NEWSROOM

Well positioned office block to go under the hammer

Auction Alliance will be auctioning a Braamfontein office block that features great retail space at their 17 March multiple auction.

The property is situated in the Braamfontein area which, in turn, falls within the Johannesburg CBD. The main entrance to the upper floors of the property is on De Beer Street and as the property is situated in the hub of Braamfontein, right alongside the Braamfontein Centre, it enjoys excellent exposure to passing vehicular and pedestrian traffic on both De Beer and Jorisson Streets.

The property, with a GBA of 4,809 m², comprises a multi-storey building where the ground floor hosts street front retail accommodation and the first floor of the property hosts a college, security area and office. The second level hosts a partly covered parking area and the remaining seven floors comprise of office accommodation. In addition, the property includes a lower level basement and is utilised as additional parking.

The combination of retail and office space yield good income for prospective investor. The projected gross income of the property, for the period January 2010 - December 2010 is R2 282 229.

The area is easily accessible via a number of major routes including the M1 highway Smit Street offramp as well as the Jan Smuts offramp. The area has also seen a large number of properties being converted to neat, modern student accommodation due to the close proximity of Wits University adding another opportunity.

The subject property enjoys all municipal services such as water, sewerage and electricity.

The auction takes place at The Southern Sun Grayston Hotel @ 12 o'clock.

For more information please contact John Hislop on jhislop@auction.co.za or 011 430 5555

Auctions find their niche in the residential property market

26 February 2010

Already a preferred method of sale in the commercial property sector, auctions are proving their worth and rapidly gaining momentum as the preferred mechanism for selling residential property. Useful as a defined activity in a confusing real estate market, the auction mechanism is geared at simplifying the buying and selling of assets. The auction environment remains a valuable barometer of current market sentiment, and represents real value of real estate assets at a defined moment in time.

A particular area of interest in the residential real estate sector, is the high-end, upmarket properties that Auction Alliance has knocked down under its bespoke Platinum Division. Comments Craig Berman, Auction Alliance's head of residential property: "The proof is in the pudding - we are currently ahead of the game with regards to selling high-value residential real estate on a nationwide basis."

Berman enthuses that Auction Alliance's success is rooted in its credibility in all its areas of business - from commercial and residential, through to capital assets sales: "With our experience across all these asset classes, our strategic marketing efforts and huge advertising spend, we are able to capture the imagination and interest of buyers and sellers from far and wide. Auction Alliance is gearing in excess of R1billion to the market from a range of bespoke game farms, luxury lodges, exclusive homes and a full array of residential stock across the board, offering buyers unprecedented investment opportunities on our auction floors."

According to Berman, residential real-estate has seen a slow recovery, and attributes blame to the fact that many people are unsure how to successfully value their assets: "To establish a successful value of an asset, you need to strike a balance between its true value, and the value that would promote maximum buyer participation. The auction environment remains the final frontier with regards to achieving great pricing and enviable buyer hype."

Berman continues that Auction Alliance's core aim and objective is to create wealth for both sellers and buyers, and says that this is the real key to the company's continued success. Recent investment opportunity sales from the Auction Alliance Platinum Division include:

• 13 Finchley Road in Camps Bay, which sold for R4,3million
• 40 Landskroon Road, Oude Westhof, which sold for R2,8million
• 1 Sleepy Hollow, Noordhoek, which sold for R5,4million
• 10 Hampton Court, Umhlanga, Durban, which sold for R5,5million
• 31 Homestead Road, Edenburg, Rivonia, which sold for R3,9million
• 805 The Island, Westlake Country Estate and Safari, which sold for R4.8million

Moving forward, it seems the mist of uncertainty is slowly lifting as experts across the country are predicting an increase in South African residential property prices, concludes Berman: "Property analysts and economists are predicting two major trends for the domestic residential property market in 2010 - firstly, the acceleration of house price inflation from the bottoming out of the market as we start heading out of the recession, and the second factor, the 2010 FIFA Soccer World Cup."

Notable Hotels up for auction

19 February 2010

The hype of football and the 2010 Soccer World Cup may only be a temporary four-week blip on the country's radar, but the more permanent upside is the focus on tourism that can spin out from this FIFA event as it showcases South Africa to the world.

