Business Day HomeFront 22 February 2019

HOMEFRONT

Property Investment Special Focus

13 OCTOBER 2016 WWW.BDLIVE.CO.ZA 22 FEBRUARY 2019 WWW.BUSINESSLIVE.CO.ZA

MUST READ

The growing pull of retirement estates PAGE 14

Best property investment asset?

PAGE 20

Hot prospects on foreign shores PAGE 24

Carlswald Luxury Apartments in Midrand

On the mark In SA, sectional title flats and gated community homes are gaining significant market share. HomeFront explores their Changed rules for replacing title deeds continuing appeal to investors and lifestyle home buyers PAGE 4

PAGE 28

REAL LIFE Real Esate.

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HOMEFRONT MARKET WATCH

On the mark In SA, sectional title flats and gated community homes are gaining significant market share. HomeFront explores their continuing appeal to investors and lifestyle home buyers WORDS: GEORGINA GUEDES :: PHOTOS: SUPPLIED, ISTOCK AND SHUTTERSTOCK

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eeds Office figures show a total of 29,143 freehold properties and 15,648 sectional title units were transferred countrywide in the fourth quarter of 2018. Interpreting these results, Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, points out that this translates into a 3.6% drop compared with the total number of properties sold in the third quarter, and an 8.1% increase in the number of sectional titles sold.

“This reveals a considerable shift in the market away from freehold titles and towards sectional title living,” he says.

A further piece of the real estate puzzle is estate living, which Lightstone Property reports on separately, as an estate can house both freehold and sectional title properties. Sales of this property type have held steady in recent years, with Lightstone reporting a value growth ahead of the curve.

Lightstone suggests that sectional title and estate

prices have increased more than those of freehold homes. “The average value of estates has remained quite consistent with previous years in terms of Q2 to Q4, but experienced an overall increase of 10% over the past year,” says PaulRoux de Kock, analytics director at Lightstone.

“While volumes have declined we are seeing a higher increase in value obtained for sectional titles and estates compared with the 4% increase in value obtained for freehold properties.”

RETURNS This makes a strong case for the return on investment of buying into these types of properties. “Residential estate living is on the rise, especially among the more affluent,” says estate property specialist Basil Weinrich, who assists market researcher New World Wealth in compiling its annual list of the top 10 residential estates in SA. “We estimate that more than 40% of South African high net worth individuals

live in or have homes on residential estates.”

The report states that, while the South African residential market has come under strain over the past year, houses and apartments on top-end residential estates have outperformed the general market. Another trend is that luxury apartments are being developed on estates, which formerly focused only on houses.

SURGE Possible reasons these kinds of group living schemes are thriving: in SA, the mostlisted reason for the surge in popularity of sectional title and gated estate ownership is security. Steyn City, north of Johannesburg, is one such estate, where advanced security features allow for relaxed, “open-door” community living within its walls.

“Security remains a big issue for South Africans, and this is an area where Steyn City excels. Our Parkland Residence is equipped with the latest technology, including biometric access,

“Residential estate living is on the rise, especially among the more affluent” Basil Weinrich, property specialist

electrified perimeter fencing, CCTV cameras with advanced video analytics, a fully equipped security nerve centre and 24-hour patrols,” says Steyn City Properties CEO Giuseppe Plumari.

The estate offers a combination of ownership options including freehold homes, sectional title cluster and apartment developments. The joy of sectional title ownership is that the maintenance and upkeep of the property is the concern of the body corporate. This frees the buyer and resident from unexpected costs covered by the levy, enabling the “lock-up-and-go” lifestyle that is in such high demand by modern buyers.

UPKEEP Saxony Sibaya is being developed within the Sibaya Coastal Precinct. According to Stefan Botha, director of Rainmaker Marketing, Saxony Developments has identified the demand for sectional title living around SA.“It is a very successful ownership type as the units within the development are

HOMEFRONT

incorporated within their own body corporate and they pay a levy towards maintenance within the specific development.

“It applies to those who are buying and investing and buying off plan — and they have the benefit of capital appreciation,” he says.

APPEAL New and existing regulations are making sectional titles even more appealing for investors.

“Buying a new sectional title apartment directly from a reputable developer means that as a buyer you will enjoy peace of mind, knowing you have National Home Builders Registration Council guarantees that come with your property,” says David Britz, sales and marketing director at Multi Spectrum Property. “These guarantees include general workmanship, electrical and plumbing as well as roof

leakage and structural.”

He says new developments give buyers an opportunity to acquire homes with 100% loan facilities, as developers arrange these packages with financial institutions when they go to market.

The newly established Community Schemes Ombud Service has brought much-needed regulation to this space. “Sectional title gated security estate living, now being governed by a service, ensures the maintenance and upkeep of an investment to a higher and more regular degree,” says Craft Homes development manager Simon Malan.

LONGEVITY Malan adds that with the newly established ombudsman implementing compulsory levies, maintenance plans will be in place to ensure an estate’s longevity.

Craft Homes offers a

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range of residential options, from freestanding homes to townhouses, apartments and retirement estates. One of its developments is Sandton Gate Terrace, comprising 37 exclusive apartments in a secure mixed-use precinct in Sandton.

Security estates now increasingly offer a range of ownership options. Those who want to buy freehold houses and enjoy the autonomy of this ownership model can do so, yet those who opt for the sectional title option can enjoy amenities and security.

