Dear visitor, this week we found 35 headlines of articles about property investing for you. Included you’ll also find details of 1 property seminar and 4 upcoming events related to property. If you benefited from receiving this free e-mail and want your colleagues, family or friends to share your excitement about property, please refer them here.

Last week we discussed the hurdle rate for commercial property investment. According to the subscribers who responded to our poll question about what the minimal yield is that they require from a new property investment they wanted an average initial yield of 12.47%. This represented a spread of responses from as low as 8% to 15%. Almost 30% of the respondents required at least a 15% yield. The poll results were very much in line with my thesis that 12.5 % is currently a prudent initial yield on new commercial property investments.

But what about residential? Compared with 12.47% yield on commercial why are many residential investors considering yields of 5-8% ?

In my opinion the false belief in sustainable high capital growth of residential properties has led to a total disconnect between rental income and prices. Notwithstanding the rising interest rates and the total collapse of credit worthy interest coverage ratios many investors have continued to invest! Instead of being on a road to financial freedom many are now on a road to financial bondage, because if they stop earning a salary they cannot afford the shortfalls. Many of these inexperienced investors have been seduced by the apparent success of property sales gurus who preach a negative gearing investment philosophy, but who are only able to continue to invest themselves because they earn money from sales commissions and running seminars. Many students have now learnt that refinance is only possible when either their salary or their rental income goes up and not because capital growth has taken place.

There are many lessons to learn from the current interest rate cycle. Some people are now considering selling their units at its cost price because they cannot afford to keep up with the monthly shortfalls. The easiest way to learn is from others who have learnt lessons the hard way. If you have learnt any investment lessons from the current economic environment please share them by writing to me and let others benefit from your valuable experience.

 
All the best
Executive Editor

SA Property Investor SA Property Investor
  Issue no: 204 12 September 2008  
 Some light at the end of the tunnel... Go to the top of the newsletter
Investors and property experts are becoming increasingly excited and positive about the current market situation, and especially the outcome of interest rate decisions in the months to come. Read this very informative article and remember to vote in our Opinion Poll.
Some light at the end of the tunnel - Rodneyhayter.com, 10 September 2008
The Reserve Bank’s decision to hold interest rates at its August bi-monthly meeting suggests that we have reached the peak and that rates will start coming down from next year.

The move has drawn an almost audible sigh of relief from the latest Pam Golding Properties Intellectual Properties, who were quick of the mark in pronouncing it “good news for the housing market!”

This time, according to an article in the magazine, the Reserve Bank has ignored those diehards urging it to continue with raising interest rates – which so far has been the chosen weapon with which to try to stem the inflationary spiral. The Bank’s monetary policy committee, chaired by the governor, Tito Mboweni, decided to listen to the clamour of protest from hard-pressed consumers and take cognisance of our sliding economy.

Thus the bank’s repo rate (at which commercial banks borrow money at the RB’s “window”) remains at 12% and the prime and mortgage lending rate from the banks stays at 15,5%. What a relief! And it’s good news for the housing market.

But why has the Reserve Bank ostensibly taken a different line? One reason is that the committee’s inflation targeting policy, which to all intents and purposes isn’t working too well, attempts to look ahead and not to the short term. Moreover, monetary policy over the short term has a limited impact on the economy. 
Read more...
 Weekly E-News Go to the top of the newsletter
MARKET TRENDS
The way of the future - I-africa.com, 10 September 2008
In spite of efforts by developers to promote the sales of apartments in places like Melrose Arch in Sandton and Durban’s revitalised Point area, high-rise living in South Africa has a long way to go to attain the same popularity as it enjoys in places like London and New York.

SA responds to rates - I-africa.com, 09 September 2008
The South African Reserve Bank (SARB) said on Thursday in the introduction to its latest quarterly bulletin that consumption in South Africa responded to rising interest rates in the second quarter of 2008.

Global property stakes: SA slips - Property24, 08 September 2008
South Africa no longer counts among the world's top 10 performing housing markets, a new report by UK-based property group Knight Frank shows.
GENERAL PROPERTY NEWS
How to access government housing grants - Realestateweb, 11 September 2008
Government through its housing subsidy programme assists people with very low salaries to buy houses.