There has been extensive speculation since South Africa was awarded the role of host of the upcoming FIFA 2010 games, and big brands such as Bidvest, One & Only, and Protea have made headlines investing in the local hospitality sector. The question asked by many however, remains whether the next decade will be able to sustain this massive investment and interest in the hotel realm.

"Occupancy and success will always remain a challenge if SA tourism and its affiliates abuse this window by attracting tourists for their own short-term advantage. If the hospitality industry hikes prices excessively, many tourists will reconsider visiting our shores due to excessive costs, and the relatively long length of time required to travel here and explore our beautiful country," says a respected veteran of the industry. "

For South Africa, it is about beyond 2010 and ensuring repeat tourism on both a local level and a Pan African level, in addition to the traditionally targeted European and American visitors.

Auction Alliance has often been associated with prime realty and high profile sales across the country, and its latest offerings of iconic hotels do not disappoint. "It is about being current and working on the same level as the market's current focus," says Auction Alliance CEO, Rael Levitt.

The Cape Castle Protea Hotel is on the agenda for Auction Alliance's next auction, to be held in March in Cape Town. The hotel will remain under Protea management by agreement, and the new owner will be in a position to upgrade the 14-storey, 67-room hotel, to a 4-star rating, making it an exceptionally attractive investment. The hotel in its current condition boasts 360 degree views, a pool and restaurant, 68 undercover bays, 3 200 m² in total.

For the investor or operator looking for a slightly smaller, but equally attractive hospitality catch - La Splendida, based in Mouille Point, boasts 24 suites and both internal and external Art Deco features. The hotel has commanded much interest as it remains the only hotel on the Mouille Point strip.

For those in the market for a less central, but equally accessible investment, Harbour House Hotel in Hermanus cannot be overlooked. With ultra modern finishes complimenting the original homestead, this property offers 18 self-catering units for the tourist looking for more privacy, as well as a boutique conference facility for up to 30 people.

Looking at Gauteng, the United Hotel in Midrand will also be on offer. The hotel features 115 fully-serviced and air-conditioned rooms, with ample parking. It also boasts a conference venue, which is near completion and will soon be fully operational. With the airport a mere five minutes away, the hotel is well positioned as a popular business destination.

The Tudor Hotel in Durban will also soon be going under the hammer. The fully operational hotel offers 22 single and double rooms, all en-suite and fitted with television and air-conditioning.

Two five star game farms, namely the fossil rich Elandsfontein game farm one hour outside Cape Town and Zorgvliet's decadent Ka'Ingo, will also be going under the hammer offering investors additional unique investment opportunities.

For more information on these and more opportunities contact 021 443 6000

Excellent prospects for the commercial property market

12 February 2010

It's been a month into the new year and going forward, it is clear that the property market is positively geared for an active year ahead.

Excellent prospects are expected for 2010, with regard to the local commercial property market. Norman Raad of Auction Alliance says that the driver behind this positive sentiment is a direct result of the huge targets set for all the major banks' commercial property finance teams.

Last year saw the majority of banks biding time and trying to manage their bad debts. As a result, the lending criteria have changed and access to loans has become substantially more challenging. For this reason, clients are going to need to come up with more equity at a slightly higher lending rate than before , however, the outlook remains exceedingly positive for the year ahead.

Investment opportunities akin to those experienced in 2007 will abound in 2010, and this will no doubt bring about much needed market stimulation, says Raad. "For the past few years, we have seen demand exceed supply and this will soon change. If you are thinking of investing in the property market, then now is the perfect time - the more cash you have available, the more opportunities will come your way."

He says that although the property market has still not made a full recovery from recent economic woes, there is definitely trading taking place. "There is serious activity in terms of various funds selling and buying property, and the banks are lending again - these are all positive trading signs for the property market."

He believes that the emergence of new funds, like Fortress for example, and the consolidation of Redefine, will create active players. "The past year has given the likes of Pangbourne, Growthpoint and Redefine time to consolidate and manage their existing properties, and to strategise for 2010. I am of the opinion that in 2010 these funds will now become active buyers and possible sellers of properties in the beginning of the year."