One estate offering both is Steyn City. “Our flexibility means that Steyn City is able to cater to a range of homeowners, from young executives to families and retirees,” says Plumari. “Of course, for sectional title owners, the big drawcard is that they are able to take advantage of a lowmaintenance, lock-up-andA

EDITORIAL TEAM Editor: Kim Maxwell Designer: Samantha Durand

Residential property type: transaction split Estates

89%

8% 3%

85%

11% 5%

80%

78%

13%

14%

6%

7%

Sectional title

72%

74%

19%

18%

9%

8%

78%

77%

76%

15%

15%

16%

7%

8%

8%

2003 2004 2005 2006 2007 2008 2009 2010 2011

Freehold

73%

70%

68%

66%

66%

66%

67%

17%

19%

21%

22%

23%

23%

22%

10%

11%

11%

2012 2013 2014

12%

11%

11%

11%

2015

2016

2017

2018

The graph shows how sectional title and estates have increased in sales transaction volumes since 2003.

Source: Lightstone Property

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HOMEFRONT go lifestyle. But, thanks to Steyn City’s extensive parkland, they also enjoy the benefit of endless space and areas to run, walk and play.”

This year sees a new Steyn City apartment development, 104 on Creek, comprising 105 two- and three-bedroom apartments.

Sitari Country Estate also offers a mix of ownership options, with freestanding houses, apartments and townhouse living. Set for completion in February, the sectional title luxury apartments at Waterford Place are a value offering within the estate.

LUXURY “Designed by BPAS Architecture, Waterford Place offers the best value-formoney proposition in Sitari, with the additional benefit that the apartments are move-in ready and available for viewing,” says Uvest Property Sales executive director Claudius Combrinck.

He says only 14 of 55 luxury apartments are still available.

Ellipse Waterfall, developed by Kent Gush Properties, is the first luxury apartment offering at Waterfall City in Midrand.

While the development is sectional title, because it is within Waterfall it falls under the rules of the 99year lease arrangement that governs the estate.

Each purchaser at Ellipse becomes a member of the Luna Club, which offers a temperature-controlled leisure and lap pool, wellness centre indoor gym and boutique spa.

There is a coffee shop, wine room and residents’ cellar. A children’s game room and entertainment options for adults are planned.

Chris Cilliers, Lew Geffen Sotheby’s International Realty Winelands principal and CEO, says loneliness is a worldwide issue.

Community involvement in group housing of any kind is increasingly important.

“Group housing schemes, whether sectional title or estate living, are becoming like small towns. It’s comforting to know that if I go to the gym at the same time I will see the same people and strike up some kind of relationship with them.”

VARIETY Val de Vie Estate marketing director Ryk Neethling has found that a variety of ownership options and a diverse luxury property offering has contributed to the success of the estate.

Val de Vie Estate comprises about 1,000ha with 1,500 completed residential units comprising freehold stands ranging

“Rather invest directly with the developer than wait for the estate to mature and purchase at inflated rates from an estate agent” Jessica Hofmeyr, Century Property Developers

from 700m² to 5ha.

The range of ownership options within estates not only appeals to different investor types, but to different ages.

Multigenerational estates increasingly appeal to families wanting to live close to one another, with access to common amenities.

MIXED USE Zimbali Lakes Resort, a 350ha, mixed-use, multigenerational and pet-friendly estate, encompasses a range of residential opportunities from freehold land to sectional title developments and a retirement offering.

It is 15 minutes from King Shaka International Airport and a short drive from the hub of Umhlanga.

According to Horizon Capital Residential MD David Sedgwick, mixeduse developments are appealing to investors. “From

a convenience perspective, services in larger mixeduse developments could include a concierge, a local coffee shop or meeting place for friends and neighbours, a gym, pool deck and braai facility.”

He says the City of Cape Town is actively pursuing an urbanisation strategy and encouraging mixed-use developments with active street edges in an effort to pedestrianise areas more.

Horizon Capital’s Azure and The Aster apartments in Cape Town are both sectional title developments.

ADVANTAGES “Sectional title has distinct advantages such as, often, a full management service responsible for day-to-day running of the scheme including insurance, maintenance of the outside and of common property areas, and a sense of community when it comes to

estate living,” says Sedgwick.

The Houghton in Johannesburg has a successful mix, with apartments sold at launch in 2011 for R2.8m now fetching R5.5m. The development is in its final phase with the completion and launch of The Houghton hotel scheduled for May. The developers say that a sectional title unit in The Houghton is a sound investment. “People understand the mitigation of financial exposure and apply diversification to their investments.

“The Houghton may not be high-income generating, which comes with risk, but offers an attractive yield with capital growth,” says The Houghton director Arnold Forman.

POTENTIAL All these features come together to safeguard the investment — whether buying to take up occupation or for investment purposes.

“I believe the fundamental reason that sectional title apartments and gated security estates are in such high demand is the fact that they have already proven to be a great investment,” says Jessica Hofmeyr, sales, rentals, marketing and operations executive at Century Property Developers. The company

The Houghton in Johannesburg

The Aster from Horizon Capital in central Cape Town

Zimbali on the KwaZulu-Natal north coast

Paardevlei Lifestyle Estate in Somerset West

has established a number of developments in soughtafter Waterfall and other destinations in Gauteng.

Hofmeyr says the best way to maximise return is to get in early. “Rather invest directly with the developer than wait for the estate to mature and purchase at inflated rates from an estate agent.”

DEMAND Balwin Properties CEO Steve Brookes says the company’s success lies in having identified a need for secure estate living within a certain price bracket.

