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Bad News Psalmwich

When the Day of Judgment comes, we shall not be asked what we have read, but what we have done.” Thomas á Kempis (The Imitation of Christ)

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I received bad news, the other day. This had me reflecting; what do other people do when they get bad news? Surreptitiously I have been observing or asking people this week how they handle bad news.

 

I discerned, observed or had reported to me the following methods;

Get it over with, with a dramatic episode; kick the cat, spouse, road rage.

Coldly channel the negative energy; gym, running, sport, furious knitting.

Indulgence; food, alcohol, sex, nails.

Escapism; TV, Romance novels, Porn.

Activity; Overtime, disassemble car.

Withdrawal; depression, silence, worm-eating.

 

This is by no means an exhaustive list. You may be able to pick out one of your own from the above. I’m sure the psych guys have all sorts of advice for us and I’ve read a sufficient share of pop-psychology literature to tell you that you can save some money and read the Psalms.

 

I had a great Pastor, no really I do.  I’m so grateful that I go to a small enough church where I could drown my sorrows in good coffee with my pastor. No five-year plan; no spiritual dagga, no maniacal grinning. Just “oh this is really bum news. How are you feeling?” More coffee. After some soothing noises, the shepherds crook appears from under the table. “So where do you go when you get bad news?” He queries, off the cuff. “To the minor prophets.” I lamented. “Hmmm,” pastor (experienced at dealing with nutters) controls his mirth. “I prefer the Psalms,” he comments.

 

Have you spent time in the Psalms lately? The book of Psalms is the ‘secret place’ of the scriptures. Don’t look that one up in a commentary it won’t be there. If you can’t find God when you’re furiously knitting, eating worms or grumbling to yourself, or doing something unspeakable – head for the Psalms I say. That’s where God makes all the necessary ooh-aah noises.

 

I never thought I’d see the day that I would be kissing little girls’ toes saying “ooh…..aah, wasn’t that awful, poor little frozen chicken, ag…shame, poor little hamster dropping.” But then I had some daughters, who, whilst performing Pavlova type leaps, sustain no small number of injuries. Since one can not concentrate on the gripping editorials contained within the bowels of the Isle-of-man-shoemakers-monthly magazine, with the deafening shrieks of amateur ballerinas in the background, the abovementioned empathizing is necessary.

 

Back to the Psalms; well when I stub my toe, or worse, whilst performing amateur ballerina maneuvers (okay the metaphor is wearing a bit thin.  Imagine me and thin being in the same sentence.) I head for the Psalms. I confess that the Minor Prophets do appeal to my sense of self-flagellation but they can do it for me too. Let me not fool you into a false sense of my saintliness. (Oh do stop laughing.) I have and do end up on the heap of sin and sulkiness when I’m on the receiving end of bad news too. But sometimes I get it right. Try and get it right – aim for God’s Word especially the Psalms in times of trouble.

 

So what’s so special about the Psalms? There is not a single emotion, urge, temptation, elation, delight, praise or passion not mentioned in the psalms. I challenge you to find one and let me know. (Actually, rather don’t.) The Psalms is where God empathizes with us through the experiences of the likes of David. This is where God says “there, there it’ll be all right, I’m in control.” Or “For goodness sake, pull your finger out.” Words we need hear sometimes.

 

I just love the variety in the Psalms; as the book opens with Psalm 1 (strangely enough, doesn’t miss a trick does He.) which sagely reminds us about where we should find ourselves in the economy of God; delighting in His Word, not in the seat of mockers – In the Jerusalem Bible it renders that “cynics”. Then waxes on about how the wicked will all end up in deep yogurt. If you like that sort of thing.  Then there are those Psalms of ascent journeying through the seasons of the heart. There’s pleading, begging for forgiveness, boasting, delighting in the triumph of the victorious, self-encouragement and so on. As a Grande finale, the last 10 Psalms do a sort of Sound-of-Music type giddy dance over the hills delighting in God whose majesty is beyond our most eloquent idiom.

 

What are you waiting for? Add the psalms to your devotions if you don’t already. Next time you’re tempted to throw your toys, or the bones for that matter, rush for the Psalms, rather than the knitting, or the remote.

 

“Okay so you’ve got my attention, what do I do with these Psalms?”

Once my daughter caught me pretending to play the piano whilst listening to Rachmaninov’s 3rd Piano concerto – one of my favorites. Rather embarrassing for me, not so strange for her. I coughed a little and began dusting ebony and ivory with an imaginary duster. “Oh I do that.” She inflected with five-year-old nonchalance. Don’t be a wimp about reading scripture out allowed. So what if you look silly. I’ve seen grown men cry at the end of cricket matches. (Probably with relief.) I’ve seen 150kg rugby fans leaping about screaming like fairies from a Peter Pan movie, talk about camping-it-up. I think that the Psalms should be wept over, danced upon, bellowed out, laboured with, announced and proclaimed, quietly considered and gently treasured. The Psalms are the gentle whisperings from a lover and the angry commandments to the disobedient. They represent God’s heart of mercy and grace as well as His fierce wrath as expressed by the Psalmists. So Copy & Paste the words of the Psalms into your prayers, your worship, your crib notes for the tests of life and into your favorite tunes. There’s no copyright on God’s Word.  Enjoy!

 

 

Try these Psalms for size

Distress; Psalm 121

U2’s favorite; Psalm 40

Fed up with the corrupt about you; Psalm 37

In need of transformation; Psalm 25

Comfort; Psalm 23

On your knees; Psalm 38, 39

Under Pressure; Psalm 54, 55

Beautiful women; Psalm 56:1 (NIV)

Reflective: Psalm 63,112

Historical: Psalm 106,

Hysterical; Psalm 140-150

Fighting fear; Psalm 91

Awe: Psalm 78

Cranial: Psalm 119, Psalm 18

Relief: Psalm 4, Psalm 64, Psalm 68

Deliverance: Psalm 141, Psalm 43

Fascinated: Psalm 19, Psalm 93, Psalm 104

 

Now make your own list, cut it out and put it in your Bible.