With the banks calling up bad debts, marginal private property funds have really fallen on hard times, and Raad believes that we will see increasingly more banks taking control of various portfolios and the sale of these assets. "The banks are currently wearing two caps - they are going to end partnerships, and they have some serious high lending targets to achieve this year. As a result, they will be looking for new horses to back and we will no doubt see emerging property funds and clients that they believe offer good growth potential."

Furthermore Raad notes that there are numerous corporates that will be looking to sell off their non-core assets, and invest their cash back into their business or settle some debts.

"I predict a bounce after the flat markets experienced during 2008 and 2009. All the necessary property fundamentals are there and, if the banks begin to write new business and the rates remain unchanged, we are in for a good run, even post World Cup," concludes Raad.

Auctions: The next decade

5 February 2010

Johannesburg: The South African auction industry will grow, strengthen and consolidate over the next decade, said Auction Alliance's Rael Levitt at a presentation given to the South African Institute of Auctioneer's annual AGM in Muldersdrift, Gauteng. Levitt's speech, named Auctions, the next decade, was delivered to auctioneers from around the country and focused on the various trends that the country's leading auctioneer foresaw over the next 10 years. "In 2020, I will be closer to my 50th birthday," exclaimed the 38 year old auctioneer who founded his company in 1992 at the age of 21, "whilst we cannot predict the future, we certainly need to look at societal, business and political trends which will impact the auction industry."

Online versus the live experience
The presentation focused on ten broad trends which will impact the auction industry, starting with the impact of the digital revolution on auctioneers. "A decade ago, I was convinced that online auctions would cannibalise traditional auctions, but today I realise that there is a place for traditional auctions. Similar to gambling online or in a casino, certain people enjoy gambling online in the comfort of their own homes, but others like the thrill of the casino. The same applies to auctions - online auctions in South Africa will grow, but then so will the real live auction experience."

Levitt, a previous Vice Chairman of SAIA, explained that over the next 10 years, auctioneers will have to create captivating experiences if they are to remain relevant: "Today people have virtually unlimited options when it comes to retail and entertainment experiences. Choice will grow as new experiences capture consumers' attention, and auctions  will need to captivate the imagination of bidders. As a result, I believe that auctioneers will start providing retail entertainment to their consumers to keep the experience exciting."

Advertising and marketing
Levitt focused heavily on auction advertising and marketing, which for most auctioneers is their biggest expense. He showed an independent survey conducted by AMPs, which shows that auction advertising spend in the print media has grown from R16million in 2004 to over R200million in 2009. "My prediction is that over the next decade, auction advertising will move towards digital channels, social media, magazines, radio and television." Levitt said that the days of dedicated newspaper auction sections will disappear because consumers are looking for specific assets and therefore auctioneers will require targeted marketing in the asset categories in which they are selling.

Specialisation
Levitt believes that the days of the general auction are over: "People looking for houses will look for property auctions in specific property marketing channels, and the same applies for cars, art, or any other asset type. We are one of the only countries in the world where large generalist auction sections have developed and they are not only costly, but they are not targeted. Like the rest of the world, targeted advertising is set to become the mantra of the serious auctioneer.

"International auction houses don't sell everything - they choose their discipline and focus on it. I don't believe that one person or one company can and should be good at everything. The larger auction houses have already started specialising and will find their focus on specific asset classes. There will still be a place for the small generalist, but these businesses will deal with lower level assets," he explained.

Transformationand transparency
"The days of smoke and mirror empowerment are over," said Levitt, "the reality is that black buyers are growing in leaps and bounds and
therefore auction companies are going to have to focus on this rapidly growing market. If 90% of auction attendees are going to be black in the next 10 years, the industry needs to ensure that black auctioneers are there to service these markets.

This does not mean that there is no space for white auctioneers, it simply means that auctioneers need to embrace transformation or they will be left behind."
Levitt also said that in a world of transparency auctioneers will have to start an auction index, where they give their actual results to the public: "Many auctioneers do no want to disclose their results, but if results are given to the public, so will the trust in auctions grow."