There is specific demand for one-bed, two-bed and three-bed apartments, both for investors and end users.

Brookes says The Whisken in Kyalami is a sectional title development that delivers on all these promises. Polofields and Kikuyu, within Waterfall Estate, are offered on a 99-year leasehold arrangement, with benefits of a broader lifestyle estate.

Where the market has changed considerably is that people are trying to reduce barriers to invest in estates.

“Whereas within normal sectional title developments people are generally required to provide a 10% deposit upfront, Balwin is attracting first-time buyers by trying to make it easier for people to invest,” says Brookes.

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HOMEFRONT GENERATION GAME

Baby Boomers v Gen X BOOMERS

The real estate industry should be cautious about writing off Baby Boomers and Generation X buyers PHOTOS: SHUTTERSTOCK

Who are they? Aged 54-72, those over 60 are the biggest spenders in the market — Boomers want their homes to reflect their success.

R1.77m — average home price in the 60-plus age bracket, and more than double the average paid by people in their 20s.

This is 4% more than the average price by this type of buyer in October 2017.

R720,000 — average deposit paid by buyers over 60 in 12 months to October 2018.

Affluent Boomers downsize to better-located “jewel box” homes — smaller and more secure properties packed with luxuries.

Selling point: upmarket apartments, townhouses and cluster homes in blue-chip suburbs.

W

hat do these two groups have in common? Significant spending power, a high chance of paying a decent deposit and a low risk of defaulting on monthly instalments. Why these two groups are still major players in the residential property market:

GEN X Who are they? Aged 36-53, they are predominantly in their 40s and well established in their careers with children who are still at school or studying.

R1.3m — average home price. Generally not buying for the first time, meaning they are able to afford a substantial deposit derived from the sale of their previous home.

This is 4.9% more than the average price paid by this type of buyer in October 2017.

R262,000 — average deposit paid by buyers aged 40-50 in the 12 months to October 2018.

Gen Xers like modern. They want informality, contemporary finishes for ease of maintenance and smart home automation.

Selling point: homes with large “great rooms” where the family can gather for activities.

Source: Rudi Botha, CEO of BetterBond

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HOMEFRONT RETIREMENT

Unprecedented choice for smart retirees The pull of modern retirement estates is much more than quality health care and security. Where and why are so many investors, old and young, signing on the dotted line?

WORDS: HELEN GRANGE :: PHOTOS: SUPPLIED AND SHUTTERSTOCK

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hink of upmarket lifestyle estates with all the bells and whistles and you have a good idea of what retirees want these days — beautiful setting, contemporary, green-built homes, clubhouse, walking trails, shops, hairdresser, spa, lovely restaurants. And, of course, a solid investment.

Added to those needs are excellent health facilities including frail care.

“Retirement planners are usually looking to buy into an active lifestyle with the best amenities, leisure, social and medical facilities,” says Charl van Niekerk, Central Developments Property Group marketing manager for Celebration Retirement Estate in Northriding near Fourways, Johannesburg.

“They also want stateof-the art security and frail-care facilities and not least they want good investment returns.”

There are 12 such retirement estates in their portfolio. What sets Celebration apart, says Van Niekerk, is its 30-bed, 24hour frail-care centre with on-site experts who also provide home care.

CARE

Langebaan Manor in the Western Cape

Celebration Retirement Estate in Northriding, Johannesburg

“Only about 10% of all retirement developments offer this level of health care from day one. Some plan to deliver it at a later phase, but never do. Just being close to hospitals is often not enough,” he says.

In this league too is the newly renovated San Sereno retirement village in Sandton. It offers excellence in frail- and assistedliving care, an increasingly required service as retirees grow older.

Mount Edgecombe Retirement Village in Kindlewood Estate on the KwaZulu-Natal north coast is part of Tongaat Hulett’s R1bn Retire KZN initiative (which includes Zimbali and Shoreline Sibaya retirement developments).

Opening next month is a 5,000m 2 care facility comprising assisted living, frail care, doctors’ rooms and a coffee shop, among other facilities.

“We’ve already sold 80% of the first phase, so it is clear that this development

HOMEFRONT

Lazuli Lifestyle & Retirement Estate on the KwaZulu-Natal north coast

The Retreat in Hazeldean, Pretoria East

“We found buyers preferred direct ownership because they have the financial means to own the property — and also want to be able to pass it on” Jessica Cabanita, marketing manager, Craft Homes

is exactly what the market is calling for. We are the first retirement scheme to market with a huge focus on care and security,” says Geoff Perkins, project manager at Collins Residential, the developer of Mount Edgecombe Retirement Village.

As with other top-end lifestyle estates, Amdec retirement accommodation provider Evergreen Lifestyle’s winning formula is a mix of elements that take the focus away from “ageing” towards wellearned healthy activity and enjoyment in the autumn years — while being equally attendant to medical and frail care.

KwaZulu-Natal has seen a surge in these lifestyleoriented retirement developments in recent years, responding to research showing that

the province is a favoured retirement destination.

Thus Evergreen is expanding rapidly: in the pipeline this year are 750 units in Zimbali, 640 units in Umhlanga Ridge and 458 in Evergreen Hilton, all for occupation in 2020.

The Evergreen developments are alongside other existing and expanding offerings in the province, including Brettenwood Coastal Estate in Ballito and Carmel Properties’ Shoreline Sibaya in Umhlanga.