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African Growth: Who’s Investing, at What Price?

afflagAfrica for so long a collective of querulous bankruptcies and killing fields has seen its coffers increasing and democratic advances reaping peace and prosperity.  The International Monetary Fund predicts sub-Saharan Africa growing at 5.4 per cent this year compared to 1.4 per cent for developed economies.

Africa’s is home to some of the world’s fastest growing economies and rapidly rising disposable incomes. A decade of relative political stability has also helped the case for African investment.

New investors come expecting bargains because the continent is still seen as poor. However, investors looking to buy into future growth are now paying a premium due to sellers savvy to opportunities being fewer and farther between.

Sub-Saharan Africa’s attractiveness as an investment destination has risen to fifth place from seventh in 2011, according to a survey by the Emerging Markets Private Equity Association. Opportunities traditionally existed in mining but speakers at Reuters Africa Investment Summit in September have pointed to consumer and banking services sectors as the next big thing.

Africa’s largest telecoms operator MTN is a perfect example of a company that paid what was considered a weighty price at the time, for the right to commence operations in Nigeria 15 years ago. It paid $285 million for a mobile license,  as of 30 June 2016, MTN recorded 232,6 million subscribers across its operations. Although MTN operates in over 20 countries, one-third of its revenues come from Nigeria, where it holds about 35% market share.

Actis, a private equity firm in emerging markets, said it was recently outbid in a North African deal by a trade buyer that offered 12 times EBITDA (Earnings before interest, taxes, depreciation and…). Valuations on the continent are, however, cheap compared with price demands in bigger emerging economies in Asia. Speaking to Reuters, John van Wyk, the firm’s co-head for the region said: “Valuations, depending on the sector, can be quite high but … compare that to the 16 times EBITDA multiple you are being asked for in India or China, that’s kind of stratospheric stuff.” “We are quite bullish about the continent but Africa doesn’t come without its challenges,” van Wyk said.

It seems that it is not unusual for new investors on the continent to make the mistake of coming with preconceived ideas of where valuations should be.

The world’s biggest retailer Wal-Mart bought a majority stake in South Africa’s Massmart for $2.4 billion back in 2011, a 19 per cent premium to the 30-day volume weighted average price. With that has come a great deal of political and legal manoeuvring that remains to be finalised.

Even where companies are willing to pay a premium for a good target, companies of the right size are hard to come by. Every big African brewer, for example, has been nailed down, according to SABMiller’s (now Anheuser-Busch InBev) head for the region, Mark Bowman. “No one is getting anything for a reasonable price anymore; you are paying for a future opportunity a significant premium. Anything that would become available would be aggressively priced and one would have to take a view if it’s worth it,” he told Reuters. Diageo, consumer goods companies with a portfolio of world-famous drinks brands, dug up a heavy $225 million for an Ethiopian state brewery a few years back, months after Heineken paid $163 million for two other beer makers in that country.

Emerging Capital Partners is opening an office in Nairobi, its seventh office on the continent, to grab east African opportunities. Alex-Handrah Aime, a director of the Africa-focused ECapitalP: believes that one way of bridging the valuation gap is for buyers to start with a convertible bond, instead of taking up equity at the onset. Private equity firms need to avoid auctions to keep a lid on valuations, she told Reuters. “It’s a competitive process. If you end up in an auction situation … the person who pays the most is going to win. That’s not necessarily the valuation that is going to be most sensible.”

Some investors have turned their backs on what they see as inflated prices. South Africa’s second-largest banking group FirstRand dropped its bid for Nigeria’s Sterling Bank after the two disagreed on price.

Interestingly Middle East Investors, though slow to join the fray, are competing for investment opportunities on the continent. Not short of oily billions and short of investment opportunities in the developed world, Africa is looking attractive.

However, challenges have been quickly recognised. One is the relatively small size of potential deals. “The Middle Eastern sovereign wealth funds are very interested in Africa, the challenge that they face is the increment at which they need to invest is way too large for the continent at the moment,” Diana Layfield, Africa chief executive at Britain’s Standard Chartered Plc. told Reuters in an interview on the sidelines of the World Economic Forum on Africa.

“Definitely there will be more (investment) coming to Africa,” Saudi Arabian Minister for Agriculture Farad Balghunaim told Reuters. “With the clear vision that is building up in African leadership now, there will be more and more investors from Saudi Arabia,” he said in Addis Ababa.

However accessing growth is not a given. There is a lack of liquidity in public capital markets. For private equity bankers, there is often a shortage of deals that can meet their mandate when it comes to size. For example, emerging markets private equity firm is reportedly aiming for individual deals of $50 million or more in Africa, meaning it has to focus on the continent’s biggest economies – South Africa, Egypt and Nigeria – to find deals.

Dubai’s Abraaj Capital is in the process of acquiring UK-based private equity firm Aureos Capital, which invests in small and medium-sized businesses in Africa, Latin America and Asia. “We tend to have a sweet spot at around $10 million, but we have investments as low as $2 million and going up to about $35 million,” Davinder Sikand, Aureos’ regional managing partner for Africa told Reuters.

“Our focus has been to build regional champions. So we’ll take positions in businesses that can demonstrate management vision and build (them) out, recognising that each of our markets other than Nigeria and South Africa are fairly small markets, and you need to build that scale.”

Due to the constraints in their home markets, Middle East investors are familiar with Africa’s challenges, such as the poor infrastructure, the shortage of a highly trained workforce and the lack of liquidity in capital markets.

Frederic Sicre, a partner at Abraaj Capital told Reuters: “Behind us are 200 of the wealthiest merchant families, royal families from the Middle East, and sovereign wealth funds from the Middle East. We can pull them into looking at the infrastructure development space, or the big utility development space, into looking at the opportunities here.”