Forging an Alliance with a history of continued success

30 January 2010

Auction Alliance has aimed to source trophy properties amongst their continued supply of premium assets on a national basis, ensuring a varied flow of investment opportunities for the public at large each month.

Auction Alliance has weathered tough markets before and grown stronger as a result. This experience of financial market turns and changing economic sentiment has also ensured an appreciation and inherent understanding of unique properties and their intrinsic value and sustainability regardless of market conditions.

The current climate has certainly seen tougher lending facilities and more cautious purchasing by buyers. "Like expensive art, people will now buy a superior work by well known artists, like William Kentridge for example, that represents all his key attributes rather than just wanting to own a canvas with his name on it," says an Auction Alliance spokesperson. "In tough economic times, investors understand that the value is in the premium work, and not just anything he happened to turn out, and it is similar with property investments. We are seeing discerning investors buying the attributes of a specific property rather than any commercial asset up for sale."  As such, it is imperative to source key properties, but not to overlook the fact that each investor has a varying appetite, price bracket and interest based on his application and portfolio of requirements. It is the role of the broker to work with the clients to ensure a successful transaction.

Auction Alliance has continued its blaze of success, with another key sale this past week on Wednesday, January 27, where a sterling R22million was secured and confirmed for Holland House, home to famous restaurant Tuscany Beach with a penthouse apartment above. The property was acquired by an international buyer who resides in Knysna, and participated in the bidding process telephonically.. Another notable sale concluded this week was New Market Junction in Woodstock, Cape Town. The extensive 10 000m² property, which boasts 200 parking bays, was sold to a Gauteng businessman for an undisclosed amount. Such acquisitions are further proof of ongoing local diversification of asset bases across the country.

Alliance's CEO, Rael Levitt, says that the influx of new buyers is critical to the company's ongoing success: "Our outreach is working as we are seeing a large increase in new registered bidders at both our commercial and residential auctions. This business is dynamic and we need to move with the market and the times. In the words of Hannes Boshoff from Ernst & Young, 'It is about realising the necessity of your product and then presenting it as a tool to facilitate others.' The auction mechanism is a tool for realising funds and attracting a wide net of buyers at fair market value."

Recent Auction Alliance sales on a national level include:

• 32 Milkwood Road, Zimbali - R27million
• 11 Stott Street, Selby - R 26,5million
• Holland House, Camps Bay - R22million
• 9 Valley View Road, New Germany - R19,14million
• 39 Florida Road, Morningside - R18,5million
• 45 Sarnia Road, Umbilo - R13,2million
• 32 Borax Street, Alrode - R11,4million
• 18 Manchester Road, Jacobs - R10,5million
• The Farm Buffelsfontein, Ptns 2; 6; 7; 11; 13 and 15, Buffelsfontein -  R10million
• Falcon Crest, Capital Hill Business Park, Midrand - R8,1million
• 24 Voortrekker Street, Vereeniging -  R4,75million

To register on the Alliance database for notifications or to submit your property on an upcoming auction, contact nraad@auction.co.za or contact 021 443 6000 (JHB) or 011 430 5555 (CT) or 031 566 3333 (KZN).

RESIDENTIAL PROPERTY MARKET ON THE RISE

23 January 2010

Countries across the world are now anticipating a rise in residential prices during 2010 - some more than others.

In the UK, around 81% of people expect house prices to rise during the coming six months, predicting average increases of 5,4%, according to a UK property website. In the US and Australia, similar expectations have been reported, although it has been noted that they anticipate the recovery to be slow and tough. In Australia, analysts and company chief executives are looking forward to improved economic conditions in 2010 - especially in the commercial property market.

But what about the southern tip of Africa - do we share similar expectations for our residential real estate market? Last year it became clear that our strict credit act was a major contributor to the fact that we were not as badly affected as the rest of the world. According to Rael Levitt, CEO of Alliance Group: "Last year was a tale of two halves, with the first month showing a plunge in traded asset values and a historic surge in home loan distress. The second half of the year started to show significant improvement in average asset values, with a palpable bounce in the last quarter of 2009."