YOUTHFUL The KwaZulu-Natal south coast is attracting the same youthful retirement market, as attested to by Renishaw Hills on the outskirts of Scottburgh.

The development quickly sold its sea-view, twobedroom, lock-up-and-go

maisonettes launched last April, priced from R1.54m.

DOWNSIZED A major drawcard in retirement developments is the convenience and ease of living that a downsized home or apartment offers.

“People typically look to downsize, and by doing so, drastically reduce costs.

And they’re doing this earlier, in their 50s and early 60s, and continuing to work for as long as they can. It’s a trend we’ve noticed in the past year,” says Evergreen Lifestyle CEO Arthur Case.

Many investors typically prefer sectional title ownership over life rights, which give estates such as Groot Parys Estate, the only sectional title retirement estate in Paarl, and The Retreat in Hazeldean, Pretoria East,

a distinct advantage.

“We found buyers preferred direct ownership because they have the financial means to own the property — and also want to be able to pass it on,” says Craft Homes marketing manager Jessica Cabanita, the developer of The Retreat. “Younger buyers see it as an investment in the short term, and a property to retire to in the long term.”

SECTIONAL TITLE Similarly, projects such as the recently launched Sentinel Hill Apartments at Lazuli Lifestyle & Retirement Estate, next to Zimbali in KwaZulu-Natal, offer affordable sectional titles from about R1.59m.

Another example is Devmark Property Group’s Langebaan Manor in the Western

HOMEFRONT

Zevenwacht Lifestyle Estate near Stellenbosch Cape, which includes 60 sectional title apartments.

Their Plettenberg Manor development, offering freehold or sectional title homes, cottages and apartments, is nearly 80% sold out.

“Some retirement villages under full ownership title have shown growth of up to 12% a year on capital and an 8% rental return, giving about 20% total investment return a year.

This compares favourably with the current norm in the residential market of 4% to 5% a year,” says Devmark Property Group CEO Hein Ehlers.

CAPITAL GROWTH Shoreline Sibaya also decided to follow the sectional title route.

“Research showed us that the new generation of buyers into retirement

Quadrant Gardens in Claremont

villages wanted a purchase option that was transparent, and in which they benefited from the full capital growth of their purchase,” says Carmel Properties director Alan Beesley.

The Western Cape is highly competitive in the retirement market, with a growing selection of picturesque estates, such as The Village at Langebaan Country Estate, Zewenwacht Lifestyle Estate on the Stellenbosch Wine Route and Buh-Rein Retirement Village, with its sectional title apartments and facilities including restaurants, deli, library, gym and cycling/jogging paths. It has frail care as well as a Memory Care (dementia) facility.

Selling well is De Plattekloof Lifestyle Estate in Plattekloof, with its breathtaking views of

“EIGHTONN is a groundbreaking, independent living concept that promises to cater to what until now had been a largely underserviced portion of the Atlantic Seaboard” Jacques van Embden, MD, Blok

greater Cape Town. “We’ve sold just less than R300m of property since launching in 2017, so we are at the forefront of retirement property sales in Cape Town,” says Claudius Combrinck, MD of Adlab, which markets the estate.

Developer appetite shows no sign of waning,

underpinned by projections such as that of the World Health Organisation, which anticipates that the percentage of South Africans over the age of 60 is set to double to 15.4% by 2050.

In the first half of this year, Rabie Property Group is completing three new

retirement villages in the Western Cape: Oasis Life Clara Anna Fontein, to form part of the 128ha mixeduse Clara Anna Fontein Estate in Durbanville, followed by Oasis Life Burgundy Estate in March, and Oasis Life Century City shortly thereafter.

Evergreen Retirement Holdings has recently announced the addition of another retirement estate, Evergreen Sitari (within the Sitari Country Estate in Somerset West), to its portfolio. The eighth in the Evergreen stable, Evergreen Sitari will comprise 500 properties, ranging from apartments to luxury freestanding homes.

Professional health care is provided on site, including home-based care and frail care. The first homes go on sale in the first quarter of this year.

For some retirees urban lifestyle is a priority — and this is where mixed-use estates such as the soonto-be-completed Quadrant Gardens, a 75-apartment retirement development in Claremont, take centre stage. Managed by the Cape Peninsula Organisation for the Aged, Quadrant Gardens is a joint venture with developer Corevest.

LIFE RIGHTS Quadrant Gardens combines life rights apartments with shops, restaurants and offices, as well as wellness facilities, a gym and 25m indoor pool.

Next door is Life Kingsbury Hospital and various amenities are on offer in the immediate environment.

Then there is EIGHTONN, the newly launched independent living development in Sea Point.

In keeping with the communal living ethos of developer Blok, EIGHTONN has a rooftop wellness studio and pool, deli and communal garden, all close to Sea Point Promenade and urban amenities. A holistic care package includes a 24-hour concierge, in-unit emergency services and a nurse available to tend to any medical needs.

“EIGHTONN is a groundbreaking, independent living concept that promises to cater to what until now had been a largely underserviced portion of the Atlantic Seaboard,” says Blok MD Jacques van Embden.

But then as Evergreen’s Arthur Case says: “Retirement doesn’t mean you have to stop living, it’s just the next phase in the adventure of life.”

HOMEFRONT MARKETS

Era of responsible investing?

More than ever, this year is shaping up as a wake-up call for cautious real estate investing. Where should property investor appetites lie?

Industry predictions about stable prospects among the categories WORDS: SARAH HUDLESTONE :: PHOTOS: ISTOCK AND SHUTTERSTOCK

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hrough the doom and gloom, there seems to be a glimmer of light for South Africans invested in some sectors of the property market.