Revamps create new property pool - Property24, 11 September 2008
The countrywide boom in property refurbishments is gathering momentum, creating a new pool of highly marketable housing stock.

Building with the web - Property24, 11 September 2008
In today's market, you can source virtually any product off the Internet – from groceries, to theatre tickets to holidays, and now, you can even purchase architect's plans over the web.

How 2010 will boost market - Property24, 09 September 2008
The lights have dimmed in Beijing's Bird's Nest stadium and now the spotlight is swinging south to focus on South Africa as it prepares for the world's next huge sporting extravaganza – the Soccer World Cup in 2010.

When selling property is like a game of dominoes - Realestateweb, 09 September 2008
Tips for sellers who have a written offer, but the deal is dependent on another property sale going through.

What to do about contingencies - Property24, 09 September 2008
The current uncertainty in the real estate market means that it's very common for homebuyers to make their offers to purchase contingent on the sale of their existing homes.

Fixing things that aren't broken - Property24, 09 September 2008
Paddy Hartdegen asks why the government keeps trying to fix things that aren't broken – and breaks them in the process.

Sect. title for dummies 2 - I-africa.com, 03 September 2008
This is the final article in a two-part beginner's guide to buying into sectional title. How do the rules of the scheme restrict the use of your unit?
RESIDENTIAL PROPERTY NEWS
Dramatic improvement in property sales - estate agency - Realestateweb, 11 September 2008
Rawson Properties' managing director Tony Clarke says business is improving rapidly. Is it among a lucky few agencies?

Property investment as your own business - Realestateweb, 10 September 2008
Residential property can produce returns that sound too good to be true and is an alternative to a pension. Here's how it delivers for investors.

House prices in doldrums - I-africa.com, 09 September 2008
House prices slipped a further 0.8 percent month-on-month in August, and are now 5.5 percent lower than in August 2007, according to mortgage provider ooba's latest 'oobarometer' price index.

Residential confidence not back yet - Property24, 08 September 2008
While there has been a clearly detectable upswing in business confidence in all the areas, consumer confidence in the residential property sector has not yet recovered.

Bank managers loosen screws for property buyers - Realestateweb, 08 September 2008
At last some good news for the residential sector: Mortgage rejection figures have eased slightly and buyers get bigger interest rate discounts.

New tax break: Allowance on residential units revamped - Realestateweb, 07 September 2008
Own at least 5 residential property investments? Sars could soon give you a gift - tax law change.
COMMERCIAL PROPERTY NEWS
Low vacancies boost office rentals - Property24, 10 September 2008
The latest SAPOA Office Vacancy Survey offers an explanation for the continued increase of commercial office rentals not only throughout Cape Town, but in fact throughout the whole country.

Gautrain station in Midrand boosts property values - Realestateweb, 09 September 2008
Hot on heels of SA's biggest development deal, property owner puts prime piece of vacant land on market for staggering R30m.
LISTED PROPERTY NEWS
Property developer turns to Yield-X, instead of bank, for millions - Realestateweb, 09 September 2008
Just nine months after joining AltX, Calgro M3 has listed a R300m bond at the JSE to finance low-cost housing developments.

Shoprite could list fund to expand in Nigeria - Business Report, 08 September 2008
Shoprite could list a pan-African property fund to raise capital for expansion in oil-rich Nigeria, where a shortage of retail properties was holding back store openings, analysts said last week.
ESTATE AGENTS NEWS
Making money in a sluggish property market - Realestateweb, 08 September 2008
Coaching experts give estate agents tips on how to raise their game to thrive in tougher conditions.

Estate agents: when all is not what it seems - Realestateweb, 05 September 2008
Dodgy ethics: are estate agents really that bad? Voetstoots court case highlights how agents can get off hook when things go wrong for buyers

Locking out estate agents - nasty new law - Realestateweb, 05 September 2008
Shocking market conditions have pushed many agents out of market, many more to follow for different reasons, predicts top law man.
SPECIFIC AREAS
Dinokeng area poised to flourish - Rodneyhayter.com, 11 September 2008
The Dinokeng area to the north-east of Pretoria is all set to boom, due to a Blue IQ initiative which aims to establish the area as a premier tourist destination.