Clearly, the continent has become a far more competitive place than it used to be. Despite many target deals being on the small side for the bigger players, the expected returns are considered reward enough in the long term. Africa, -keep doing what you’re doing and you’ll keep getting what you’re getting. If democratisation continues, peace will abound and prosperity should follow the necessary hard work buoyed by investment.

What every Potential Home Buyer should ask an Agent

fetchimageSo you’ve made your calculations with your home loan calculator and you’re out there viewing houses and getting all excited about what you see. At some point you’re going to have opportunity to talk about the house you’re interested in with the agent. If you’re anything like me you sit staring at the agent with mouth open like a guppy and your best questions dribbles down your chin as they gush madly about the house in question. Then you drive home confidently reciting some the most incisive questions know to man. Perhaps you should come prepared.

 Don’t be afraid to ask questions, you’ve gone to the trouble of using your home loan repayment calculator, don’t hold back with your research now. Whether you are looking to rent or buy you will be parting with a significant sum of money and you are well within your rights to have any of your questions answered.

Here are some important questions you should ask the agent before you sign on the dotted line. They are not necessarily in any particular order.

What are the rates? 
This will help you calculate your budget should you want to look at making an offer for the property.

Is there a levy? 
This is a particularly important question to ask if you are looking at a flat within a residential block or a unit in a sectional title complex.

How long has the property been available?
The longer the property has been on the market the more likely that it is overpriced or has some other problem. Having this information empowers you when it comes to negotiating a price – for example, if it’s been on the market for a while, the vendor or landlord is likely to be keen to come to a deal and so may settle for less than the asking price.

Why is the property available?
Hopefully the answer will be something that is not related to the standard of the property. For instance, if the current residents are looking to move because they have out grown their home or need to relocate then consider if you would be in the same position if you moved in.

How long did you/the previous owners/tenants live here?
The longer the better. If there have been many different residents in a short period of time, why did they not stay longer?

Has there been any recent improvement work on the property? 
Recent work can be viewed both as positive and negative. If the house has just had new windows or guttering that may be a plus. However, if it has been underpinned to prevent subsidence this may prove to be a significant negative.

Is there a neighbourhood watch?
While the answer won’t necessarily tell you how safe the neighbourhood is, you should get a good idea if neighbours look out for each other if there is an active scheme in place.

What are the neighbours like?
Although you are unlikely to be told directly that you are set to move next to neighbours from hell, the reaction you get from the landlord or homeowner should give you some idea what the local residents are like. Does she run a trombone recital club or a day care? Does he service cars or use loud power tools all day?

How many viewings have they had?
More viewings indicate a greater interest in the property, however, if none of the viewings have resulted in an offer does this show that it is too expensive or has another issue. Again, getting this information also gives you more ammunition for price negotiations.

What is the local traffic like?
This is especially important to ask if you have to commute to work by car. Again it’s unlikely that they will complain about heavy traffic but you may pick up some clues in the answer as to whether there is a problem.

When is the noisiest time of the day?
Any mention of aircraft or traffic noise? Is the house on a minibus taxi route or near a taxi rank? What about proximity of shops, clubs and restaurants that may have high noise volumes at certain times of day.

How old is the roof? 
Firstly, are there leaks and where? Roofs only last for a limited time so it’s worth checking just how old the current one is. The older the roof the more likely it will need work, which may be quite costly.

When was the last time the geyser needed repairs or has been replaced? 
Geysers sometimes malfunction due to electrical faults or water pressure issues. Is the current geyser under guarantee?

Has the property ever been burgled?
Unfortunately if a property has been burgled in the past it can often be revisited again. If they have been burgled on more than one occasion then it’s even more likely that it will reoccur. It’s also a good idea to ask what security measures the property is fitted with – for instance an alarm.

Are there any issues that I need to know about?
Certain problems, such as if a property has been underpinned for subsidence, must be legally declared, however asking this question should ensure you know if there is anything else that you’re not being told. Ask about rising damp and faulty drains.

How old is the septic tank?
Not all South African towns have waterborne sewerage. Septic tanks have a life span and they often need draining. They are also attacked by nearby roots. Ask to see where the tank is in the garden and look how closely trees are planted.

How far is the property from local amenities? 
Can you easily walk or drive to everything you need without a problem?

This list is by no mean exhaustive but they all make up a body of research that you began when using your bond calculator. Keep in mind that agents are paid to put the best face on a property not to be dishonest. Most agents may be honest about most things but they are unlikely to volunteer information that will paint the house in a bad light. So take your list of questions with you and write down the answers as you hear them. Happy house hunting.

Doing your part to ensure bond approval.

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{Financial institutions are tightening their grip on approval criteria for home loan seekers. What can you do once you’ve used your bond calculator to improve your chances.}

 The amount of accepted applications have fallen lately as a result of tighter lending regulations. These oblige providers to make far more stringent checks that you’ll be able to afford to pay your bond, even if interest rates go up or your circumstances change.

While there’s no way of absolutely guaranteeing your bond application will be approved, there’s plenty you can do to make sure your chances are as high as possible.

The following are some helpful suggestions that should assist you in your home loan seeking endeavours. Remember that a good start in this process is to find out where you stand with the aid of a home loan calculator.

In no particular order of importance…

  1. Grow that nest-egg

Saving a large deposit reduces the lender’s risk if they offer you a bond, as they’ll be providing a loan for a smaller portion of your house’s cost. It also shows that you have the financial discipline required to pay a bond. Remember that when you use your bond repayment calculator, one of the entries is the deposit; you will notice what a difference a large deposit makes to the final monthly repayment. Applying with a higher deposit will improve your chances of being accepted.

  1. Shrink some debt

Lenders can be negatively swayed if you have many debts on top of your bond, like outstanding credit card bills, overdrafts or loans. The more you can pay off before you apply, the better your chances.

That doesn’t mean you should use most of the deposit you’ve saved to pay off debts. Focus on paying off the expensive ones, preferably using money you’ve saved by cutting down your spending on luxuries.

