Newsletter - 10 March 2005
Roll on Spring Time! After thinking we had come through the London
winter without too much difficulty, February gave us a not-too-subtle reminder
that we weren't out of the woods just yet! Hopefully the snow has now abated and
we can start looking forward to the spring and summer months ahead.
Interest Rates Some interest rates news: There was a lot of talk in
South Africa over the last month that interest rates would drop by another 0.5%.
However the SARB ultimately decided not to, as the economy is already expanding
rapidly. In the UK, the Bank of England yesterday left interest rates unchanged
for the seventh consecutive month.
Busy, busy, busy Since we last sent out a newsletter, it's been quite
manic in the IPS offices: over the last month the London office has been helping
clients with their investment requirements, meeting with as many new clients as
we can possibly fit in, sorting out mortgages and somehow we even found the time
to pop over to the 2005 Homebuyer Show. The IPS team back in South Africa
continues to source an exciting range of properties with excellent investment
potential.
Recent Investments We get a lot of people asking us for "real-world
examples", so we thought we would briefly describe three examples of how we
recently helped clients investing in South Africa:
- A client bought on the West Rand before Christmas for R260,000 in a unit
that had a tenant paying R3,250 a month. This is a rental yield of 15%! To make
it better, in less than 4 months these properties are now worth over R300 000 –
a growth of over 15% in that time.
- Another client bought before Christmas in Glenwood, Durban. They bought
their units 3 months ago at R320,000. The exact same units (in the development)
are on the market today for R400,000. This is 25% growth before the unit has
even transferred into their name.
- The third example is a client that bought a house in Camps Bay for R4.9
million. As expensive as this sounds, they are getting a 37% return on their
investment with short term lettings through our partner Nox Rentals. This
property should be cash flow positive in year 7 – and this is without the DTI
incentive. So the client now owns a property investment that they:
- Can use as a holiday home;
- Get great investment returns on – in both capital appreciation and rental
returns
- Can still possibly use to apply for the DTI incentive
South African Investment Properties IPS continues to source great
investment opportunities – here are three of our best at the moment:
Tygerberg ValleyWe have managed to secure units in the highly sought
after Tygerberg Waterfront. There are a number of different developments: some
of which are completing & transferring right now, whereas the last (and
best) development is coming online in October 2006. Cape Town V&A Waterfront
property prices grew from R10,000/m2 to R44,000/m2 between 2003 and last year,
largely because of limited availability in this niche market. Tygerberg is one
of the fastest growing regional nodes in Cape Town, and these developments find
themselves right in the centre. IPS believes the capital appreciation on these
units will be well above average, and JustLetting is confident enough with
demand in the rental market to offer a rental guarantee of 6.5% for two years.
What more could you ask for?
Constantia KloofThis development is one of the most sought after in
Constantia Kloof (Gauteng). With great north-facing views and no possibility of
people building in front of them, the units are very spacious and have been very
well built with excellent finishes. This is the best development on the near
West Rand that we have come across. Similar units in the same area are currently
fetching prices in excess of R750,000. The demand for units in Constantia Kloof
is exceptionally high as it one of the most sought after areas on the West
Rand. Rental returns should be good with strong prospects for capital
appreciation (expected to be in the region of 30% in 2005 alone). We have
managed to secure three units as a previous buyer could not come up with the
required mortgage. The asking price has therefore been reduced to R685 000,
which is over R50 000 below market value.
Durban PointWe have secured units in one of the most exclusive
developments on Durban Point. Although a run down area to date, the government
is spending vast amounts of money in upgrading the area: the uShaka Marine
World, the widening of the harbour to allow for cruise ships, the canal system,
new hotels and the new casino – all new developments in preparation for the 2010
World Cup. With this level of investment, is it possible that we could be seeing
the Point also following in the footsteps of the Cape Town V&A? The city is
definitely giving it the backing, and with prices in this impressive development
at around half of those available in Umhlanga, this could prove to be a
phenomenal investment. However, we do believe this should be at least a 3 year
investment.
The 2005 Homebuyer Show The 2005 Homebuyer Show was held on the
25th-27th of February at the Excel Exhibition Centre, in London, and was a very
successful event for IPS. South Africa remains a largely unknown and untapped
international property investment market, when you consider the number of
exhibitors from Spain, Bulgaria, Dubai, Florida and other corners of the
globe.
On Saturday morning, Scott presented a 45-minute overview titled
"Investing in South Africa" which was very well received – in fact, our stand
was swamped with interested visitors after the talk!
To read more &
see a few photographs, visit:
http://www.internationalpropertysolutions.com/News/2005Homebuyer.asp
Over
the three days we met a large number of people interested in South African
property investment, including many British and Irish investors who were
especially interested in the DTI Incentive…
DTI Incentive The Small and Medium Enterprise Development Programme
(SMEDP) is a grant paid to both local and foreign investors starting new or
expanding their current operations, and is based on approved assets and
activities/projects. In an attempt to stimulate the tourist market, this grant
has been extended to cover qualifying assets in the tourist
industry.
Successful applications receive a 30% reimbursement (10% per
year for 3 years) of the capital value of the buildings, furniture and
accessories (such as vehicles), but excluding the value of the land. There are a
few restrictions involved, such as apartments and flats (sectional title
ownership) not qualifying.
This creates an excellent investment
opportunity at the top-end of the property market, i.e. luxury properties in
popular tourist areas that attract a sustainable level of short-term holiday
lets.
If you are interested in this opportunity and would like to discuss
it in more detail, please get in touch.
Exciting News - IPS in Dubai! On the 14th of March (this coming Monday),
IPS are holding an Investment Evening in Dubai. There are over 38,000 South
Africans now living and working in the city, and we have already had a lot of
requests from people asking for property investment assistance. If you know of
anyone who is currently living in Dubai, please forward this on to them, or get
them to register on our website.
Getting up to Speed If you would like to do some background reading
before getting started in the property market, we would like to recommend Kyle
Harris' new book, The Power of Property . It's an easy-to-read
book that covers the basics of property investment, including the jargon, the
laws, the tricks & traps, and the important numbers that you should know. We
are currently selling the books in the UK, at £13 each (cost price) or £15
including UK delivery. To get your copy, click here.
Please
get in touch with us if you would like to discuss any of this in more
detail.
Happy investing!
Our preferred partners:
|
Invest in the most sophisticated property market globally. IPS has the total solution for investing. Want to know how? 
This concise and easy-to-read book covers just about everything (tax, costs, finance, legal entities, etc.) that you need to know about buying a property in S.A.
R 3,225,000