Potch student housing cheaper - Property24, 11 September 2008
Buyers who want to invest in student accommodation in Potchefstroom now have a window of opportunity.

Over(berg) the moon - I-africa.com, 10 September 2008
In sharp contrast with most of the rest of South Africa house prices in the Western Cape’s Overberg district are increasing by an average of 13.2 percent year-on-year.

Atlantic Seaboard: 4 months to sell - Realestateweb, 10 September 2008
Property owners in prime Cape Town stretch are still getting big money, but it's taking longer to sell - estate agent.

Eastern Cape favourite hunting ground for investors - Business Day, 10 September 2008
Real estate agents in Eastern Cape are experiencing strong demand for game farms as investors are attracted to the region.

Bold plans to put new face on Melville - Business Day, 08 September 2008
Melville is in for a facelift. The suburb variously described as “the closest thing Johannesburg has to Cape Town” and “Jo’burg’s bohemia” badly needs it.

Rosebank enjoys Gautrain boom - Business Day, 05 September 2008
There is a development explosion taking place in Rosebank, with the catalyst being the Gautrain station that is taking shape in Oxford Road.
INTERNATIONAL PROPERTY NEWS
Belize draws SA property investors - Property24, 11 September 2008
In the face of potential political and economical instability as well as a struggling local property market, an increasing number of affluent SA property buyers are moving to off-shore property investment.

Zambian property market reportedly "thriving" - Rodneyhayter.com, 11 September 2008
The Zambian property market is flourishing thanks to a booming economy, a thriving mining sector and new mortgage lending service.

The Fannie & Freddie housing market fix: is this the cure? - Realestateweb, 08 September 2008
As US government takes control of mortgage businesses, experts size up whether this will help move the world past the credit crisis.
 Upcoming Events & Seminars Go to the top of the newsletter
2nd Annual South African Value Investor Conference
2nd Annual South African Value Investor Conference - Book your seat today!

IPS Exclusive Investor Breakfast Launch
IPS along with City and Docklands & Real Estate Investor Magazine, will host an exclusive breakfast launch. At the launch there will be £20 000 discounts, the developer, mortgage brokers, lawyers and everything else the investor requires. There will also be a 45 min presentation on the UK Market, the development, tax and structuring, moving money offshore, arranging mortages and a FAQ to answer any of your questions. Most importantly you will get the best opportunity to invest!

Price: Free to attend

Cape Town

18 September 2008 - Cape Town Convention Centre - 18h30 - 20h30
Click here to book

George Robertson's Trust Education Seminar - 4 Hour Seminar
For more information visit: www.trusteducation.co.za

The Estate Agents Affairs Board’s Exams
Dates for 2008: New dates to be confirmed
You must enrol at least 4 weeks before the exam date. For information about enrolling for the Board Examination, click here. For any other information please visit their website:
www.eaab.org.za

Reserve Bank Monetary Policy Committee Meetings
8-9 October 2008, 10-11 December 2008
To advertise your upcoming property-related event, please e-mail Marissa the details.
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 Please refer a friend to us
 Editor's Note
Ooba issued its second "oobarometer" price index on Monday and according to them the average house prices are down from R821 351 in August last year to R776 048 in the same month this year. The average decline ratio - or percentage of all loan applications initially rejected by banks - improved by 1,3% to 49,8%. Of those, however, more than 30% received a home loan from another bank.  Read the full article in the Residential Property News Section.

Due to the huge success of last year's SA Value Investor Conference, Robert P. Miles has agreed to make this an annual event in South Africa. This year the 2nd Annual SA Value Investor Conference will take place in both Johannesburg and Cape Town. Don't miss out on a opportunity of a lifetime. Click here for details and to book your seat.