Moving forward, it seems the mist of uncertainty is slowly lifting as experts across the country are predicting an increase in South African residential property prices. Property analysts and economists are predicting two major trends for the domestic residential property market in 2010. Firstly, the acceleration of house price inflation from the bottoming out of the market as we start heading out of the recession, and the second factor, the 2010 FIFA Soccer World Cup.

Mid 2009, the residential market saw a bottoming out of recessive house prices, followed by a somewhat more positive second half of the year. Although Alliance Group still saw a large number of distressed properties hitting its auction floors, numbers were considerably lower than the record-breaking peak experienced in the first quarter of 2009.  When asked about the effect that the interest rate cuts had on the distressed segment, Levitt responds: "For many distressed homeowners, the interest rate drops in 2009 were too little too late."

Despite a minimal effect on immediate relief, the rate-cut cycle did contribute largely to the recovery now seen in the market, albeit a slow and hard slog. Jacques du Toit, sectoral analyst: Secured Lending at Absa Retail Bank, predicts the market to follow through on the recovery seen in the last half of 2009 and expects house prices to grow by between 6% and 7% in 2010. Levitt adds: "We should see an uptick in median prices across the board." Some market segments will, however, benefit from greater price increases than others, says Levitt: "Up-market suburbs are predicted to be the recipient of higher property price inflation."

Despite positive sentiment and a reasonable market forecast, sensible lending and tight credit control should still be top of mind. Erwin Rode, CEO of Rode & Associates, warns that the recovery in nominal house prices does not guarantee an immediate recovery in real house prices. Domestic households are still highly indebted and as a country, South Africa still faces a number of very real challenges.

The effect of the 2010 FIFA World Cup on the domestic economy has increased government spending on infrastructure for the tournament and as such, has acted as a buffer, limiting the impact of the global recession. However, it has not only ensured increased spending from entities within our own borders, but it has also put South Africa on the map globally, showcasing its potential and increasing foreign investment sentiment and spending.

Levitt notes: "A sweet spot may emerge for estate agents and auctioneers if buyers are buoyed by positive World Cup sentiment, and if sellers who are mildly distressed will accept realistic prices. The outlook is far better than 2009, which saw many people tightening their belts to deal with the weak economy and growing unemployment. In 2010 individuals will start spending more as the stock market continues to rally and the economic outlook improves." This sentiment is echoed by Du Toit, who forecasts a gradual increase in activity and transaction volumes in the residential property market.

South Africa is a few months away from welcoming a large contingent of World Cup supporters to its shores, the nation is united by soccer fever, its economy is heading out of recession, politically it is tackling challenges, and it is ready to showcase the biggest sports spectacle in the world. There is no doubt that 2010 is a year unlike any other for South Africa and a milestone for its people.

ICONIC CAMPS BAY BEACHFRONT SITE UP FOR GRABS

16 January 2010

A Camps Bay beachfront property which will be going on auction in late January is attracting wide international interest - and according to the Auctioneers will set the stage for a 2010 property boom in the country s most exclusive suburbs. Who can forget that last year the now-renowned Grand Cafe sold for a spectacular R44 million, an unprecedented amount for the Camps Bay strip.

Estate agents, property investors and homeowners along the Cape Atlantic Seaboard are already experiencing a large bounce-back after December s Fifa Wold Cup draw which attracted visitors into the mother city. According to Alliance Chief Executive, Rael Levitt: "2010 is set to be one of the most historic years in the history of South Africa, and as the eyes of the world turn to us as we near the world s greatest sporting event,  eager investors are already being attracted to our prime coastal areas".

The recent successful Alliance Group auction which saw several portions of the magnificent Boschendal wine estate go under the hammer is a good example of how international investors are focusing keenly on our prime real estate.

The no-reserve sale of the Camps Bay property, on the instructions of the beneficiaries of the estate, will start 2010 off with a bang. "In the worst of times, Camps Bay beachfront s prime real estate has attracted historic prices, but we are now experiencing unprecedented international interest in a significant piece of real estate that s in one of the most beautiful locations on earth - Camps Bay, comments Andrew Cohen.