  1. Get your credit record in order

Check your credit record through credit bureaus like Transunion, Credit4life or Compuscan. (There are many more.) These can reveal any potential problems like unpaid loans or bills that warn off lenders.

It also gives you the opportunity to check there’s nothing incorrect on your credit report that would harm your bond application – if you find anything wrong, you can ask for it to be removed.

You’ll then be able to work on making yourself look more attractive to lenders. Avoid applying for many financial products just before you take out your bond, although sensible spending like paying off a credit card in full each month can look good.

  1. Declare all income

When your lender or broker asks about your income, don’t just give your basic salary. Include details of bonuses, commission and any other income like investments, shares, expected inheritances and even potential pension payouts.

Make sure the information you give is accurate, make sure you include all your income. Try to time your application sensibly  – you’re far more likely to be accepted if you have a permanent contract than if you’re still in a probation period of a job you’ve just started.

  1. Reduce your bill load

Having bills you pay out for every month will reduce the total amount of your wages available towards paying your bond.

Divide your monthly expenditure into essentials such as food, travel costs, bills and child maintenance, luxuries such as gym membership, holidays and entertainment. If you can cut down on the latter, you’ll improve your chances of being accepted.

In the event of failure…

When you’re looking for any kind of loan, avoid appearing too desperate. Don’t apply for dozens of bonds in the hope that one might say yes, as every lender will leave a mark on your credit report when they check it.

Instead you should look into why you’ve been turned down. The lenders all have different criteria, so just because one rejects your application  doesn’t mean that all of them would. Your calculations with your bond calculator are still valid.

Ask the bond provider if they can offer any feedback. You can also check your own credit report to look for any potential problems or speak to Bond Brokers like Bond Buster, SA Home Loans or IHBB who may have a clearer idea of why the lender rejected your application.

Can bridging finance help you with your home loan

bridgingCan Bridging Finance Help you with your Home loan?

So you’ve used your bond repayment calculator to establish what you can afford in terms of a purchase price and the necessary repayments. But for some reason you fall short of what you can afford for one of the following reasons. Consider these scenarios and see whether bridging finance is for you.

Transfer Fees – Bond
If a purchaser has been granted a loan by a bank but is short of the transfer and legal fees it is possible in some circumstances, where the bond granted is higher than the debt due, to get an advance on the bond granted, for these costs.

Estate Agents Commission
If the attorney handling a property sale / purchase transaction is prepared to give a Letter of Undertaking to settle the loan to the estate agent for commission advance and the Principle of the agency is prepared to allow the bridging of estate agents commission to take place, then it is possible to arrange a bridging loan on the sale of land or buildings.
Generally the purchaser should have presented guarantees to the attorney and all documents ought to have been signed by all parties regarding the transaction

Pensioners Finance
People older than 65 who own property and wish to access some of the available equity can access up to 40 % of the equity with no need to pay any monthly payments.
Common conditions: The client should reside in the residential property; both partners must be over 65 years of age and agree that the settlement of the loan can be made from the property owner’s estate.

Sellers Proceeds – Bridging
You have sold a property and made a profit and need some of the money now rather than when registration takes place.
Common conditions: As long as the attorney handling the transfer is prepared to sign a Letter of Undertaking that the purchasers have put up guarantees, that all Common conditions have been met and that he will disperse funds to the bridging company on transfer, then it is possible to arrange an advance of this profit; sale proceeds advance.

Credit Rehabilitation
Similar to Debt Consolidation above, but all the debts you have are settled by the lenders on your behalf and your credit bureau listings removed. Property is the main source of the funds in lieu of the debt settlement. If clients do not own a property then the chances are you won’t be able to get assistance.

Additional Bond
A second bond or further bond is one method where the equity of your property can be unlocked and converted to an access facility or to cash.
Common conditions: Client must be able to prove ability to service the loan granted and the value of the property must be higher than the current bond. You can calculate this with a bond calculator.

Debt Consolidation for property owners
This is a 4 month bond – if you have equity in a property a short term loan can often be arranged to settle your debts (from the equity in your property) and then arrange for you to apply for a normal 20 year or 30year bond (don’t forget you can use your bond calculator for this.). This is a debt restructuring program
20 year bond – if you have at least 40 % equity in your property but you are blacklisted at the credit bureau, a 20 year bond could possibly be arranged for you

Bridging for developers
Bridging for developers can be obtained where a property developer has almost completed, or has completed, a property development project and needs to get access to some of the funds due to him from the sale of units built.
There are various ways this can be done and so it is best to speak to a consultant to advise you.

For a rudimentary list of property bridging finance service providers a simple entry into a search engine will do. Shop around the net to see who’s out there and meet with your banks to compare notes.
For those looking for bridging finance in addition to your home loan, remember to use your bond affordability calculator to work out your preliminary repayments and then factor in bond registration costs et cetera. From there you will be able to tell where you stand with regards to your bridging finance requirements. Any challenges you may have encountered with bridging finance in the past consider approaching the FAIS Ombudsman.

Written by Matthew Campaigne-Scott

A Glossary of Terms for the Homebuyer

property-investment-real-estate-trading-word-cloud-illustration-word-collage-concept-35121918When considering a mortgage bond from a bank to buy your dream house you may find yourself bogged down in a swamp of legal terms and bureaucratic mumbo jumbo. Not everything is as straight forward as your bond calculator.

Affordability Score

The Bank’s assessment of a Buyer’s ability to afford monthly instalments based on their income.

Agent’s Commission

The amount payable by the Seller to the agent for work done on marketing and selling a property. This is a percentage of the selling price.

Asking Price

The price at which the Seller is offering their property for sale.

Beetle Certificate

A certificate issued confirming that a structure is free of wood borer or termite infestation. This is a legal requirement when selling.

Bond

A lending agreement between a Buyer and the Bank. The legal bond document states that the Bank will lend an amount of money in the form of a bond.

Bond Calculator

Online software used to calculate estimated repayments on a bond. Input data is required, for example the desired monthly price. The sales price is then automatically adjusted enabling the user to appraise his/her position in the market place.

