Scott Picken, CEO of International Property Solutions (IPS) believes a paradigm shift is occurring: 8 years ago, people would only invest in property in their own neighbourhood. Now, investors are starting to seek the best investments globally. IPS was created 5 years ago to facilitate international investments and provide an end-to-end solution to ensure that investors can invest with confidence!

Monday, March 29, 2010

IPS Cares about animals

IPS Gives Back!

On Wednesday 17 March, IPS began their drive to give something back with our very first charity afternoon at Kitty and Puppy Haven. This day marked IPS’s sixth birthday and was the perfect day to gather our staff and start helping those who need it.

Kitty and Puppy Haven is one of the only rescue and rehabilitation centres in Gauteng that offer complete veterinary care, vaccinations, and sterilisation of all the animals in their sanctuary. They also find homes for these once injured, traumatised or abused animals, once they are in a fit condition, healthy both physically and mentally. The people who work at Kitty and Puppy Haven have seen the worst of what these pets are put through and have some amazing success stories. They recently relocated their premises to allow for the much needed space for all their special animals.

Upon arrival we were greeted by a contented bunch of cats and dogs, each with their only special character. The staff at Kitty and Puppy Haven are dedicated to what they do and welcome every visitor (whether animal or human) as a part of their family. During our tour of the facility, everyone found their hearts being stolen by more than one of these special animals.

Because Kitty and Puppy Haven are extremely busy doing the wonderful work they are doing, they have not found the time or resources to begin revamping their new location. So, IPS set about, in the sweltering Johannesburg heat, building a plant bed in front of the main wall so the beauty inside would radiate to the outside. After grappling with weeds, stones and broken glass, the plant bed was taking shape. We built it up so it would stand higher than ground level to allow for better drainage during our spectacular Highveld storms. We finished the bed off by planting some seeds and giving them a light sprinkle of water. In a few weeks these seeds will begin sprouting and in time will grow into a gorgeous array of flowers designed to attract butterflies and birds to this cheery place. IPS have laid a foundation which, hopefully, further volunteers can continue to build on. After bidding this sanctuary a happy farewell, IPS can certainly say it was worth closing our doors for an afternoon to give a little bit back.

Watch this space as we update you with more of our volunteer work and possibly a few pictures of our flowers as they grow.

Sunday, March 7, 2010

Rand Prospects 2010-2012

By Cees Bruggemans, Chief Economist FNB
22 February 2010

The present US context would appear to warrant another year of Rand firming against the Dollar. Also, the European context warrants Rand firming against the Euro.

Yet not everything may support such outcomes.

The Rand’s advance against the Dollar ended five months ago. It is uncertain how far recent Euro weakness will proceed, boosting the Rand. Also recent domestic policy actions may eventually favour Rand moderation.

So what gives in 2010 and beyond?

Following the Great Crisis (2007-2008), the Great Recession (2008-2009) and resulting policy responses, 2010 could quite easily be a copycat repeat of 2009 for the Rand.

As the Rand firmed steadily in 2009 from near 10:$ to 7.50:$, a copycat repeat could yield further Rand firming towards 6:$ this year.

Asia should remain a growth locomotive, with China leading with 10% GDP growth. Most of the developed West will be a slow coach, starting the year with 10% unemployment and policy determined to keep rates low.

It is a context favouring firm commodity prices and capital flows into emerging equity and bond markets, also firming their currencies.

Yet the Rand reached 7.50$ by September 2009, thereafter coming to a standstill. This probably reflects many forces. US growth recovery was more robust than other Western countries, inviting Dollar revival. During 4Q2009 Europe encountered sovereign fiscal weakness, spilling over into Euro weakness and more Dollar safe haven strength in 1Q2010. Chinese policy tempering also fed global concerns.

All these dynamics guided risk aversion, limiting capital flows, causing emerging market pullbacks.

Throughout the Rand appeared in suspended animation at 7.20-7.80:$. These same forces could continue to prevail in coming months, keeping the Rand near 7.50:$ within a wide trading band.