The SA Reit sector in particular could show signs of improvement, after a challenging 2018.

Recently property markets suffered an extended period of poor business confidence — the result of a broadly

stagnant economy for the past six years.

This can be attributed to uncertainty over the future economic policy direction of the country.

According to Lightstone Property, providers of comprehensive data and analytics, it could take a while for things to pick up.

Transactional activity remained subdued for all property sectors last year. Lightstone Property’s 2018: A Year in Review

report recorded the lowest number of transfers in the past three years.

Its analysts say this may be the result of a decrease in business confidence.

Lightstone says the continued uncertainty relating to land expropriation without compensation could have a negative effect on all sectors of the property market as talk of claims on commercial and retail have emerged.

RESIDENTIAL In the residential property sector the picture is not so rosy, with politics and economic factors to blame for poor national house price growth.

FNB property sector strategist John Loos says the FirstRand economic growth forecast of 1.4% for 2019 is unlikely to be enough to lift average price growth significantly. “We expect another year of real house price decline, where average house price growth of 3%-4% in 2019 remains below the CPI inflation rate and more noticeably below per-capita income growth.”

Rawson Properties MD Tony Clarke is cautiously optimistic. He says the market is unlikely to improve before national and provincial elections in May, but after that, “property owners should prepare for continued slow growth”.

COMMERCIAL Lightstone says the largest number of transactions in the commercial property market is in the range of a maximum R2.5m. It reports “an evident spike in the volume of transactions” in the latter part of 2017 leading into the first quarter of 2018.

But, in what Lightstone notes as an alarming finding, total transfer values dropped to about R3bn in the year to date, a reduction of more than R1bn compared with the same period in 2017. This is the most significant drop since 2016. Gauteng still records the most transactions, followed by the Western Cape.

HOMEFRONT INDUSTRIAL Industrial property, particularly in the warehousing and logistics sector, will see steady growth into 2019 as new products and expansions are planned. Lightstone analysts predict steady growth in this sector well into the year.

Anchor Stockbrokers real estate analyst Wynand Smit agrees: “The industrial sector, especially logistics-focused facilities, should deliver the strongest returns on a relative basis.”

In SA, prime logistics assets are becoming sought-after property assets to own. According to Redefine Properties’ industrial asset manager Johann Nell, in 2017 the average rental growth for logistics assets was 8%. “About 20% of Redefine Properties lies in the industrial sector with about 40% of that being in warehousing and logistics,” says Nell.

RETAIL Lightstone says the retail property sector had the most registrations among the retail, industrial and office sectors, with 525 transfers during the third quarter of 2018. This was closely followed by industrial property with 510 transfers.

Office property trailed with 250 transfers.

Its analysts note that although growth within the retail space has slowed, there is still progress driven by consumer spending habits. Annual nominal inflation rates for the industrial, office and retail markets indicates that industrial property is above the 6% mark, while the retail and office spaces are at 5% and 4% respectively.

Stanlib head of listed property funds Keillen Ndlovu says the biggest challenge in the retail sector now are the difficulties at national clothing retailer Edcon, which is facing a rescue funding crisis, and an oversupply of retail space.

Ndlovu says Edcon makes up about 2% of rental income in the listed property space, which includes not only retail, but offices, industrial and properties such as residential and storage facilities.

Expanding into offshore markets has helped to dilute exposure to Edcon. “It’s not easy to predict the ripple effect on other retailers,” he says.

OFFICE “The office market is still faced with oversupply,” says Ndlovu. “For example, Sandton CBD offices are 16% to 18% vacant. The industrial sector has been relatively more stable. We need better economic growth to help to drive demand for space and therefore rental growth.”

Spire Property Group CEO Gregg Huntingford says co-working spaces will continue to shake up the property industry in SA. “Some commentators say that the number of co-working spaces is estimated to double by 2020,” says Huntingford, who attended a global conference of real estate brokerage firms.

The Workspace CEO Mari Schourie, whose company has branches in SA, says future global trends show that big corporations will begin using co-working spaces and also have increased levels of co-operation with those workspaces as demand for flexibility grows.

“Prospects for the property sector in central and eastern Europe are robust and should support the overall sector’s growth” Wynand Smit, real estate analyst, Anchor Stockbrokers

Anchor Stockbrokers’ Smit says the end result will most likely be a combination of a rental reduction and decrease in Edcon’s footprint.

“There are, however, landlords who have already co-operated with Edcon to reduce their footprint. Furthermore, high-quality assets should be able to re-tenant space fairly quickly, even potentially at improved rentals.”

Smit notes that about 40% of the South African Property Index’s assets are offshore, which diversifies the sector’s exposure to a weak local property market and single tenant risk, such as Edcon. “Prospects for the property sector in central and eastern Europe are robust and should support the overall sector’s growth,” he says.

EPP, jointly listed on the JSE and Luxembourg exchanges, may be a good example of that. The largest owner of retail real estate in Poland, it operates as a Reit. It has a portfolio of 19 retail properties, six office buildings and two development sites in Warsaw, with one under construction, offering a total of more than 835,000m 2 in Poland’s 20 biggest cities.

HOMEFRONT LISTED PROPERTY “Listed property is recovering off a low and volatile base of 2018,” says Ndlovu. “We encourage investors to look beyond 2019, which we see as a transition period from a tough 2018.

They should also take a long-term view.”

