or not the power to rezone and establish townships lay with the municipal or provincial sphere of government.

After taking the matter to the High Court and the Supreme Court of Appeal, the city appealed to the Constitutional Court.

In June 2010, the Constitutional Court found that these powers do in fact lie with the municipal authority, and therefore ruled Chapters 5 and 6 of the Development Facilitation Act invalid. The order of invalidity was for 24 months so Parliament could remedy defects in the legislation.

A year later – in May 2011 – the SPLUMB was gazetted and an extensive consultation process launched. However, the bill must be passed into law in June 2012.

“As that deadline looms nerves are fraying in some quarters of the private sector,” says Sapoa chief executive, Neil Gopal. “There has even been talk of a new application being brought before the Constitutional Court in an attempt to extend the deadline for another 18 to 24 months.

“Sapoa does not support an approach that favours litigation over engagement and discussion. We prefer to work closely with government and other stakeholders to seek effective solutions. To this end, Sapoa and the Department of Rural Development and Land Reform convened a high-level briefing session and workshop on SPLUMB for Sapoa members in Johannesburg on January 19 (2012). “The session enabled our members, the commercial and industrial property industry, to communicate with the department directly and clarify exactly what progress is being made.

“The bill, which aims to provide a coherent regulatory framework for spatial planning, land use management and land development, is supported by Sapoa. We believe it is in the interests of our sector to have a predictable, transparent and valid regulatory framework in place.”

Gopal says Mr Sunday Ogunronbi of the Department: Rural Development and Land Reform undertook that the department would use its best endeavours to have the bill passed by June 2012, and only if it is certain that the department is unable to fulfil this undertaking will consideration be given to apply to the Constitutional Court for an extension of the deadline date.

With continued lethargic economic growth prospects, a reduction in the interest rate would have been welcome as it would have provided a further confidence boost for the residential property market, says Dr Andrew Golding, chief executive of the Pam Golding Property (PGP) group.

“There is still an over-supply of housing stock and though banks are approving more loans, access to credit remains a key factor in concluding sales. However, from the start of the year sentiment has been more positive, and PGP’s group turnover in December – traditionally a quieter month – was up 19 percent on December 2010,” says Dr Golding.

Following the announcement that the repo rate is set to remain at 5.5 percent, Seeff chairman, Samuel Seeff believes it paves the way for economic stability which is critical to recovery of the property market.

“Although a cut in the base rate would usually stimulate the market, we are dealing with an unusual situation. A medium-term cut would in any event do little to stimulate large scale buying,” he says.

“We are nearing at the end of a five year cycle since the introduction of the National Credit Act and Seeff expects overall transaction levels and prices to remain relatively stable for the year. However, we think there will be a significant clearing of bank and urgent sale stock. Following this and provided that the economy and interest rates remain stable, we should see some strength returning. More demand and commitment from buyers will result in increased competition and sellers becoming less likely to negotiate. Prices will start picking up slowly and pave the way for a balance between supply and demand and recovery of the market.”

Seeff expects the sustained demand for realistically priced properties to continue.

Mike Greeff, chief executive of Greeff Properties, says there’s been a lot of uncertainty in the market which has led to negativity and indecision, and the fact that the repo rate is remaining the same, is really good news.

“Marcus is sending a message of stability to would-be investors who will take comfort from the fact that they can make more accurate forecasts and budget for the months ahead. The stability of the repo rate is going to act as something of a life raft in a sea of economic uncertainty – it’s the one thing bond holders can cling to in the face of shocks like the future Eskom rates rises and the less than favourable inflation rate,” says Greeff.

“The rigorous requirements of the National Credit Act means that the average buyer may not see the benefit of the repo rate stability, but there are likely to be positive spin offs in the wider midrange market from R1 million to R2.5m, where knowledge of stability will lead to more decisiveness. We think the extra bit of economic confidence is what many would-be investors who may previously have been fence sitting, need to take the plunge and decide to buy.”

“As with 2011, property prices are just holding their own, which affects agents’ commissions. Unlike other industries where professional fees are charged, our commission doesn’t go up with inflation each year. The only ways our earnings increase is if property prices increase, or we sell more properties.

“If property prices only go up by 2 or 3 percent in 2012 then in real terms, commission earnings will decline. Add to this the fact that costs are increasing by at least 10 percent and the equation becomes interesting. Normally, if you are sacrificing margins you can try to make up the numbers with higher volumes but the numbers of sales for the most part are going to be flat year-on-year and in some areas may even decline.”

The economics are simple – fewer sales, flat prices, and homes taking longer to sell equates to estate agencies spending more money with less return. Because of these factors, Jawitz believes 2012 will be another very competitive year for the industry, as growth will have to include taking market share from competitors.

“The bigger brands should be better off by the end of the year,” he says.

The decline in the number of estate agents supports this view with the fall off in agents coming mostly from the smaller agencies that have not been able to sustain themselves in a challenging market. The number of estate agents has decreased by 60 percent since the height of the boom in 2006/7 to about 25 000. Most of the bigger national franchised brands or the larger brands in the metro areas have fared significantly better in this period and although total sales may not be increasing, relative market share will have grown.

