Financial Mail - Investors Monthly - - Opening Bell - edited by Joan Muller

Best places to buy and sell

The Ger­man cap­i­tal of Berlin has be­come the most prof­itable res­i­den­tial prop­erty mar­ket in the world, with av­er­age house prices up a hefty 21% last year.

Knight Frank’s lat­est an­nual Global Res­i­den­tial Cities In­dex, which tracks price move­ments in 50 mar­kets world­wide, has three other Ger­man cities in its top 10 rank­ings for 2017 — Ham­burg (14.1%), Mu­nich (13.8%) and Frank­furt (13.4%).

It is the first time the in­dex has in­cluded Ger­man cities in its rank­ings. The four cities men­tioned are part of a rel­a­tively small group of global hous­ing mar­kets that still man­aged to record dou­ble-digit price growth last year.

Oth­ers in­clude Izmir in Turkey, Reyk­javik in Ice­land, Van­cou­ver in the US, Bu­dapest in Hun­gary and Hong Kong.

Kate Everett-Allen, Knight Frank’s head of in­ter­na­tional res­i­den­tial re­search, notes that house prices have slowed glob­ally in 2017, with the Knight Frank in­dex record­ing av­er­age growth of only 4.5% in the fourth quar­ter of 2017, down from nearly 7% a year ear­lier.

The slow­down in China’s hous­ing mar­ket had a no­table in­flu­ence on the in­dex’s over­all per­for­mance. Everett-Allen says the 15 Chi­nese cities tracked by the in­dex av­er­aged growth of 23% year on year in 2016. In 2017, the same 15 cities av­er­aged only 1.6%.

Cape Town and Jo­han­nes­burg are placed 26th and 89th, with av­er­age growth of 9.4% and 3.5% re­spec­tively, in 2017.

Lo­cal is lekker again

Prop­erty pun­ters who placed their bets on SA-fo­cused real es­tate in­vest­ment trusts (Reits) at the be­gin­ning of the year are squarely in the money. That’s in sharp con­trast with last year, when real es­tate coun­ters with SA port­fo­lios were out of favour and gen­er­ally lagged be­hind their off­shore coun­ter­parts.

The SA listed prop­erty in­dex as a whole is down around 16% in the year to date (to April 12). How­ever, the sec­tor’s over­all per­for­mance has been skewed by the huge drop in a hand­ful of larger coun­ters. The lat­ter in­clude the Re­silient sta­ble of com­pa­nies (Re­silient Reit, Fortress Reit, Nepi Rock­cas­tle and Green­bay) as well as a few rand-hedge stocks such as MAS Real Es­tate, Intu Prop­er­ties, Cap­i­tal & Coun­ties Prop­er­ties and In­vestec Aus­tralia Prop­erty Fund. If th­ese are stripped out of the equa­tion, the per­for­mance of the sec­tor has not been too shabby.

Fig­ures from An­chor Stock­bro­kers show that the sec­tor’s 10 best per­form­ers in the year to date (to April 12) all gen­er­ate the bulk of their earn­ings in SA.

More­over, the top stocks are pri­mar­ily smaller com­pa­nies with mar­ket caps gen­er­ally be­low R7bn. Most of th­ese coun­ters ap­peared cheap at the start of the year and typ­i­cally traded at at­trac­tive yields north of 10%, which sug­gests there has been a clear shift re­cently towards value.

The win­ning stocks in­clude res­i­den­tial de­vel­oper Bal­win Prop­er­ties with a share price jump of 22% in the year to date, fol­lowed by Fair­vest (21%), — which owns a port­fo­lio of small and mid-sized malls that cater to for lower-in­come shop­pers — Four­ways Mall owner Ac­cel­er­ate Prop­erty Fund (20%), rental hous­ing plays Ind­lu­place Prop­er­ties (17%) and Oc­todec In­vest­ments (12%), Emira Prop­erty Fund (15%), and re­tail-fo­cused Re­bo­sis Prop­erty Fund (12%).

An­a­lysts ex­pect that prop­erty stocks with a fo­cus on SA will con­tinue their out­per­for­mance over the next six to 12 months due to ris­ing in­vestor sen­ti­ment un­der the lead­er­ship of Pres­i­dent Cyril Ramaphosa and more favourable lo­cal eco­nomic growth prospects.

Last stands at Blair Atholl

Blair Atholl Golf & Equestrian Es­tate near Lanse­ria In­ter­na­tional Air­port on Jo­han­nes­burg’s western out­skirts, widely re­garded as one of Gaut­eng’s most ex­clu­sive res­i­den­tial ad­dresses, ear­lier this month re­leased its last 80 va­cant stands for sale. Gen­er­ously sized be­tween 2,542 m2 and 5,607m2, the stands are priced from R1.565m to R3m. The es­tate, which was launched in 2007 and spans about 600 ha, was the for­mer homestead of golf­ing leg­end Gary Player.

Like many other golf­ing es­tates that were launched at the height of SA’s pre­vi­ous hous­ing boom, Blair Atholl ran into dif­fi­cul­ties fol­low­ing the fi­nan­cial cri­sis and sub­se­quent re­ces­sion in 2009-2010. How­ever, the es­tate is now sol­vent fol­low­ing the trans­fer of the own­er­ship of all the com­mon prop­erty from the de­vel­oper to the home­own­ers as­so­ci­a­tion.

The es­tate of­fers an 18-hole golf course, a club­house, a fit­ness cen­tre, a spa, an equestrian cen­tre, ten­nis courts, a restau­rant as well as ex­ten­sive moun­tain bik­ing, run­ning and walk­ing trails.

About 150 homes have al­ready been com­pleted at Blair Atholl, which Peet Strauss, Pam Golding Prop­er­ties’ de­vel­op­ment man­ager for Jo­han­nes­burg, says has an av­er­age value of R11.2m (ac­cord­ing to lat­est Light­stone fig­ures).

Strauss says this places Blair Atholl as Gaut­eng’s most ex­pen­sive sub­urb.

The club­house at the 600 ha Blair Atholl es­tate.

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