For many investors in Reits, Brexit has been a worry. Ndlovu says he believes most of the negative Brexit news is priced in, as with UK stocks listed in SA, such as Hammerson and Intu.

“These stocks have fallen a lot and are trading between 50% and 70% below their net asset values.

“It is true that the market has been liking more money market and income fund type of investments with limited volatility and capital losses,” says Ndlovu. “But we have seen interest slowly come back to the listed property space after a massive decline last year.”

Smit says globally property has performed exceptionally well so far in 2019 . The FTSE Nareit All Equity Reits Index delivered a total return of 11.6% in January, the strongest monthly performance for Reits since October 2011.

“The South African Property Index delivered a total return of 9.2% for January, the eighthbest performing month since 2004,” he says.

Catalyst Fund Managers investment analyst Mvula Seroto says a re-rate (increase in value due to profitability potential) in the sector would be a big gain for listed property in 2019.

“However, this will only be possible if the economic outlook improves, there are positive results from the 2019 general elections and a reprieve from credit rating agency downgrades.”

Capricorn Fund Managers SA portfolio manager and analyst Howard Penny expects 2019 to be a better year overall for SA Reit returns after a disappointing 2018. He says the jury is out as to whether the sector could re-rate on a relative valuation level this year. “Given worries surrounding rising global interest rates, perhaps the bounce-back may have to wait for 2020.”

“We have seen interest slowly come back to the listed property space after a massive decline last year” Keillen Ndlovu, head of listed property funds, Stanlib

Some markets can’t be known from behind a desk. Property’s one of them.

As one of South Africa’s largest listed property asset managers, our team of property experts have more on-the-ground experience and have visited more markets than any other asset manager in South Africa. For more information on the STANLIB Property Income Fund, speak to your financial adviser or visit stanlib.com/knowledgecentre

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HOMEFRONT INTERNATIONAL

Best F bang for your buck

oreign governments are wooing wealthy South Africans looking for property investment opportunities coupled with residency or a second passport for travel and ease of access to international markets.

Many citizenship-byinvestment programmes offer attractive property options with good capital value retention, a currency hedge and growth.

Among countries that appeal to South Africans are the UK, Portugal, Malta and Grenada, but from an investment perspective

Where to go and what to choose — some of the top countries attracting South African property investors WORDS: DEBBIE HATHWAY :: PHOTOS: SUPPLIED AND SHUTTERSTOCK

UK “London has long been a magnet for South African property investors,” says Smuts and Taylor MD Mike Smuts. “Although the UK’s divorce from the European Union (EU) has been anything but smooth, and while there are concerns over the potential economic ramifications of its departure from the EU, investors are not quitting the UK property market just yet.”

Many opportunistic investors will continue to snap up distressed assets available at a discount, thanks to a combination of lower asking prices and a weaker sterling, as well as the low cost of borrowing. “As we look forward to 2019 there will inevitably be headwinds for the property sector against a backdrop of Brexit-related uncertainty, but this is a relative concept when compared with political and economic uncertainty on the domestic front,” says Smuts.

Henley & Partners managing partner Amanda Smit adds that the UK housing market is still experiencing significant volatility, but notes that analysts agree it will not take long before house prices begin to rise again. “Investors can purchase property from £13,561.98/m 2 in the central area and from £7,656.92/m 2 outside central London,” she says.

it’s becoming trickier to narrow down one country above the rest.

“It’s quite complicated,” says Nadia Read Thaele, director of LIO Global, a boutique consultancy specialising in residency and citizenship-byinvestment programmes.

“There’s no perfect programme. Each has different benefits and drawbacks and every family has to work out what suits them best.”

Thaele says she has noticed more diversity among local clients in the past two or three years. She attributes this to SA increasingly

making its mark globally in the business sector and more business owners needing freedom to travel extensively without the hassles of visa requirements.

“To enjoy the maximum benefits of a European citizenship-by-investment programme you generally need about R15m to get into the eurozone — and residency programmes start from as low as R2.5m. The Caribbean programmes start at about R1.5m, but generally have the benefit that you can exit your investment after a period and still retain citizenship,” she says.

HOMEFRONT

PORTUGAL Lisbon, Cascais and Porto are the favourites for property investment and offer good long-term value, says head of Pam Golding International Chris Immelman. “Lisbon continues to amaze me. Since we started doing business there in 2014 it has wrested the mantle as Europe’s favourite weekend destination from Paris, Europe’s foodie destination from Barcelona and Europe’s tech and startup capital from Dublin,” says Immelman.

There are minimal residency requirements; investors and their families naturalise for citizenship after six years and tax is payable only if you spend more than 183 days in the country. “This is truly the right time to invest in Portugal as prices will continue to increase in line with demand,” says Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty, noting that the rand is unlikely to strengthen for some time.

Portuguese Golden Visa options for foreign investors include investment in real estate for a minimum of €500,000, or via the creation of a new company with at least 10 jobs based in Portugal. It can take the form of a minimum investment of €350,000 in a cultural or scientific research project, €500,000 in the purchasing, rebuilding or renovating of urban properties, or a minimum of €1m cash deposit, or the equivalent financial investment through bonds or stocks.

MALTA Malta has proven to be the most successful country in terms of investment and is the second-fastest growing property market in the world, according to the Q3 2018 Knight Frank Global House Price Index. Seeff director Lance Cohen says it also has a strong rental market, boosted by large expat and holiday demand, and offers attractive property investment options.