Bond Cancellation Cost

Costs accrued during the cancellation of a bond. These include an Attorney’s registration fee and a Deeds Office fee.

Cancellation Attorney

The Attorney who attends to the cancellation of the Seller’s bond and is appointed by the Bank with whom the current mortgage bond is held.

Conveyance Tax

A tax charged for the transfer of property from the Seller to the Buyer.

Conveyancer

A Conveyancing Attorney will attend to Deed Office transactions such as the transfer of a property from a Seller to a Buyer.

Cooling Off Period

The 5-day period after the Offer to Purchase has been signed during which the Buyer of a property has the right to cancel this agreement.

Credit Report

A detailed score card of an individual’s credit history prepared by an official credit bureau. This report will determine your risk as a borrower.

Debt-to-Income Ratio

A ratio which shows a Buyer’s monthly payment obligation to debts and which is divided by gross monthly income to ensure affordability.

Estate Agent

The Estate Agent is a person who is authorised to act as an agent for the sale of land or the valuation, management, or lease of property.

FICA

The Financial Intelligence Centre Act, 2001 was formed to regulate money laundering and requires valid information to be presented to the Bank.

Home Loan

An agreement between the Buyer and a Bank, where the Bank lends the Buyer money in order to purchase property.

Home owners Insurance

An insurance policy that covers your house (structure and property) in the event of damage or loss.

Instalment Amount

The monthly amount paid to the lender as part of the total home loan amount. Instalments run for the entire duration of the agreed term.

Interest Rate

A percentage interest is added onto the amount of money borrowed from a Bank. This amount is fixed for a period and is based on the amount of money borrowed.

Mortgage Broker

Someone who acts as an intermediary between the Buyer and a Bank, for the purposes of arranging a home loan.

Municipal Rates

Taxes paid to the municipality by property owners.

Net Income

This is your yearly income after taxes.

Occupational Rent

A charge applied to the Seller for occupying the property after registration has taken place or to the Buyer for occupying the property before the registration has taken place.

Offer to Purchase

A legally binding document signed by the Buyer and Seller stating the agreement of the sale and its conditions.

Payslip

A document issued on a monthly basis by your employer as proof of your monthly income.

Property Transfer

When ownership of a property legally changes hands from Seller to Buyer, through registration of the property at the Deeds Office.

Purchase Price

The amount paid for the purchase of a property as set out in the Offer to Purchase agreement. This can be worked out retroactively by using a bond calculator.

Qualified Buyer

Someone who meets a Bank’s requirements of affordability and has qualified for a home loan.

Registering Attorney

The Attorney who attends to the registration of the new bond into the name of the Buyer.

Repayment Term

The number of months allocated to pay off a home loan. The maximum repayment term is 30 years. This can be easily calculated with a bond calculator.

Sectional Title

An entire property of flats or townhouses. The property is divided into individual units and sold separately and runs under a Body Corporate.

Subject to Sale

When a sale of a house becomes binding and unconditional then certain conditions are met, such as bond approval.

Title Deed

The legal document which states ownership of a property. The Title Deed is filed at the Deeds Office and contains details of the property.

Utilities

Services provided by the government for your use at home. Utilities include: water, electricity, telephone service and other essentials.

Voetstoots

Refers to a property sold “as is”. After a sale of property, a Seller is not liable for defects following a reasonable inspection of the property.

Print this list out and keep it handy when those terms start flying around that you’re not too familiar with. Remember to refer to your bond calculator as the figures start coming at you. With both your bond calculator and your glossary of terms you’re all set to go house hunting.

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Bond Affordabilty and the Hoops Banks make us jump through

Your Bond Affordability ‘Score’Picture

Is there such a thing? With research it seems that between the banks the variables are many and the absolutes are few. After working out what you can afford with your bond calculator one will have to take your chances depending very much on the bank.

ABSA Home loans singled out ‘Affordability’ as having become a key factor in the South African housing market recently. You may know what you can afford having used a bond calculator to work out what asking price you can afford but the banks have varying, between banks, criteria on which to base its decision to grant you a bond.

Affordability is a key factor in the South African housing market and banks’ lending criteria has tightened up, but in some instances applicants are reportedly still able to qualify for 100 per cent loans.

ABSA has been quoted in a previous review that the focus of demand for supply of housing is set to be on smaller-sized and higher density housing because affordability is set to remain a key factor into the future.

ABSA also said it still lends up to 100 per cent home loans to would-be home buyers even in this buyers’ market but only if they qualify.

In line with the National Credit Act, the bank’s lending criterion is informed by the customer’s affordability and credit worthiness and taking into consideration some factors as discussed below.

Bond Assessment Criteria

When a local property website asked the four major banks what the criteria are for assessing a home loan application the summarised replies were:

Standard Bank: a loan–to-value criterion plays a major role in what the customer can qualify for; documents required depend on whether the applicant is employed or self-employed, has a Standard Bank transactional relationship or not and if they earn a fixed or variable income.

Generally, document requirements are less onerous for customers that have a transaction account i.e. Employed SBSA applicant with fixed income would need to provide the latest payslip and an offer to purchase.

A non Standard Bank customer with fixed income would need to provide the latest payslip together with the latest three months consecutive bank statement reflecting three months’ salary deposits.

Nedbank:  minimum income (single or joint gross monthly income) + R2500- minimum loan amount R100 000. A maximum repayment term of 25 years. An acceptable credit record. Payment by debit order. The property must be in good condition and acceptable to the bank

FNB:  latest copy of applicant’s payslip. A bank statement. Self-employed applicants will need to supply a signed personal statement of assets and liabilities as well as a balance sheet and financial statement for the business from which income is derived. A commission earner will be required to submit the last six months commission earnings statement.

ABSA:  Current debt repayment behaviour; credit history; affordability; net disposable income; household finances; residential property cycle and prospects; prevailing economic cycle; consumer risk profile.

Preapproval of Bonds

When asked if the bank would give pre-approval of a bond with no upfront fees: this could be worked out and adjusted using a bond calculator.