In addition to market share growth, the larger franchised brands are also seeing the benefit of the smaller independent agencies realising that the support of a national brand may be key to not only growth but also survival especially if the current market persists for a few years. Most of the franchised brands have increased the number of new offices opened.

Jawitz says Jawitz Properties grew its franchise network by 35 percent in 2011 including opening franchised offices across the Eastern Cape and expanding into KwaZulu-Natal. He expects this trend to continue this year.

“Key success factors for estate agents in 2012 will be similar to many other industries – meeting clients’ service expectations, employing technology as a critical enabler and most important, upholding the integrity of the brand and the people that represent it,” says Jawitz.

“It is always difficult to predict a turnaround, however, taking into consideration a number of indicators we are hoping for an upturn, especially in the residential sector,” says Arnold Williams, secretary for the Building Industry Bargaining Council (Cape of Good Hope).

“On the positive side, it’s important to note the increase in cement sales for 2011, which showed a 3.2 percent increase from 2010. Although this is not a huge increase, it does indicate signs for recovery in the building industry as a whole. Another positive indicator is the number of 100 percent bonds that the banks are granting. First time buyers are even getting loans of up to 104 percent. In addition to this, bond originators reported a general increase in the number of mortgage bonds granted over the last few weeks, which is likely to stimulate building in the residential sector.

“And finally, good news for all homeowners with bonds, is the Reserve Bank’s unchanged repo rate, as this will further assist home buyers and stimulate the residential sector of the building industry.”

Contrary to this, is the likelihood that the industry will be slowed down by the changes that have been made to the National Building Regulations, which now require buildings to be more energy efficient, and so will increase the relevant building costs. The new regulations are also likely to cause a backlog in the approval of building plans, further restraining the industry.

“We also need to look beyond our borders and consider that the unstable global financial markets and the impact that this may have on our industry over the next year,” says Williams.

He says the BIBC will increase its efforts to monitor and enforce fair labour practices and compliance to the negotiated minimum wages and benefits in accordance with the BIBC’s collective agreement, to ensure that the building industry labour force remains stable and that all builders are competing on equal terms with the same labour costs.

He believes that although there may be a little more competition among the banks for certain clients, the lending volumes prevailing in 2011 will be maintained for most of this year. Currently, he notes, new mortgage lending totals about R7.5bn a month, and further advances about R2.5bn a month – with about 25 percent of these loans being obtained through Betterbond.

In addition, says Botha, consumers should not expect too much in the way of interest rate concessions in 2012.

“The situation now is quite different from that of a few years ago, when borrowers in good standing could with relative ease secure a rate that was one or even two percentage points below the prime rate. These days most loans that are approved are at prime (currently 9 percent and then in most instances only if the borrower can pay a 10 percent deposit.

“However, most lenders are now credit-scoring potential borrowers to allow for a one or two percentage point increase in interest rates in future, which means that those who are approved for loans should have the financial resilience to cope with such increases without defaulting and running the risk of losing their homes.”

What is more, he says, the requirement for most homebuyers to pay a deposit of at least 10 percent offers protection against the possibility of negative equity for individual borrowers and the property market in general.

“We believe this is prudent in the face of the ongoing turmoil in the world’s financial markets. On the other hand, Betterbond is not expecting any increase in interest rates until perhaps the end of 2012, and this, together with even modest wage and salary increases, will make homes affordable for many more people.”

As for the property industry, Botha says economies of scale and cost savings on shared services will be some of the main drivers for further consolidation among estate agencies.

“We believe this month’s decision by major lender Absa to once again start accepting applications for 100 percent loans from mortgage originators is just the first salvo in the renewed battle,” says Lew Geffen, chairman of Sotheby’s International Realty in SA.

“The move will no doubt prompt counter-measures from the other banks anxious to retain and gain top quality clients, and shrewd consumers will be the real winners.”

Geffen says there will no doubt be many people who believe this scenario is wishful thinking on his part. However, he says even now most lenders are already offering bonds of up to 100 percent to their own clients in good standing, and bonds of 90 percent on average to new clients. This is despite their stated determination just a few months ago to insist that every potential borrower pay a sizeable deposit.

“What is more, I am not suggesting that the banks will immediately relax their lending criteria. Bond applicants will still need to have excellent credit records, low debt loads and good employment prospects in order to be approved. Only now, perhaps, they won’t need to have such a large sum of cash on hand to pay a deposit and cover transfer costs.”

Geffen says that in due course – and if inflation tails down later this year as expected – the banks will probably again be more negotiable on interest rates.

“Meanwhile, bond applicants can at the very least expect higher levels of service and faster response times, as banks increasingly relearn that home loan borrowers are very often the most loyal consumers of their other, very profitable, banking products and services – and not just high-risk nuisances as they have often been viewed in recent years.”

From an industry point of view, he says, the results of this shift in attitude will be an increase in the number of loans granted, and a decrease in the number of repeat sales for estate agents.

“Originators are already reporting an increase in the number of loans being approved over the past few weeks, and that will inevitably lead to surplus stock being absorbed and home prices starting to show real increases. In short, it will open the way to the proper recovery of the market over the next two to three years.”