Property Market News:
“we do believe that the recession is at its end (for now at least)” - FNB Home Loans Strategist John Loos
Although the above statement is positive, the quote from Mr. Loos in a recent article regarding the October year on year property price deflation of -1%, did come with a considerable BUT: "However, we continue to warn against expecting too much”… “the platform off which the US hopes to launch its economic recovery doesn't appear very stable.”
In general, the property market has definitely shown signs of recovery in the past few months and as always, those areas where the property market has traditionally been stronger, continue to lead the way. In particular, Cape Metro area saw a significant jump in activity levels according to the FNB Residential Property Barometer. Agents surveyed in the Cape were more upbeat about activity than their Gauteng counterparts, however all regions have seen an improvement. This is generally as a result of the positive impact of the series of interest rate cuts that took place in the first half of 2009. Interestingly, sellers selling in order to upgrade jumped from 9% of total selling to 17% from the second quarter of 2009 to the third.
Lanice Steward, MD of the Anne Porter Knight Frank reported that for the last 2 months the sales of residential property in the Cape Peninsula has seen an upward trend. This has also resulted in some sellers trying to overprice their properties. She points out that this trend is likely to continue, as ABSA, FNB and Nedbank are now granting 90% to 100% value bonds. This definitely boosts the property sector. FNB offers 100% loans of up to R2 million, and its competitors are also following a similar trend.
Johan Loos summed up the current trend: “Realistically, therefore, while we expect to see a move back to house price inflation as 2010 approaches, the expectation is that average price inflation for next year will be moderate at around 5% for the year, and that late in 2010 we may well see the market 'flattening out' somewhat as the interest rate stimulus wears thin.”
With this current market trend in mind 
is currently looking at a couple of development opportunities in the Cape Town area. Hopefully we will be able to successfully time the buying now for completion towards the end of next year, as the market is reaching a small peak.
Construction news:
Despite the slow turn around in the property market, the construction industry is predictably lagging behind. As recently reported on privateproperty.co.za:
"Levels of activity in the residential building sector remained depressed up to August 2009. Both the planning and construction phases in respect of new housing continued to suffer in the first eight months of the year, driven by economic conditions, which negatively affected the supply of and demand for new housing. "
“Activity in this sector of the economy is only expected to bottom and recover gradually during the course of next year, based on demand and supply conditions for new housing," said senior property analyst at Absa Home Loans, Jacques du Toit.
At we have found a mixed reaction in the residential market this year. On one hand, the smaller projects (up to R1,5miliion) has shown a significant drop in enquiries, cost estimates etc. Whilst on the other hand, the R4 to R10mil projects have continued to come in at their normal pace.
The 2010 Soccer world cup – construction of stadiums:
Although the availability of materials has negatively affected the property industry, the R700 billion rands our government has injected into the construction of infrastructure for the 2010 world cup has been positive for the construction industry, staving off some of the downturn felt in other sectors the construction industry.
Colleen Gray, CEO of the CENTURY 21 property group has warned against some of the media hysteria of the Soccer World Cup as the kick off draws ever nearer regarding exorbitant rentals.
"In this respect, it's relevant to quote an analysis by the German Institute for Economic Research (DIW), which found that the German property market would indeed benefit from its exposure to their World Cup, but only in the long term.
"The report implied that visitors to Germany would be exposed to local property opportunities and that this would ultimately lead to buying decisions.
"And I would expect to see a similar scenario here, particularly in terms of Cape Town and Durban, where property is world class and exceptionally good value in terms of Sterling and Euros for example. This would apply selectively, however."
Project news:
House Oxley
Currently still in progress, with completion due early next year, this residential building is situated in Benguela Cove Lagoon wine estate in Hermanus, approximately 1 hour away from the Cape Town CBD. The estate combines the modern architectural designs with nature and its surroundings. This double storey residence is one of 124 residential possibilities in this estate. Harrison Hyde Architects’ designs complement the image of the estate with features like the basement cellar (the estate is a wine & olive farm) and the use of stone cladding & slate complement the estate’s natural surroundings.
To date the project has progressed fairly smoothly, and the client (who lives in the UK) will be over in December to check on the progress.
200 Buitengraght
This double storey existing office building in Bo-kaap, a suburb near the Cape Town CBD, was bought by a young IT company for its new offices & to sublet. The design work was undertaken by Jaco Grobeler, following which was appointed to manage the project for the client, ensuring the work was undertaken in the most economic and logical way to re-vamp this office space and modernise it. Internal glazing panels as dividers instead of brickwork and the refurbishing of existing features like the courtyard are a few interventions taken to enhance to overall product that gives the whole building a new and rejuvenated look. The contractor was Thembekile Project Managers.
