Property360 - National Digital Magazine - 29 January 2021

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N E A R , FA R . . . .

WHEREVER YOU ARE THERE’S A PROPERTY WAITING FOR YOU PA G E 3 PICTURE : LEONARDO ROSSATTI

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Landlords should keep rents low and hold on to good, paying tenants, rather than increase rents and risk losing the tenant.

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OUTH AFRICANS active in the property market this year are likely to face some unknown environments as the country deals with the ongoing coronavirus threat and economic decline.

To help them navigate these conditions, real estate experts share their insight and advice for buyers, sellers, landlords and tenants so they can be as successful as possible in the property arena.

B U Y E R S : This year’s buyers should prepare and do their research into all the costs of buying a property, from transfer duty to conveyancing fees and bond initiation, says Craig Mott of the Rawson Property Group.

They need to consider and budget wisely for rates, taxes and – if buying into a complex – regular, as well as special, levies.

“They need to know what they can afford. The best way to do so is to get a prequalification certificate. They need to be cautious about taking the interest rate cuts as a signal to obtain a bigger home loan than they were previously contemplating.”

He adds that the rate cuts have brought rates close to historic lows, which means they can be expected to rise as soon as the economy improves.

FNB’s Hayden Giger agrees: “Take your time, do your homework and make sure you factor into your calculations an interest rate increase buffer. When it comes to interest rates, unfortunately, what goes down must come up.”

From a property price, interest rate and bank lending point of view, Jawitz’s Herschel Jawitz says the market “couldn’t be better for buyers than it is now”. This means buyers should not try to time the market and wait for things to get even better.

“If you can afford to buy and you see the property you want, put in an offer and see how the seller responds.

“If the seller counter offers, think about what this property means to you and how much more you are prepared to pay to buy your dream home.

“The best deals are when all parties have given a bit to meet somewhere in the middle,” he says.

Negotiating the property world in uncertain 2021

Everyone breathed a sigh of relief when 2020 finally ended but we’re not out of the woods yet. Experts give advice on how to cope when buying, selling, letting and renting this year BONNY FOURIE bronwyn.fourie@inl.co.za SELLERS: While property prices might still not be keeping up with inflation across most regions and price brackets, Jawitz says buyers have moved from “cautious” to “committed” when it comes to putting in offers and buying. This is a significant improvement from the market agents saw early last year.

He adds: “But this is not a market to test the theory of ‘if get my price I will sell’.

“Most sellers are not getting their prices, so you have to be a serious seller who is prepared to listen to what the market is saying when it comes to setting a price for your home.”

When deciding on an agency and agent, sellers should not use the highest valuation as the most important criterion.

“An overpriced home sends a very quick signal to the market that you are not serious about selling your property.

The relationship between the selling price and time on the market is almost always a negative one. Importantly, if you are going to sell in a soft market, make sure you buy in the same market, especially if you are upgrading to a home that is more expensive,” Jawitz says.

Mott advises sellers to assess their properties and make them presentable.

“Remember, buyers are knowledgeable and spoilt for choice so you need to make your property stand out from the rest. Get an updated valuation on your property so it can be priced right.”

In challenging market conditions, he says it is advisable for sellers to seek the advice and services of an experienced estate agent and let them handle the rest.

Giger says sellers must understand the

area and market they are selling in and speak to the relevant experts to make sure their properties are priced correctly.

LANDLORDS: Buy-to-let owners who are seeking tenants need to market their properties at realistic and market-related rents.

“If you do have a tenant, make sure the maintenance that you are responsible for is always up to date and that you constantly engage with your tenant,” Giger says.

Jawitz says this is not the time for landlords to test the rental market.

“If you have a good, paying tenant, who is looking after your property well, try as hard as you can to keep them. This doesn’t mean you have to ‘give your property away’.

“As general advice, I believe that putting in a good tenant at below your desired rent – even if you can afford to keep the property empty – simply makes sense.

