1. Aengus Property Group Defies Property Market Slump
2. African Cities - Development Opportunities
3. You Risk Losing Money Only If You Sell Now
4. Why SARS Loves Joburg Property Investors
5. Nedbank : "Why We Dumped Pam Golding Clients"
6. Why Inflation Feels Worse Than It Is
7. Make High Interest Rates Work In Your Favour
8. Now Is The Wrong Time To Stop Investing
9. What’s Worrying Me?
10. Being Moved To Another Fund Shouldn't Affect Your Pension Benefit
11. Thought for the Month
Aengus Property Group Defies Property Market Slump
Choking economic conditions, declining property prices and warnings that property-market returns will continue to decline, have knocked confidence in the property sector. But Richard Rubin, CEO of Aengus Property Holdings, urges investors to look beyond the negative sentiment and base their decision making on facts: inner city rentals to an emerging middle class continue to offer appealing investment returns. What’s more, healthy fundamental conditions in this sector of the property market ensure excellent prospects for continued rental escalations and capital appreciation.
The inner-city urban renewal projects with which Aengus has been involved for several years have provided investors with steadily increasing annual escalations, that have outstripped expectations.
These rental increases are driven by healthy demand for affordable accommodation within easy distance of some of Johannesburg’s biggest employers. The escalations have ensured that overall returns to investors in Aengus’ urban renewal projects have outdone those from many other property investments, some of which were overpriced to begin with.
Nett rental returns of 10%-12% per unit are the norm for investors in units managed by the Aengus Property Management. These returns are before the benefits offered by SARS on inner city investment offering accelerated depreciation – a tax incentive linked to properties in designated Urban Development Zones.
Rental demand for properties within the Aengus stable in some cases outstrips supply ten times, underpinning long-term income and capital growth prospects. The typical tenant in Johannesburg’s inner city is young, employed at one of the blue chip organisations in the city and enjoys the benefits of high-security, fashionable and furnished accommodation. As Rubin points out, this is not someone who is considering emigration.
In fact, this is the market sector where the long-term growth lies. While economists warn that the National Credit Act and rising interest rates have disqualified many from becoming home buyers, the market for rental property is growing. The investment opportunity is especially compelling at the bottom end of the market, where the notion of urban renewal projects is only just catching on and there is plenty of scope for capital appreciation.
For investors looking for an investment commitment of manageable proportions, as a hedge against risk, Aengus’ units are a boon. “Coping with a rate hike on a R3 million property purchase is far more onerous than dealing with higher rates on a unit which cost you R250 000,” Rubin explains.
“Not only is it is easier to make up any shortfalls between rentals and bond repayments on a smaller capital amount, but the scope for raising rentals on our units is far greater than it is on many properties in overdeveloped suburban areas.”
African Cities - Development Opportunities - Lynne Smit
How fast must we build houses and infrastructure to cope with population growth? Experts predict urbanisation trends.
African countries must create the same amount of urban space between now and 2025 as has been created since the beginning of the process of urbanization, according to Jean Marie Cour, a development consultant addressing a United Nations University workshop in Cape Town recently.
Between now and 2050, the world population will increase from six to nine billion individuals, and the urban population will double from three to six billion.
"The prosperity and stability of the world will depend to a great extent on the way in which we act now to deal with this extraordinary change. There will only be sustainable development if we are able to manage this peopling process," Cour said.
You Risk Losing Money Only If You Sell Now - Neesa Moodley-Isaacs
Homeowners who bought their properties at or near the top of the price curve and who borrowed the maximum amount are facing negative equity - in other words, what they owe on their home loan could be greater than the value of the property.
Property prices have entered a downward trend after notching up increases of more than 20 percent a year for almost five years.
Why SARS Loves Joburg Property Investors - Denise Mhlanga
Investors big and small can cash in on big tax perks in the inner city, with millions of rands set to be channelled back to their pockets.
Anyone who lives in Johannesburg and particularly the inner city will tell you that it is an exciting, edgy and vibrant city.
When the Minister of Finance Trevor Manuel announced in his 2008/2009 budget in February that Urban Development Zone (UDZ) tax incentives will be extended for another five years from 2009 to 2014, he set the right tone for investing in the city.