Until next week!
 Business Partners
 Opinion Poll
Do you agree with the property experts that interest rates will fall steadily back to 13% by the second half of next year?
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 Last week's poll results
The minimum yield I expect of a new commercial property invest-ment as a private investor is;
 Book of the Week
Building Wealth: Achieving Personal and Financial Success in Real Estate and Business Without Money, Credit, or Luck
Russ Whitney
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 Our Goal

Our goal is to serve all South African property investors; locally and abroad, residential and commercial, direct and indirect, listed and unlisted, large and small, off-plan and existing, single owners, partnerships and syndications. There are obviously many ways to own property but to make the right choice requires intelligent property investing comparisons. Being well-informed is the first step, so our goal is to deliver all the best property information.

 Did you know?
In medieval and Renaissance Europe the term "property" essentially referred to land. Much rethinking was necessary in order for land to come to be regarded as only a special case of the property genus.

This rethinking was inspired by at least three broad features of early modern Europe: the surge of commerce, the breakdown of efforts to prohibit interest (then called "usury"), and the development of centralized national monarchies.

Source: Wikipedia.org
 This Week in History
06 September 1963

The Centre for International Industrial Property Studies, is a Strasbourg, France-based training center for specialists in intellectual property law. It was founded on this day in 1963, as part of the Strasbourg Law Faculty, within the Robert Schuman University.

Intellectual property (IP) is a legal field that refers to creations of the mind such as musical, literary, and artistic works; inventions; and symbols, names, images, and designs used in commerce, including copyrights, trademarks, patents, and related rights.

Source: Wikipedia.org
 Key Property Indicators Go to the top of the newsletter
 
Current
Last
Week
Last
Month
Last
Year
Prime interest rate
15.50%
15.50%
15.50%
13.50%
ABSA House Price Index
(nominal year-on-year growth)
1.7%
(Aug '08)
2.6%
(Jul '08)
3.5%
(Jun '08)
15.1%
(Aug '07)
FNB Residential Property
Barometer

4.42
(2Q2008)
4.96
(1Q2008)
5.10
(4Q2007)
5.80
(2Q2007)
FNB House Price Index
2.3%
(Aug '08)
3.5%
(Jul '08)
5.7%
(2Q2008)
5.1%
(2007 ave)
Standard Bank Residential Property
Gauge
-1.8%
(Aug '08)
-2.6%
(Jul '08)
-11.3%
(Jun '08)
5.7%
(Aug '07)
Oobarometer
(Avg. house price change)
-0.8%
(Aug '08)
-1.4%
(Jul '08)
-1.4%
(Jul '08)
-
-
IPD SA Property Index -
Total Return: All Non Residential Property
27.7%
(2007)
26.7%
(2006)
30.1%
(2005)
23.4%
(2004)
Property Loan Stock Index
1132
-
1124
     0.7%
1111
    1.9%
1261
    10.2%
Real Estate Index
726
-
716
     1.4%
694
    4.6%
829
    12.4%
Property Index
303
-
302
     0.3%
300
    1.0%
344
    11.9%
Property Unit Trust Index
341
-
344
    0.9%
346
    1.4%
404
   15.6%
Capped Property Index
280
-
279
    0.4%
275
   1.8%
318
    11.9%
For more reports & indexes, please visit our website (Updated)
 Quote of the Week Go to the top of the newsletter
"There is nothing like writing to force you to think and get your thoughts straight."  Warren Buffett

Executive Editor
Investment
Opportunities
Newsletter Editor
Website & Technical
Enquiries
Rian Maartens
Craig Holt
Marissa Knibbs
Martin Cronje
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DISCLAIMER:
SA Property Investor makes no representation and gives no warranty as to the accuracy of the information in this document and accepts no liability for any errors, misprints or omissions herein (whether negligent or otherwise). SA Property Investor shall not be liable for any loss or damage whatsoever arising as a result of any person acting or refraining from acting or placing reliance on any information contained herein. All information in this newsletter been obtained as is and is provided as general information only. No reader should rely solely on the information contained in this publication, as it does not purport to be comprehensive or to render specific advice. As such it is not intended for use as a source of investment advice. All readers are advised to retain competent counsel from legal, accounting and investment advisers to determine their own specific investment needs.
SA Property Investor