Meanwhile the Anglo-Saxon banking troubles, having triggered the Great Recession, also uncovered many old fiscal sins in Europe’s monetary union. Late in 2009 and into 2010 this put downward pressure on the Euro, causing Rand firming towards 10:€ and potentially beyond it.

European monetary union wasn’t accompanied by political union. Every country retained fiscal sovereignty. The Financial Stability Pact of 1997 created an artificial straightjacket, requiring every country to limit its fiscal deficits to 3% of GDP. Reality was a lot more flexible and was papered over by the good times, with weak countries getting subsidy support from rich countries as well as their bonds being able to leverage handsomely off Germany’s good name.

When the Great Recession struck, it greatly worsened fiscal finances in Europe’s periphery, even suggesting eventual sovereign default, putting the focus fully on inadequate European coping mechanisms.

With some European countries suffering weakened finances and rich Europeans unwilling to bail them out, the Euro headed lower firming the Rand towards 10:€.

Yet Europe may not be in freefall.

Europe’s periphery (Greece, Portugal, Spain, Ireland) faces painful fiscal adjustment (higher taxes, public spending cuts) with increased unemployment. Even so, such fiscal weakness may ultimately require European support. Though rich taxpayers may balk, letting the monetary union unravel would be more costly.

Besides, resulting Euro weakness is good for exporters and fragile European recovery. This is worth something, warranting some European backing for its weak periphery.

Financial markets appear to be accepting the tough love meted out to the periphery, the superficial willingness to ‘stand’ by weaker countries, the retention of fiscal sovereignty, and the advantage of a weaker Euro.

America’s financial crisis may have weakened the Dollar as its interest rates fell to near zero, favouring US exporters and supporting US growth. It all went at Euro expense to which Europeans had no answer, until Greek fiscal trouble started to force the Euro lower.

Though European fiscal strain could be substantial in coming years, with the European centre unwilling to support its periphery unduly and fiscal sovereignty mostly surviving, markets do recognize the benefits of Euro weakness, thereby probably arresting it.

Thus Rand firming against the Euro could also moderate eventually.

In coming months US growth could keep favouring the Dollar, eventually further bolstered by Fed rate tightening later in 2011-2012 even if US fiscal fundamentals longer term indicate Dollar weakness.

Despite our small balance of payments funding needs and global positioning suggesting rich commodity export prices and large capital inflows, the Rand could yet remain in suspended animation near 7-8:$ and may eventually give way to renewed weakness above 8:$ from 2011-12.

Domestically, flexible inflation targeting (hinting at keeping rates cyclically low in 2010-2011) and exchange control reform (giving banks greater ability to support client activity abroad) also hint at Rand moderation.

Thus the latest Rand firming cycle against the Dollar may surprisingly already have ended in 2009, and its belated firming against the Euro in early 2010 may be contained ere long. Eventually new cyclical easing may materialise.

The high water mark for Rand overvaluation could be near 7:$ and 10:€. Beyond 2010 looms eventual US and European policy normalization and their currency revival, potentially implying less Rand strength towards 8:$ and 11:€, actively abetted by our own policy actions.

Cees Bruggemans is Chief Economist of First National Bank. Register for his free e-mail articles on