Standard Bank: A customer can apply for a pledge via the internet or through the Standard Bank Call Centre. No fees are charged for pre-approvals.

Nedbank: Does not grant pre-approvals. Customers can read through the information on the bank’s website to determine what they can afford through various calculations and thereafter use a bond calculator.

FNB: It is called a “Passport to Purchase” where no upfront fees are levied and this pre-qualification is valid for 90 days.

ABSA: According to the National Credit Act, financial services providers are prohibited from granting pre-approved finance to customers.

Sceptics may reflect that this is hardly a scientific process but at the end of the day banks are conservative for a reason. What’s best, is to ensure you have jumped through all the necessary bureaucratic hoops with the bank of your choice and ensure you are taking advantage of a bond calculator to keep the correct figures at hand.

 

 

Ten practices of picky property purchasers

So you want to buy a house. House hunting is all about the viewing. Here’s how to make sure a property is really worth your money.Picture

Upon determining your bond repayments with your bond calculator it’s time to start looking around. Looking around a property that could become your new home is exciting, but you can’t afford to get swept up in fantasy, sales pitch and the pressure to purchase…

Failure to use the viewing time effectively and you could miss something that ends up costing you dearly.

Here are ten tips that will help you see what’s really up for sale behind the agent’s sales talk.

1 View during the day

Make sure to view the property at least once in daylight so that you can see it with clarity. If your first viewing was unavoidably at night, push for another viewing in daylight before making an offer. Similarly if you have viewed the property during the day and want a better idea of what the area is like in the evening, you could arrange a second viewing later in the day.

This will give you an idea of how light the property is at different times of the day, how loud the neighbours are and what the neighbourhood is like once evening sets in.

2 View with company

The more pairs of eyes you have looking around a property the better.

If you attend a viewing alone then it’s likely you will be lead around by an agent who do their best to highlight the positive features of the property, not giving you the chance to look closely.

So even if you will be living alone, take a friend or relative to view the property with you as they may spot something you miss.

3 Examine the exterior.

It is easy to get caught up examining the inside of a property and forget to take a thorough look at the outside.

Checking the exterior and the roof as well as the pipes and drainage is essential; if there are any problems they could be expensive to fix.

If any work needs doing you may either want to arrange a professional survey if you are looking to buy, or look for a rental property elsewhere.

4 Take your time

The last thing you want is to have to rush around the property because you have another appointment or viewing booked.

You should leave at least 20-30 minutes to view the inside of a property and a further 20-30 minutes to check the outside and the local neighbourhood.

If you are being shown around by an agent or the owner, try and view the property at your own pace and avoid being rushed through.

 

5 Consider room and space

An empty flat or house will always look bigger than a fully furnished property, so you need to check that there really is enough room.

Check what the property offers in terms of storage space. For instance, are there built in wardrobes in the bedrooms, or would you need to have space for a wardrobe in each room?

Would your bed, couch, dining table and drawers all fit comfortably or would you be blocking plugs and windows and so on?

In the kitchen, are the white goods built in or would you need to use vital space for a fridge, washing machine or dishwasher? What about the cupboard space, is it expansive enough to fit all of your pots, pans and crockery?

6 Arrange many viewings

Making sure you go back to view a property after the first look can help make sure that you don’t miss any potential issues and ensures that your know exactly what you’re getting for your money.

It also gives you the chance to ask the agent or owner any specific questions that you have after looking around the first time and to negotiate on price if needs be.

7 Take pictures

Taking lots of photos, or even a video, is a great way of ensuring that should you miss something you then have a personal record of the viewing to look back at.

It also means that you can look back at the property and compare it to others you’ve seen in your own time without the pressure of going around with a letting or estate agent.

However, make sure to ask permission before you start snapping away. Although letting agents and estate agents will not usually have an issue with you taking photos, if the owner still lives in the property it is only polite to check.

8 Watch out for damp

Damp can be serious concern regardless of whether you are looking to buy or rent a property, simply because it may illustrate more fundamental problems.

Signs of damp include a musty smell, peeling wallpaper or bubbling paint and mould or dark residue on the walls and ceiling.

If you suspect that the property suffers from damp it need not be a deal breaker but should definitely be an issue you raise with the agent and investigate further.

Any cracks or signs of subsidence may indicate a much more serious problem with the property so make sure you look out for these too.

 

9 Examine everything

When you are looking around a flat or house, don’t be afraid to test the fittings and fixtures.

Check that the windows open easily and that there is suitable water pressure throughout the property by testing the showers and taps. You are also within your rights to check things like the level of loft insulation, the wiring and electrics during a viewing and it’s a good idea to do so.

Although you may feel awkward testing things in this way, any issues you spot at viewing can either be fixed before you move in or be used to negotiate a reduction in price.

10 Ask the hard questions

Don’t be afraid to ask questions, whether you are looking to rent or buy, you will be parting with a significant sum of money and you are well within your rights to have any of your questions answered. For example ask about rates, previous renovations, traffic, neighbours, burglaries, state of roof, proximity of schools, state of geyser, the reason why the property is on the market, were there tenants before and so on.

Negotiating a Better Price for Your New Home

Here are four important considerations when negotiating the asking price of your prospective home so you can bring down the monthly repayments you calculated with your bond calculator.Picture

Probably the biggest purchase you’re likely to make is a house. So bringing down the asking price even a couple of per cent will save you thousands of Rands.

Here are our 4 easy methods of negotiating down the price of the property you have your eye on.

  1. Start low

It may be that you have to put in an offer on the property before you get any reaction from the seller.

If this is the case put in an offer below what you worked out using your bond calculator, this will then allow you to up your offer at a later date which will then seem more attractive to the seller.

It’s also wise to explain your offer; state exactly what work the house needs and how much it will cost, or that other properties of a higher standard went for less than the listed price nearby.

Explaining your offer in this way not only makes the seller think twice about their valuation but also makes you appear serious about purchasing the property by showing that you haven’t simply plucked a number out of mid air.