Waiting for a higher rent, which in this market may not materialise, may leave you in a position where it will take longer and longer to catch up with your costs – such as rates, levies and upkeep – as the property stands empty.”

In this market, he says, cash flow is king.

Jacqui Savage, national rentals manager for the Rawson Property Group, says 2020’s lesson was that a good relationship between landlords and tenants is crucial.

“Once there is a clear and good line of communication between the relevant parties, most things can be overcome.”

For landlords especially, compliance, financial and maintenance management are important factors.

Odette Maartens of Dogon adds: “Work with reputable agencies that would do proper checks on tenants and make sure they can afford the rent.”

She recommends landlords do not increase rents and rather keep good tenants.

TENANTS: Tenants who are experiencing financial difficulty must communicate this to their landlord, Savage says. If agreement can’t be reached they can part ways amicably.

Tenants should always pay on time and make sure they treat the property as if it were their own, Giger adds.

“Who knows, maybe the owner will hold back on the annual increase.”

The casualty of the economy is the rental market as it applies to falling rents or rents that are, at best, flat and vacancy rates that are climbing, Jawitz says. For tenants, this means they may be able to renew their lease at the same or a lower rent or look for a cheaper rental property.

“In the same way landlords should hold on to good, paying tenants, so tenants need to consider the benefits of a good landlord and factors such as the cost of moving.

“Negotiate with your current landlord first before you make a move. Landlords have expenses to cover and mortgages to pay and below a certain rent may want to look for a new tenant who will pay more than you are offering.”

Tenants must rent what they can afford, Maartens advises.

“We saw many tenants having to move in with family and friends and cancel their leases when Covid-19 hit, so don’t over extend yourself in case of hard times.”

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Letter from the editor

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Still on the crest of the wave

Estate agents believe this should be a good year, especially for buyers.

However, sellers too could benefit, and semigration to coastal areas is likely to continue as more people work from home BONNY FOURIE bronwyn.fourie@inl.co.za

THE NEW YEAR finally feels as though it is beginning.

I was fortunate during the

South Africa’s coastal towns will attract many of this year’s semigrants.

holidays to chat to industry heads, and I’m thrilled to hear that many recorded a good year with regard to property sales last year – even with the three-month shutdown.

It’s no secret that low interest rates have been a big driving factor.

Sadly, however, we are also seeing more distressed homes come on the market as people are unable to meet their monthly commitments or are opting for a different lifestyle.

Whether it was income loss or lockdown that made people reconsider their lives, many are finding new ways of having a roof over their heads.

For some younger married couples that might mean moving in with parents. For millennials it might mean giving up their inner city apartments in order to return to the suburbs.

And for others, this could involve moving to a new province that offers an improved lifestyle.

Covid has certainly shaken up how we view our homes.

Psychologically, many are wanting more community and family and friends closeby – ask any single person who has faced lockdown alone in a city without the security of knowing someone who could at least do a drop-off or call an ambulance if need be.

And so we move into 2021 with the knowledge that we are in the middle of history in the making and something new is being created.

It is exciting, turbulent, excruciatingly sad but also creative times.

Here is hoping the year is kind to you, and that it offers you great opportunities to make your best property dreams a reality.

Warm regards

Vivian Warby vivan.warby@inl.co.za

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OMENTUM is expected to continue where it left off last year, with interest rates still in buyers’ favour.

Sellers could also get in on the action. If buyer interest holds, says Herschel Jawitz, chief executive of Jawitz Properties, real property price growth in excess of inflation will be seen for the first time in a while.

What else can we expect to see from this year’s property market? What home types will be “hot property” and where will they be? Will we see a resurgence of semigration? Real estate professionals outline their thoughts on what can be expected over the next 11 months.

P R O P E RT Y I N D E M A N D As expected, key buying trends will include houses with work-from-home space, nano unit apartments which offer a cool lifestyle in metro hubs and a continuation of the downsizing trend from large properties to smaller secure homes that are cheaper to run, Jawitz says.