Wednesday, March 3, 2010

ABSA Housing Index - First Quarter 2010

• The South African economy emerged from recession in the second half of 2009,
with real GDP rising at an annualised rate of 0,9% in the third quarter. Positive real
economic growth of 2,5% is forecast for 2010.
• Despite a trend of declining interest rates during the course of 2009, the household
sector continued to experience a fair amount of financial pressure on the back of
major job losses over a wide front, declining real disposable income and relatively
high levels of debt. However, the cost of servicing household debt declined
markedly as a result of lower interest rates.
• House price growth in all segments of the market slowed down further during the
course of 2009, with some categories recording a nominal drop in prices. In real
terms, prices declined further in all segments.
• In 2009 the average price of affordable houses increased by 2,8% to R291 700 in
nominal terms, while declining by 4% in real terms. In 2008 prices in the affordable
segment increased a nominal 10,2%, but dropped by a real 0,8%.
• House prices in the middle segment of the market declined by a nominal 0,2% to
R965 700 in 2009, after prices dropped markedly in the first half of the year, but
started to recover in the second half. A nominal price rise of 4,1% was recorded in
2008. In real terms middle-segment house prices declined by 6,8% in 2009, after
dropping by 6,2% in the previous year.
• In the luxury segment of the market house prices were up by almost 1% to about
R4,5 million in 2009, compared with a growth rate of 8,8% in 2008. The average
real price of luxury housing was down by 5,8% last year after declining by 2% in
the preceding year.
• At provincial, metropolitan and coastal level, house prices were marginally up last
year in some regions in nominal terms, but after adjustment for the effect of
inflation, price declines occurred in all areas compared with 2008.
• The affordability of housing improved further during the course of 2009, based on
the ratio of house prices as well as mortgage repayments to disposable income.
This was the net result of trends in nominal house prices, nominal household
disposable income and interest rates.
• The steady recovery evident in the residential property market since late 2009 is
expected to gather further momentum in 2010 as a result of better economic
conditions, the lagged effect of lower interest rates and less tight credit conditions.
Nominal house price growth of around 6% is currently forecast for 2010, but with a
projected average consumer price inflation rate of also 6%, no real price growth is
expected this year.

Click here for full report -

Nationalisation and South African Property

Julius Malema & your property rights
Jackie Cameron
03 February 2010

‘Have 20 properties, as long as you're a local'- ANC Youth League speaks to Realestateweb

CAPE TOWN: The ANC Youth League, becoming increasingly vocal and more controversial in its views, gives investors in South African residential property its blessing - provided they are not foreigners.

This was the message from Floyd Shivambu, spokesperson for the ANC Youth League, in response to questions from Realestateweb, property news site in the Johannesburg-listed Moneyweb stable.

"They can own more than one house, they can even own 20 houses. There's nothing wrong with that," said Shivambu of property investors with South African assets in a telephonic interview.

"We don't agree with foreign control of South African land. South Africa must be owned by South Africans," he continued.

The ANC Youth League is headed by Julius Malema, who has become a household name thanks largely to his colourful and often controversial comments. The ANC Youth League seems to have played a key role in ensuring President Jacob Zuma and the ANC's political success during last year's election. It is owed favours by the ANC's ruling politicians. It is also increasingly trying to call the shots at the highest political levels.

Earlier this week, the ANC Youth League lashed out at mineral resources minister Susan Shabangu after she attempted to reassure international investors at a mining conference in Cape Town that nationalisation of mines is not government policy.

The organisation accused her of being "disingenuous and dishonest" and of not understanding the ANC after she reportedly said nationalisation of mines would not happen in her life time. "In our internal discussion with Minister Shabangu, she said that she does not disagree with the ANC Youth League, but because she is now trying to impress imperialists, she changes her tone," said Shivambu.

"The ANC is the centre of power and gives direction to government policy, not vice versa. The reason why the ANC Youth League has developed a concrete programme on the nationalisation of Mines within the ANC, not in government, is because we understand that the ANC gives policy direction to government. The ANC policy objectives are located within the Freedom Charter, which says Mineral wealth beneath the soil shall be transferred to the ownership of the people as a whole," said the ANC Youth League.

Shivambu told Realestateweb that he was "100%" sure nationalisation of mines "is going to happen". "The sooner investors realise that, the better...Investors mustn't be misled," he said.

Talk of nationalisation is worrying for many investors in South Africa and those with the ability to command foreign investment flows. It also raises the possibility that South Africa will ultimately go down the same political and economic road as ailing northern neighbour Zimbabwe.

Another thorny issue that is lurking in the background is land expropriation, a concept supported by ANC leaders. Expropriation sparked Zimbabwe's economic demise, ultimately leading to hyperinflation and severe financial hardship for its people.

The ANC Youth League is fully supportive of land expropriation, but not with "generalised compensation". Although the ANC Youth League leaders have not yet applied their minds fully to land expropriation and "haven't yet entered" that debate, the idea is that it should be guided by "objectives" and "conditions" and with the objective of the "restoration of wealth", Shivambu told Realestateweb.