The City of Johannesburg (CoJ) celebrated this extension on Monday and announced that since the introduction of UDZ tax incentives in 2004, R5bn of investments have been achieved.
Nedbank : "Why We Dumped Pam Golding Clients" - Denise Mhlanga
Move over La Residence - office space is the "new black" in Sandton and Nedbank intends cashing in on the high demand for rental office space.
While the residential property market is having it tough right now, non-residential in the form of office space in Sandton is more in demand.
Nedbank Corporate has cancelled its R1,6bn mixed use development, La Residence, launched in March in favour of office-only space.
Why Inflation Feels Worse Than It Is - Paul Berkowitz
If you think the costs of goods and services are rising faster than official figures reveal, it may be because of the way inflation data are measured and reported, and because of your particular consumption habits.
"Inflation is taxation without legislation." – Milton Friedman
"Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man." – Ronald Reagan
"By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens." – John Maynard Keynes
What is it about inflation that strikes fear in the hearts of grown economists? Inflation targeting has become not just the central policy objective for the Reserve Bank, but the only policy objective. Market analysts await the monthly consumer and producer price information releases from Statistics South Africa (Stats SA) with more excitement and trepidation than they do their own wedding anniversaries.
Are the fascination, the power and the intrigue surrounding these price data misplaced? What relevance do inflation, inflation-targeting policies and inflation expectations have on our lives? And why do the prices we pay seem to increase at a faster rate than the official statistics tell us they are increasing?
Make High Interest Rates Work In Your Favour - Bruce Cameron
Interest rates you can earn are now at recent highs. They aren't likely to go up much further following the recent row between Investec and Statistics SA over the accuracy of the current inflation rate; the introduction in January of a new way of calculating inflation, which is expected to result in a sharp drop in interest rates next year; and the fact that high interest rates are starting to bite, also contributing to downward pressure.
This means you need to be thinking about whether you can take advantage of the current high rates.
What is clear is that when interest rates are high, very few people benefit from investing in money markets for the short term. The reasons for this (as pointed out in our lead story today) are inflation plus tax. These two factors will reduce the real return you receive. The higher your marginal tax rate, the worse off you are.
You are most likely to benefit from short-term interest-earning investments if you are in a low-income tax bracket or if you have not used up your interest exemptions from the taxman. This exemption applies to the first R19 000 you earn in interest in a tax year if you are under the age of 65, and to the first R27 500 if you're 65 or older.
Now Is The Wrong Time To Stop Investing - Bruce Cameron
Bailing out of the markets during the current downturn will result in your losing the substantial gains of the past five years and could seriously hamper your ability to retire financially secure.
You are going to have to keep your financial head below the parapet for some time as the property and equity markets take a hammering in economic conditions that are fast resembling a war zone.
However, equity and property experts say you should be able to survive if you do not panic and are not being strangled by debt.
What’s Worrying Me? - Duncan Artus
Allan Gray’s Duncan Artus looks at ways to restructure your portfolio for tough times.
People outside the investment management industry often ask me what exactly it is that we do. After much thought, my standard reply has become ‘we are paid to worry'. At Allan Gray we manage a not-insignificant portion of the South African savings pool. This is a responsibility we take very seriously and our top priority is attempting to maintain our clients' wealth in real terms when the risk of loss is high.
For some time now, we have been communicating to investors in our funds that the absolute returns they have enjoyed in the recent past have been unsustainably high and that the potential grenade in the tea party could well be a sharp correction in company earnings which are at very high levels.
Being Moved To Another Fund Shouldn't Affect Your Pension Benefit - Laura du Preez
The Pension Funds Adjudicator issued a ruling this week stating that you have a right to your expectations of receiving a reasonable benefit even if your employer transfers you to a new retirement fund.
Mamodupi Mohlala, the adjudicator, also issued a second ruling in which she said if you are the victim of an administrative bungle involving your retirement benefits, you have a right to be put into the position in which you would have been had the errors not occurred.
Your future is created by what you do today, not tomorrow.
- Robert Kiyosaki (1947 - )