From a rental point of view, the trend will be value for money.

“With a surplus of rental stock in a tough economy, tenants will be looking for extreme value for money and rents will remain under pressure for the year.”

In KZN there has been an increased demand for full-title houses as people spend more time at home and work from home, says Daphne Rhode, regional sales manager for the Rawson Property Group. There will be “a definite increase” in first-time buying, especially among those previously renting.

Martin Rautenbach, franchisee of Rawson Constantia in Cape Town, says with interest rates so low, buyers are snapping up properties, specially in the southern suburbs. Investors are also taking the opportunity to purchase.

“We also have Johannesburg parents buying properties for their kids close to UCT but coming very low off the asking price.”

Increasing volumes of sellers are downscaling – “selling big and buying smaller”,

he says, adding investment properties, smaller budget-friendly homes and those in good school catchment areas will be in demand.

Hayden Giger, growth head at FNB private bank lending, says there is a large supply of properties to let and tenants have increased choice at “very competitive” rents.

“Part of the increased supply in the rental market is due to the low interest rate environment which is allowing a lot of tenants to become first-time buyers...”

For property owners, he says 2021 will see more renovations as people improve their work-from-home and living environments.

Dogon Group Properties rental manager Odette Maartens says micro-living and onebedroom lock-up-and-go units have become popular in Cape Town while, in the suburbs, more spacious apartments and homes are in demand as many people still work from home.

S E M I G R AT I O N Lifestyle plays an important role in semigrants opting to relocate to the Mother City and coastal areas, says Craig Mott, Rawson Property Group’s regional manager for Cape Town. The coastal strip between Cape Town and Port Elizabeth, is “without a doubt one of the most beautiful parts of our country”. Many of the towns on the Garden Route are among the safest places to bring up a family and offer lifestyles that balance family, work and outdoor activities.

“The KZN North Coast is equally desirable from this perspective, boasting proximity to two of the busiest ports in Africa as well as easy access to King Shaka International Airport,” Mott says. “This has attracted entrepreneurs, who are making the most of the excellent value for money and quality of life on offer, paired with abundant business opportunities.”

There has also been a rise in “super commuters” – professionals who live in small towns and commute to major business hubs.

“This, together with increasing remote work opportunities, has made it possible for

professionals to look for property further away from the major cities.”

Maartens says Cape Town and the Western Cape remain firm favourites among semigrants.

“This is due to the lifestyle they afford – beaches, mountains, and good schools.”

While Jawitz agrees Cape Town and KZN’s North Coast are the “obvious semigration destinations”, he notes in a challenging economy, semigrants will look for coastal destinations that offer better value such as George and the Helderberg region.

Giger says: “With Covid-19 driving a large number of people to work remotely, places where one can work from have opened up, and people are looking at coastal areas outside the traditional Cape Town and Durban metros.”

AREAS TO LOOK OUT FOR Jawitz says the most active segments of the market are the lower-to-middle priced ones.

“Even though we are seeing a more balanced market as demand has picked up relative to supply, it is still a buyer’s market with buyers looking for value as a key buying criterion. This ‘value’ means that position is not top of the buying list and that any area that offers good value will be appealing.”

These include some luxury areas such as the Atlantic seaboard in Cape Town and Atholl and Illovo in Joburg.

In KZN, Rhode says Umhlanga and Ballito are still popular with up-country buyers, while Umdloti has also seen an increase in activity.

In the Western Cape, semigrants and locals are buying in areas such as Rondebosch, Claremont and Kirstenhof, which are familyorientated, Rautenbach says. Buyers are also taking their first steps on the ladder in areas such as Diep River, Plumstead and Southfield.

Other areas to look out for are the southern suburbs – for those who can afford them – and the northern suburbs – for those seeking value.

Maartens also highlights the Western seaboard as an area to watch this year.

DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright ANA Publishing. All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from ANA Publishing. The publishers are not responsible for any unsolicited material.

Publisher Vasantha Angamuthu vasantha@africannewsagency Executive Editor Property Vivian Warby vivian.warby@inl.co.za Features Writer Property Bonny Fourie bronwyn.fourie@inl.co.za Design Kim Stone kim.stone@inl.co.za

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P R O P E R T Y

W O R L D

BY BONNY FOURIE bronwyn.fourie@inl.co.za

Dangers to buyers in private sales BUYERS who are purchasing property from a private seller – without the use of an agent – need to be aware of the risks, some of which are “considerable”, says Berry Everitt, the Chas Everitt International property group chief executive.

One of them is the possible non-disclosure of defects as private property sales fall outside the ambit of the Consumer Protection Act, which means sellers can include a voetstoots clause in their sale agreements.

Once a buyer signs the offer to purchase they are accepting the property “as is” and will

have little recourse against the seller for defects that might become apparent later.

There is also a greater risk of buyers losing their deposit.

They can either be persuaded to pay it into the seller’s private bank account, after which the seller can then abscond with their money, or they might forfeit their deposit in a cancelled sale, if the sales agreement is inadequate.

Everitt says some agreements do not stipulate exactly which fittings and fixtures are included in the sale and which are not. There is also a greater risk of transaction delays.

The rental market might see improved performance this year.

R E N TA L M A R K E T L O O K I N G R O S Y THE RESIDENTIAL rental market suffered last year following the Covid-19 hard lockdown but this year might be a different story.

Jacqui Savage, of the Rawson Property Group, believes the market will grow, taking into account that rental escalations have been lower and many landlords have

not increased their rents.

“Landlords have had to take another look at their rental pricing as the rents being asked are having to come down slightly and, in some cases, quite a bit in order to find and secure suitable tenants,” she says.

Tenants have a wider choice of

properties at reduced rates, says Dogon’s Adrien Epstein.

“Tenants in difficult economic circumstances… are encouraged to try to negotiate with their… landlords before finding alternate accommodation, in order to minimise wasted moving costs and additional stress.”

Buyers purchasing from a private seller must know the possible risks in order to avoid facing hidden defects.

Micro apartments prove to be a boost for developers MICRO apartments are increasingly being developed for the market and with studio apartments ranging from 20m² to 30m² in size, developers are able to achieve strong per-square-metre rates.

In addition, investors and end users are able to secure homes at affordable prices – by Atlantic seaboard standards, says Adrien Epstein, a Dogon Group Properties sales representative in the area.

“We expect this trend to micro apartment living

to give Sea Point’s Main Road and surrounding retail pockets a significant boost as people living in small spaces are more inclined to eat out, outsource laundry, socialise and use the urban outdoor space and facilities as an extension of their homes. The City of Cape Town’s relaxation of parking requirements in respect of these apartments will result in less car ownership and increased use of public transport and neighbourhood living which can be done on foot.”

The ability to measure and manage lights and water usage is a priority for new developers and buyers.

Increasing opportunities for green homes BUYERS are looking for smarter, greener homes, and managing utilities is one of the priorities for property developers.

At the heart of any new smart and less grid-dependent home is the ability to measure and manage utilities, says Michael Franze, the managing director of Citiq Prepaid.

The South African Green Building Council says Green Star buildings enjoy energy savings of between 25% and 50% compared to older structures. The payback period of energy and water-saving practices has dropped, especially as costs of green building technologies decline and utility costs rise.

In South Africa, the move towards being independent of the grid is rapidly gaining momentum, but while many banks are willing to offer finance to install facilities like solar energy, the cost for individual home owners can be prohibitive.

“However, some local solar companies are offering their own form of private power purchase agreements, which mirror the way Eskom deals with independent power producers only for body corporates,” Franze says.

Micro apartments make good sense for investors and tenants.

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What’s new in the

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