But on the question of whether individuals who have amassed property portfolios should be worried, Shivambu said: "That's an easy one." As long as you are South African, you are welcome to grow your residential property portfolio, is the current ANCYL thinking. Write to

Chinese property market is in trouble!

Beijing Seen Vacant for 50% as Chanos Predicts Crash (Update1)

By Bloomberg News

Feb. 12 (Bloomberg) -- Jack Rodman, who has made a career of selling soured property loans from Los Angeles to Tokyo, sees a crash looming in China. He keeps a slide show on his computer of empty office buildings in Beijing, his home since 2002. The tally: 55, with another dozen candidates.

“I took these pictures to try to impress upon these people the massive amount of oversupply,” said Rodman, 63, president of Global Distressed Solutions LLC, which advises private equity and hedge funds on Chinese property and banking. Rodman figures about half of the city’s commercial space is vacant, more than was leased in Germany’s five biggest office markets in 2009.

Beijing’s office vacancy rate of 22.4 percent in the third quarter of last year was the ninth-highest of 103 markets tracked by CB Richard Ellis Group Inc., a real estate broker. Those figures don’t include many buildings about to open, such as the city’s tallest, the 6.6-billion yuan ($966 million) 74- story China World Tower 3.
Empty buildings are sprouting across China as companies with access to some of the $1.4 trillion in new loans last year build skyscrapers. Former Morgan Stanley chief Asia economist Andy Xie and hedge fund manager James Chanos say the country’s property market is in a bubble.

“There’s a monumental property bubble and fixed-asset investment bubble that China has underway right now,” Chanos said in a Jan. 25 Bloomberg Television interview. “And deflating that gently will be difficult at best.”

Third Costliest
Investor concerns have spread beyond real estate. Among 15 major Asian markets, the benchmark Shanghai Composite Index is valued third-highest relative to estimates for this year’s earnings, after Japan and India, even after falling 8 percent this year.
A glut of factories in China is “wreaking far-reaching damage on the global economy,” stoking trade tensions and raising the risk of bad loans, the European Union Chamber of Commerce in China said in November.

More than 60 percent of investors surveyed by Bloomberg on Jan. 19 said they viewed China as a bubble, and three in 10 said it posed the greatest downside risk. The quarterly poll interviewed a random sample of 873 Bloomberg subscribers and had a margin of error of 3.3 percentage points.

Digesting the debt from a popped property bubble may slash bank lending and drag growth lower for years in an economy that Nomura Holdings Inc., Japan’s biggest brokerage, says will provide more than a third of world growth in 2010.

Japanese Comparison
The risks are so great that a decade of little or no growth, as Japan experienced in the 1990s, can’t be dismissed, said Patrick Chovanec, an associate professor in the School of Economics and Management at Beijing’s Tsinghua University, ranked China’s top university by the Times newspaper in London.

The Nikkei 225 Stock Average surged sixfold and commercial property prices in metropolitan Tokyo rose fourfold before the bubble burst in 1990. The Nikkei trades at about a quarter of its December 1989 peak.

“You have state-owned enterprises using borrowed funds from the stimulus bidding up the price of land -- not even desirable plots of land -- in Beijing to astronomical rates,” Chovanec said. “At the same time you have 30 percent-plus vacancy rates and slumping rents in commercial property so it’s just a case of when you recognize the losses -- or don’t.”

China’s lending surged to 1.39 trillion yuan in January, more than in the previous three months combined. Property prices in 70 cities climbed 9.5 percent from a year earlier, the most in 21 months.

Reasonable Control
Policy makers are starting to rein in the loans that helped fuel the property boom. Banks should “strictly” follow real estate lending policies, the China Banking Regulatory Commission said on its Web site on Jan. 27. It called for banks to “reasonably control” lending growth.

The People’s Bank of China today ordered banks to set aside more deposits as reserves for the second time in a month to help cool expansion in lending. The requirement will increase 50 basis points effective Feb. 25, the central bank said on its Web site. The current level is 16 percent for big banks and 14 percent for smaller ones.