Camps Bay has always attracted visitors from around the world. The seaside suburb, known for its exclusivity and natural beauty, has long been the playground of the rich and famous. Lying at the foot of the Twelve Apostles mountain range, this cove is embraced by granite boulders at each end and the enclave is skirted by a palm-fringed expanse of pristine white beach. With its almost Caribbean feel and some of the most prime real estate on this planet, this is any investor s dream. As the country gears up for the momentous year ahead, and with tourism already picking up, this piece of the Atlantic Seaboard is pure gold - but properties here are not easy to come by.

That s what makes Holland House a true gem: right in the heart of this world-famous strip and right on the beach, a prestigious property with the finest location imaginable has come up for auction. Holland House features a luxurious apartment upstairs and the well-known, elegant and vibey Tuscany Beach restaurant down on street level, assuring a firm rental income opportunity. Professional due diligence has already been done by a top town planner and what s more, the property is to be sold with no reserve - the sale will be confirmed on the fall of the hammer. The property has a gross area of 691m2.

Cohen is very excited at the prospect: "This is a massive opportunity for a canny investor. The sale is without reserve which offers one lucky investor the opportunity to start 2010 with the acquisition of a piece of real estate gold. It simply does not get better than this."

Auctions Shrug off 2009 Property Downtown

24 December 2009

The year end results for Alliance Group, the country's leading auction house (which is a owned by the financial services group, Transaction Capital, and black empowerment group, Amabubesi Holdings) have reflected an extremely tough twelve months, says Chief Executive Officer, Rael Levitt. "2009 was a tale of two halves, with the first month showing a plunge in traded asset values and an historic surge in home loan distress". According to Levitt the second half of the year started to show significant improvement in average asset values with a palpable bounce in the last quarter of the year.

In his annual year end review, Levitt explains that 2009 was an historic year for the South African auction industry. "With record levels of distressed selling, the FIFA world cup around the corner, lower interest rates and a plunge in investment and consumer spending, the year has seen an unprecedented number of advertised auctions. In the last quarter, bidders began cramming back into the country s auction rooms and this has sparked a mini-boom in the industry".

While many property financiers and estate agencies were paralysed by a lack of debt financing, the global downturn, poor buying sentiment and South Africa's first recession in 17 years, the South African auction industry in 2009 still saw record numbers of transactions being conducted throughout the country. Alliance Group's auction analysis showed that more auctions were conducted during 2009 than in the three preceding years. "From an Alliance perspective, by the end of 2009 the nationwide company brought almost 10,000 individual properties to the auction floor. We literally sold more houses in 2009 than we did in our first decade of existence".

The South African distressed housing market peaked in the second quarter of the year but forced sales of single residential homes dropped considerably in the third and fourth quarter, reports Levitt. The Alliance Group Distressed Asset Index which tracks local mortgage stress reported that arrears on mortgage bonds increased from 55,000 in the second quarter of 2008 to 140,000 in the second quarter of 2009.  That said, Levitt adds: "We have noticed a marked drop in forced auction sales in the third quarter. Lower interest rates and banks assisting defaulting debtors are now having a positive impact. Alliance reports that mortgage stress has declined year-on-year by 40% in the last quarter, with strong buyer uptake at far higher prices than the previous three quarters".  

During the year, liquidations of property developments and investor schemes reached unprecedented levels with over R5billion worth of development real estate going into  liquidation during 2009. "Sadly, several investor schemes hit the wall this year and groups such as the Genesis Property Group, City Capital, MDC Property Group and King Financial Services were all placed into provisional liquidation leaving thousands of investors exposed".

According to Levitt, "we will definitely see some commercial property hitting the distressed auction floors next year but this market is fundamentally sound and the properties will be snapped up by predatory investors". Levitt believes that distress remains for large tracts of vacant development land, incomplete developments and a few more golf estate developments which are under severe pressure.

Although the latest data on insolvencies and liquidations shows that year-on-year growth was significantly negative, according to figures just published, these reports take only the number and not the value of debt delinquency amongst individuals and companies into account. "One might interpret the improvement of insolvency as a reflection of the benefits of lower interest rate, but the third quarter of the year saw the highest value liquidations hitting the country's Master's Offices in years. Corporate liquidations in the last quarter of 2009 will flow into high value bankruptcy auctions in 2010", says Levitt.