“The property market is supported by a strong economy with Malta recently recording the largest surplus and highest decrease in debt among the 28 EU states. Property price growth has ranked among the highest in the eurozone,” he says.

Benefits of a second passport in a eurozone country such as Malta include the opportunity to open bank accounts and enrol children in top schools. They will also have access to universities in Europe at EU rates, rather than at substantially higher foreign student rates.

Malta requires a government contribution (donation) of a minimum €650,000, in addition to an investment of €150,000 into government bonds (held for five years) and a property component (investors can choose to rent or buy, for five years). “This is an attractive option to gain access to EU residence (within the first six to eight weeks) and then citizenship and travel to the EU and the US,” says Thaele.

HOMEFRONT

GRENADA Those looking for a first-class second citizenship should look no further than the Caribbean’s Spice Island. “The property-backed citizenship-by-investment programme requires a real estate investment of $350,000, which will get you a passport in less than four months,” says Immelman. “Grenadian citizens also qualify for reduced undergraduate fees at St George’s University, which boasts the largest US-accredited medical school outside the US.” Then there’s the attraction of being able to live and work in the US through the E-2 Investor Visa and enjoy visa-free access to the world’s largest markets including Schengen Europe, the UK, China, Russia, Singapore and the UAE. “If a second passport is not a priority, there is no physical residency required to invest in the Kimpton Kawana Bay Hotel development, which means it could be one of the savviest and hasslefree investments you will ever make,” says Immelman.

James Bowling, international CEO of Monarch and Co, which offers immigrant investor programmes for residence and citizenship, notes that within the citizenship programme, investors are not liable for any income tax, capital gains tax or inheritance tax. Grenadian citizens pay no tax on worldwide income and dual citizenship is allowed. “A Grenadian passport is valid for 10 years and will be renewed automatically,” he says.

WHERE ELSE FOR SOUTH AFRICAN INVESTORS? “South Africans can still get a very respectable bang for their buck in countries such as Spain, Portugal, Cyprus, Malta and Mauritius, which are fast emerging as leading destinations for property investments that deliver solid returns,” says Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty.

The real estate market in Moldova is looking promising. According to Realigro Real Estate, property sales have increased by 6%, which experts relate to its economic growth of almost 4%. Moldova recently introduced its citizenshipby-investment programme that offers passport holders visa-free access to 122 destinations around the world, including Russia, Turkey and Schengen countries.

The housing market in France is experiencing its highest price rise since 2011 due to surging demand and historically low mortgage interest rates. However, a recent report by Standard & Poor predicts that house price increases will stabilise at about 2% this year.

In the Caribbean, Antigua and Barbuda is a good destination for investors wishing to gain citizenship through a real estate investment. The twin islands offer clients the best investment options for security, resaleability and better value, according to Amanda Smit of Henley & Partners SA. “Property values in Antigua and Barbuda are relatively low and offer a high-quality range of options. The citizenship-by-investment programme offers the option to invest in real

estate and thus recover your funds (after the five-year minimum holding period). With this passport you will have visa-free access to 150 destinations,” she says.

Closer to home, Mauritius has come to the fore with appealing property investments priced from only $290,000. “Plus, purchases of more than $500,000 acquires permanent residency for you and your family,” says Pam Golding Properties Mauritius director Richard Haller. “There is also a growing demand for property to rent from young families relocating for career opportunities.

Rental incomes are providing owners in primelocated developments with 3.55% to 4.5% gross yield per annum on top of capital growth.”

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Grenada has a source-based taxation system. Citizens who are tax resident in Grenada are not subject to Grenadian tax on their foreign income, nor do they pay any wealth, gift, inheritance or capital gains tax.

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HOMEFRONT LEGAL

Title deed rules Changes come into effect this month about how to replace the title deed of your property WORDS: STAFF REPORTER :: PHOTO: SHUTTERSTOCK

I

s the title deed of your property safely stashed away? If a property owner has lost their title deed, they will have to go through an onerous, costly process to replace the original. Amendments to the Deeds Registries Act come into effect on February 25.

A title deed is proof of ownership of the property — registered in the owner’s name and signed and endorsed by the Registrar of Deeds. “If you are selling your property, not being in possession of the title deed could end up delaying the transfer to the new owner,” says Pam Golding Properties head of training Lanice Steward.

RECOURSE Schoeman Law attorney Shannon Vengadajellum says property owners who are not in possession of the original title deed need not fear. The new regulation provides recourse. However, the process will be lengthier and more expensive.

Presently, if the original title deed is lost or destroyed, a conveyancer may lodge an application on behalf of the registered

holder to the Registrar of Deeds to obtain a certified copy of the title deed.

The application must be accompanied by an affidavit by the registered holder or any other person in whose possession the title deed may have been before the loss or destruction.

AFFIDAVIT These changes are being introduced by the new process: over and above the existing application process, the application and affidavit will need to be attested by a notary public and must be advertised in the Government Gazette.

In addition, it must be open for inspection by the public for two weeks at the Deeds Registry. All costing the property owner time and money.

Says Steward: “You need to check where your title deed is. If you have paid off your mortgage or paid cash for your home, you should be in possession of the original title deed, whereas if you have a mortgage on the property, the bank will hold this document and you may retain a copy.”

In the case of the bond

being paid off, Steward says the bank’s attorney would have been required to hand over the original title deed.

Alternatively, a property owner may have mislaid the title deed.