“The liquidity bubble last year went to the property market,” said Taizo Ishida, San Francisco-based lead manager for the $212-million Matthews Asia Pacific Fund, in a phone interview. “I was in Shanghai and Shenzhen three weeks ago and the prices were just eye-popping, just really amazing. Generally I’m not buying Chinese stocks.”
‘Dubai Times 1,000’

Chanos, founder of New York-based Kynikos Associates Ltd., predicted that China could be “Dubai times 100 or 1,000.” Real estate prices there have fallen almost 50 percent from their 2008 peak as the emirate struggles under at least $80 billion of debt. The economy may shrink 0.4 percent this year, Shuaa Capital, the biggest U.A.E. investment bank, says.

The commercial property space under construction in China at the end of November was the equivalent of 6,800 Burj Khalifas -- the 160-story Dubai skyscraper that’s the world’s tallest.

It’s difficult to determine how exposed Chinese banks are to real estate debt because loans booked to some state-owned companies as industrial lending may have been used to invest in property, say Xie and Charlene Chu, who analyzes Chinese banks for London-based Fitch Ratings Ltd. in Beijing.

A drop in the property market may be accompanied by a surge in nonperforming loans. The Shanghai office of the banking regulatory commission said on Feb. 4 that a 10 percent fall in property values would triple the ratio of delinquent mortgages there.

Bank Shares
Hong Kong-listed Industrial & Commercial Bank of China Ltd., the world’s largest bank by market capitalization, has dropped 13 percent this year. China Construction Bank Corp., the second-largest, has fallen 11 percent. Both are based in Beijing. Hong Kong’s benchmark Hang Seng Index has declined 7.3 percent over the same period.
Fund manager Joseph Zeng says he has a contrarian view on China’s banks, on the grounds that rising interest rates this year will benefit their net interest margins.
“For us, non-performing loans are not expected to be a big issue until 2013, the peak of the current economic cycle,” said Zeng, head of Greenwoods Asset Management Ltd.’s Hong Kong office, in a phone interview. He declined to say what he is buying. Greenwoods has more than $500 million under management.

China has firepower to deal with a crisis. The nation has the world’s largest foreign exchange reserves, at $2.4 trillion, and government debt of only about 20 percent of GDP last year, according to the International Monetary Fund. That compares with 85 percent in India and the U.S. and 219 percent in Japan.

Own-Use Excluded
CB Richard Ellis doesn’t count empty office buildings bought by banks and insurance companies when calculating vacancy rates, since some of the space is for the owners’ use. The Los Angeles-based company said in a report that vacancy rates are starting to fall and rents to rise for the best office buildings as China’s fast economic growth buoys demand.

Gross domestic product expanded 10.7 percent in the fourth quarter from a year before, a two-year-high, after the government introduced a $586-billion stimulus package.

“In many cases when you look at these buildings and say, that’s never going to be fully occupied, somehow 12 to 18 months later the building is full,” said Chris Brooke, CB Richard Ellis’s Beijing-based president and chief executive officer for Asia.

Overcapacity may be looming in manufacturing as well. China’s investments in new factories and properties surged 67 percent last year to 15.2 trillion yuan, more than Russia’s gross domestic product. Excess steel capacity may have reached about 132 million tons in 2009, more than the 87.5 million tons from Japan, the world’s second-biggest producer. The Beijing- based EU Chamber of Commerce report said a “looming deluge” of extra cement capacity is being built.

Balance Sheet Deterioration
While neither Xie nor Chu see nonperforming loan ratios reaching the level of a decade ago, when they made up 40 percent of total lending, they say banks will see deterioration in their balance sheets.

“A lot of people will lose a lot of money, but the banks will probably not go down like in the 1990s,” Xie said in a phone interview. “Of course there will be a lot of bad debts. There will be a lot of mortgages gone bad I think.”

Rodman displays the slide show to private equity and hedge fund clients brought in by banks such as Goldman Sachs Group Inc. at his office in eastern Beijing.
“China is the only place in the world that despite having more empty buildings than the rest of the world has yet to reflect those valuations on their balance sheet,”
Rodman said.

Empty Buildings
Gazing south from the building that houses the Beijing headquarters of Goldman Sachs, UBS AG and JPMorgan Chase & Co., one of the first structures in the field of vision is a 17-story office tower at No. 9 Financial Street. Empty.