2.View thoroughly

In reality you can often tell quite quickly if you like a property or whether you don’t ever want to set foot in the house again. However, if you are interested you shouldn’t get swept away with the excitement of finding somewhere you’d want to live.

Any flaws or work that need doing represent an opportunity to knock some money off your offer price. So taking the time to thoroughly inspect the property, inside and out, could give you the ammunition you need to negotiate.

Estimate the cost of any work required and take this amount off your offer price – you’ll be justified in doing so.

You should also find out whether there are likely to be any major expenses in the near future – ask when the geyser was last serviced and when the roof was last repaired (or resurfaced if it’s flat). Again, if work is likely to be needed in the near future you have a legitimate reason to go in with a lower price.

You should also consider whether parts of the property need redecorating and how much this might cost and factor this into your negotiations.

  1. Ask for extras

If the person selling the house isn’t willing to budge on price then you may want to negotiate over the additional costs you face when buying.

It’s estimated that the cost of actually purchasing a house can easily exceed £5,000 when you consider legal fees, valuations fees and surveys.

Asking that the seller contribute towards these fees could be a good way to cut the cost of purchasing the property and save hundreds or possibly thousands of Rands – even if you don’t manage a reduction in that actual house price.

  1. Do your research

You’ve already done some research by using your bond calculator, now consider researching the  ‘going rate’ for other properties in the same area.

If you can argue that the asking price is above what similar properties sold for nearby, you will have a strong case for a reduction in price.

You should also check the asking price of other properties currently on the market and see what they offer in terms of space, features and presentation.

  • If other properties are of a similar standard but the asking price is higher, then the owners of the property you’re looking at could be struggling, or in a hurry to sell – both of which could work in your favour when negotiating over the price.
  • If other properties are of a higher standard but going for an equal or lower price you need to question whether they’d be a better investment than the one you’re currently looking at.
  • If other properties are of a similar standard but are on the market for less than the property you want to buy, you can use this to your negotiating advantage.

If you think the property is overpriced mention it to the estate agent – they may feed this back to the owners who could drop the price of their own accord.

Ask the agent how many viewings the property has had and whether it’s received any previous offers. If there hasn’t been a great deal of interest, it gives you licence to go in with a lower bid when you start negotiating.

If you discover that the property has had lots of viewings but no offers then quiz the estate agent about why they think this is the case and use this knowledge to your advantage.

You could also ask for certain things, such as curtains and appliances to be left by the current owners to reduce your set up costs even further.

After you’ve gone to the trouble of using a bond calculator to work out your monthly repayments that price you can afford, then you’ve shown intent and are ready to negotiate. Be strong and don’t back down – remember you’re the customer and you hold most of the cards. Don’t be afraid to consider the points above when proceeding with your house purchase enquiries.

George Clooney

– for Le Kap Magazine by Matthew Campaigne-Scott

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If we asked you to identify a celebrity who started out selling ladies shoes, whose face was paralysed with Bell’s palsy in high school, dropped out of two Universities, whose mother was a beauty queen and whose maternal great-great-great-great-grandmother, was the half-sister of Nancy Lincoln, mother of President Abraham Lincoln you may be a tad flummoxed.

George Clooney, it turns out, is a wealth of fascinating trivia: Born in Lexington, Kentucky he is now a house-hold name, candid pictures of whom fetch a fortune. Women, and even men have been feasting their eyes over this man’s man ever since the days of his appearance on Television’s medical drama ER, although he has been treading the boards since 1978.

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Yep, George wasn’t always so suave.

Many may not know that Clooney has a dog he named Einstein. “Einstein has been studying acting for many years now as you can imagine. I think he’s concerned that I am in his shot and he thinks that perhaps you can airbrush me out if it. That’s his hope.” said Clooney in a photo shoot with Einstein for Omega where he sports an OMEGA Seamaster Aqua Terra wristwatch. He is currently an OMEGA brand ambassador.

Going back in time George has had some roles he would prefer us to forget: everything from a simpering supporting role on the trashy sitcom Roseanne, a down to earth handy man on the more respectable: The Facts of Life and a role on a sitcom that took a nasty dive with the prophetic name of E/R.  (Not to be confused with ER!) George has certainly paid his dues.

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As Doug Ross in ER

Then came along that famous episode of ER, one of the most viewed on US TV history, where George’s character Doug Ross emerges from a flooded storm-water drain carrying a hypothermic boy under the glare of lights, cameras and howling helicopter blades over head. Fellow ER actress Gloria Ruben is quoted as saying that every women watching was wringing her hands, crying out: “oh George, SAVE ME, let it be me!” He received two Emmy Award nominations for Outstanding Lead Actor In A Drama Series in both 1995 and 1996 as well as three Golden Globe Award nominations for Best Actor – Television Series Drama in 1995, 1996, and 1997 for his role in ER.

It’s been happy hunting for George since then – in more ways than one. Scripts began falling into his lap, most famously and lucratively the Ocean’s Eleven trilogy. He got started in movies with some not so Thespian: Return of the Killer Tomatoes (1988) to the commercially pleasing Batman and Robin in 1997 – a movie that he openly advises people not to watch. In later years he displayed his maturity as an actor in movies like the critically acclaimed war satire: Three Kings.

The Facts of Life

…and with Mullet in THE FACTS OF LIFE George Clooney as George Burnett — Photo by: Ron Tom/NBCU Photo Bank

In 2002 George decided it was time to sit on the opposite side of the camera as director of the movies Confessions of a Dangerous Mind and the political drama Ides of March. Last year he directed/produced and starred in The Monuments of Men which grossed $155 million at the box office, receiving mixed reviews.