“It is advisable to go to the nearest Deeds Office and complete an application requesting a certified title deed,” says Steward. “If you are not near a Deeds Office, you can ask your attorney to apply for a new certified title deed on your behalf. This will result in the lost title deed being null and void.”

ORIGINAL She adds that property buyers paying cash should ensure the transferring attorney sends them the original title deed. “This will be available from the Deeds Office about three months after the transfer. It will avoid any delays in the registration process, or additional cost when you want to sell.”

The bottom line: ensure that the title deed of your property is stored in a secure place.

And keep an additional certified copy of your title deed in a different location.

INVESTING IN THE UK

A Property Masterclass in partnership with

Jawitz Properties has partnered with leading UK property developer SevenCapital to deliver a series of masterclasses on UK property investments.

The ‘Investing in the UK: A Property Masterclass with SevenCapital and Jawitz Properties’ events will take place between: Monday 11th – Saturday 16th March, visiting Cape Town, Natal and Johannesburg. With exclusive investment opportunities to reserve on the day, the event will explore the entire UK property market, identifying key trends and market hot spots that can inform a potentially lucrative investment opportunity.

Find out about the many great investment opportunities just outside of London in Birmingham, Oxford and Slough which one can get into at lower price points that offer good capital growth and a hedge against the Rand. With investment opportunities starting from £174,950, we think that the timing is right for the offering to our South African clients.

For more information visit www.jawitz.co.za/investing-in-the-uk or email sevencapital@jawitz.co.za

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HOMEFRONT PROPERTY NEWS

Exclusive Hout Bay estate starts construction

C

onstruction has begun at the exclusive Kerzner Estate in Leeukoppie, situated on the hillside between Cape Town’s Hout Bay and Llandudno.

The first of 48 homes are expected to be ready for handover by mid2020. Three of the first eight houses have sold for between R30.5m and R37m. ARRCC, Metropolis Architects and Fabian Make Architects designed the first batch of houses.

Seeff Atlantic Seaboard and City Bowl director Ross Levin says that in addition to high demand from local buyers there has been strong international interest.

Two properties have been sold to investors from Germany and the UK. The Kerzner Estate, located high on Leeukoppie off Victoria Road in Hout Bay, offers views of Chapman’s Peak, the bay, valley and mountains.

There are 48 plots of about 1,500m 2 each and a choice

of luxury homes tailored to the sites and incorporating natural building materials.

Houses range from 374m 2 to 738m 2 with a choice of number of bedrooms, all with en-suite bathrooms.

Additional features include air conditioning, fireplaces, fitted kitchens, stone and wooden flooring, topquality bathrooms, double glazing, swimming pools, provision for grey and rainwater harvesting and landscaping allowances.

Plot prices start from R3.7m.

Industrial rentals on the rise in Mother City Growth of Epping industrial rentals

Finishing touch for luxury Western Cape apartments

W

aterford Place, the latest luxury apartment offering at Sitari Country Estate outside Somerset West, is set for completion this month.

“There are only 14 of the 55 apartments available, priced from R1.486m including transfer duty,” says Uvest Property Sales executive director Claudius Combrinck.

The apartments include three two-bed, one-bath units, six two-bed, two-bath units and five three-bed, two-bath units. Four of these have just been released by the developer, priced from R1.695m, and have some of the best positions in Waterford Place, says Combrinck. All have two parking spots and extensive patios or balconies with

built-in braais, while corner units have extended patios and balconies.

Interiors include designer kitchens, large walk-in glass-walled showers, various flooring options and imported large-format porcelain tiles. Other features include solar geysers, LED downlights and landscaped gardens for ground-floor units.

Rand/m2 gross rentals excluding VAT, from 1980 to 2018

I

ndustrial property rentals in Cape Town have risen by as much as 9.23% a year compounded for the past 38 years, says Tony Bales of Epping Property.

In its analysis of historical data for industrial rentals in Epping Industria in Cape Town, Epping Property says that during the higher inflation era of 1980 to 1999, industrial rentals grew by 12.76% a year.

Average contractual lease escalations were 12% a year during this period. During the lower inflation era of 1999 to 2018, industrial rentals grew at 5.81% a year.

“Compounded over the past 12 years, industrial rentals have grown by 8.04% per annum,” says Bales. Due to the “present depressed state of the economy and the lower GDP cycle, industrial rentals are

Landscape artist to transform office space

L

isted commercial development company Heartwood Properties has partnered with landscape artist and sculptor Strijdom van der Merwe to transform the outdoor space of Willow Wood office block in Fourways, Gauteng.

Van der Merwe is known for installations that take nature as a core theme, using only the natural materials found on site, from wood, rock and sand to stone.

“We recognise Strijdom’s unique ability to create a space that inspires and

promotes cohesion and positivity, which is why we are so excited about his ideas for Willow Wood,” says Heartwood Properties CEO John Whall.

The landscaped area will cover 8,000m 2 .

Says Van der Merwe: “It is sometimes a challenge

to visualise the end result of an installation, especially amid the chaos during construction.

“What really helps is when the client is open to exploring ideas with me, as was the case with Heartwood Properties, who allowed me to be as

creative as I like.

A good interaction always reflects in the final product.”

The fourth and final phase of Willow Wood Office Park is set for completion in March.

presently flat”, meaning that rental growth in the short term will be limited.

Bales says it is a good time for negotiating new (or renewed) leases for industrial property as landlords are keen to retain tenants or fill vacant premises. He predicts that when the market does pick up, industrial rentals will accelerate faster than inflation.

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