Farther along are the two 18-story towers of the Bank of Communications Co. complex. Dirt is gathering at the doors and the lobby is now a bicycle parking lot. A spokeswoman for the Shanghai-based lender didn’t return phone calls and e-mails.
The supply of office buildings will continue to grow. Jones Lang LaSalle Inc., a Chicago-based real-estate company, estimates that about 1.2 million square meters (12.9 million square feet) of office space in Beijing will come on line this year, adding to the total stock of 9.2 million square meters.

The city government is driving growth regardless of the market. Financial Street Holding Co., whose biggest shareholder is the local municipal district, plans to build 1 million square meters of additional office space starting this year, and is talking to potential clients such as JPMorgan, said Lydia Wang, the company’s head of investor relations.

Doubling the CBD

Across town, the district government is seeking to double the size of the city’s Central Business District, which already has the highest vacancy rate ever recorded in Beijing. It was 35 percent at the end of 2009, according to Jones Lang LaSalle.
For its part, Beijing-based Financial Street Holdings has “100 percent” of its properties, which include the Ritz Carlton hotel and a shopping mall, rented out, Wang said. The empty buildings along Finance Street don’t belong to the company, which is 26.6 percent owned by the district government.

Zhong Rongming, deputy general manager of the Beijing- based China World Trade Center Co., which built China World Tower 3, said the company is “optimistic about 2010 prospects” given China’s accelerating economic growth. He said the new tower will include tenants such as Mitsui & Co. and the Asian Development Bank.

One new addition to Finance Street may give real estate boosters cause for concern. No. 8 Finance Street will be the headquarters for China Huarong Asset Management Corp.
The company’s mission: selling bad debt from banks.

UK Commercial property experts fear fickle real estate rebound

Mon Jan 25, 2010 5:38am EST

* 'Two-tone' recovery could arrest market growth

LONDON, Jan 25 (Reuters)- Less than one in 20 UK commercial property experts believe a fast-paced recovery in asset values will continue in 2010, while tenant demand and rental growth remain under pressure, a survey out on Monday showed.

Benchmark data in the latest Expert Panel survey, by online real estate portal Reita, shows average commercial property values have gained about 9 percent since July, although this has been driven by prime quality, well-located buildings.

Some investors fear values of secondary property in less popular areas may take up to 18 months to catch up with soaring prices in locations such as Mayfair and the City financial district, both in London, the survey showed.

Experts also worry measures taken by government to curb Britain's rising national debt could exacerbate this 'two-tone' rebound by compressing tenant demand and rental growth.

"The only economic certainty is that public spending will be severely cut by the next government and that people will have a lot less money to spend as a result," Peter Cosmetatos, director of Reita, said.

"This will undoubtedly have an impact on business and on the take-up of commercial space. With that in mind we should tread very carefully when making any predictions over long term market recovery this year," he said.

Reflecting this pessimism, fifty-seven percent of the Expert Panel said they did not expect to see a fall in secondary property yields before 2011, up from 29 percent in the last survey.

Forty-eight percent of the respondents expect returns for listed property firms to be slightly worse than direct property over the next 12 months, up from 21 percent last September.

Last week, the UK real estate sector was the worst performing equity sector at minus 4 percent, with UK REITs showing returns of minus 6.5 percent in the year to date compared to minus 1.7 percent for the FTSE All Share index, analysts at Nomura said.

"Rental values outside the prime areas will continue to slide and banks will carry on being highly selective in their lending activities as they work to shore up their balance sheets," said Patrick Sumner, chair of Reita and head of property equities at Henderson Global Investors.

Reita's Expert Panel consists of leading industry experts from more than 30 different organisations and firms, including Blackrock, Credit Suisse, Deloitte, Land Securities (LAND.L), Liberty International (LII.L), Nabarro and Segro (SGRO.L). (Reporting by Sinead Cruise; Editing by Andrew Macdonald) (See for the global service for real estate professionals from Reuters)
"If you help enough other people get what they want, you can have anything you want!"

Zig Ziglars