The 2000’s through to the present have been kind to George.  He is the only person ever to be nominated for Academy Awards in six categories. He received Best Actor in a supporting role for Syriana, a 2005 geopolitical thriller loosely based on the Robert Baer’s work See No Evil. Then in 2012, as producer received Best Picture Oscar for Argo -the political thriller about the iconic Us embassy in Tehran debacle and it’s political fallout . Both very challenging movies showing a depth to George Clooney’s greater than just charm and good looks.  Other Oscar nominations were for Best Director for Good Night , and Good Luck as well as Best Original Screenplay. He was nominated for Best Actor in Michael Clayton’s, Up In the Air and The descendants. He was also nominated for Best adapted Screenplay for the Ides of March.

George-Clooney the wise

The world’s got problems, but I can handle them.

As if this wasn’t enough there is a great deal more to George Clooney than just the movie industry. The CFR or Council for Foreign relations is an august body that influences US foreign policy. It’s fellows include CIA directors bankers, lawyers and senior politicians and one George Clooney. They have clearly had their eye on George and his political activities.

George Clooney has been vocal about a few issues. He has also made it clear that he was anti the War in Iraq and pro Barak Obama and pro Gay Rights (for example Clooney took an auction winner out to lunch to benefit the Gay, Lesbian and Straight Education Network (GLSEN)in September 2001.)

George has found his political voice with the Not On Our Watch Project, a body that was co-founded with Matt Damon, Brad Pitt, David Pressman, and Don Cheadle. In this capacity he has raised donations for the 2010 Haiti Earth Quake victims and has been on a fact- finding mission to Chad and drawn world attention to human rights violations by Burma’s (Myanmar) brutal military regime. The organisation says on their website “Our mission is to focus global attention and resources towards putting an end to mass atrocities around the world”. [1]

Clooney and human rights activist, John Prendergastco initiated the Satellite Sentinel Project (SSP), after an October 2010 trip to South Sudan. SSP monitors armed activity for signs of renewed civil war between Sudan and South Sudan, and to detect and deter mass atrocities there.[2]

Clooney spoke at a Save Darfur rally in Washington, D,C, when he and his father returned from Darfur after having made a  documentary, “A Journey to Darfur.” exposing the Darfur refugee crisis.

George the activist

George the Activist

In March 2007 Clooney sent an open letter to German Chancellor Angela Merkel calling on her to use her influence with the European Union to take “Decisive action in Darfur.” Also in 2007 he narrated and was co-executive producer of the 2007 documentary Sand and Sorrow. Clooney appeared in the documentary Darfur Now, with the view to activating people the world over to help stop the human rights abuses in Darfur.

Clooney and Don Cheadle received the Summit peace award from the Noble Peace prize Laureates in Rome in December 2007. But Clooney expressed how much he felt his and other’s efforts were for naught in his acceptance speech:  “Don and I … stand here before you as failures. The simple truth is that when it comes to the atrocities in Darfur … those people are not better off now than they were years ago.[3]

In March 2012, he whet his theatre acting appetite by starring with actors Martin Sheen and Brad Pitt in a performance of Dustin Lance Black’s play, 8, a re-enactment of the US trial that overturned California’s ban on same-sex marriage. The production raised money for the American Foundation for Equal Rights.  In the same month Clooney was arrested for civil disobedience during a protest outside the Sudanese Embassy in Washington, D.C. The man gets around.

It’s no wonder  George Clooney was included on Time Magazine’s top 100 “Most Influential People in the world.”

Speaking of getting around, George has had his fair share of exotic beauties on his arm, from the talented Talia Balsam and Italian stunner Elisabetta Canalis to popular actresses Kirsta Allen and Renee Zellweger. But 53 year old George has shown his class and his pecking order by landing 37 year old British-Lebanese human rights lawyer Amal Alamuddin. They recently did a ‘royal tour’ of the Italian countryside visiting the Chianti Hills on a vintage Vespa Piaggio. George, who has a passion for motorcycles as well as beautiful women, took his bride for further tours on an assortment of bikes throughout Italy last month.

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Leisure time

But movies is what most of us love about George, so we look forward to his latest offerings.

This year saw the launch of a science fiction adventure: Tomorrowland. The movie is all about memory, destiny and time, so he appropriately dons a masterpiece of retro timekeeping: the vintage 1958 Omega Automatic Chromometer in his role as Frank Walker. Regarding time, Clooney’s character says: “With every second that ticks by, the future is running out.” Profound words from the man who’s made good use of his time.

What does George have in store for us in the future? He is currently working on two productions: a comedy with Josh Brolin, Channing Tatum, Tilda Swinton, Alden Ehrenreich, and Ralph Fiennes called Hail Caesar. He has also teamed up with Jodie Foster  and Julia Roberts to make a thriller called Money Monster. You can’t keep a good man down. So George continues to do what he is arguably best at, making movies and keeping us entertained.

View the article with vivid and unique pictures at Le Kap online magazine. http://www.lemagpublications.com/LeKap5/LeKap5.html

Urbanisation: slower than expected, but no room for complacency.

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Formal urbanisation: Durban CBD

Over a hundred Years ago, it’s estimated that 95% of people living south of the Sahara were engaged in cattle nomadism, hunting & gathering, farming and fishing, leaving 5% of Africa’s population in urban settlements.  Prior to the growth of independence movements in the 1950s, 15% had become urbanised. According to UN figures of 2002 that increased to 37.2 with a projection of approximately 3.5% per annum the figure will look more like 45.3% by this year.

There has been a mixture of dread and concern both politically and in sociological circles as to the outcome of the expected growth figures. Will Africa’s cities cope given that they have neither been built for such growth nor seem capable of accommodating increased infrastructure even if the funds were available?

So what do we make of some of the talk in research circles that urban populations are growing slower than has been projected? In South Africa: Durban and Johannesburg have been bracing themselves for a tsunami of rural migrants only to find that there has been nothing like the rate of growth expected.

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Informal urbanisation: Durban Informal Settlement

The late 80’s saw the scrapping of the Group Area’s act and the pass laws in general. People were allowed freedom of movement overnight. There was huge concern about cities becoming swamped. Johannesburg and other cities certainly have grown but not to the extent predicted while others haven’t at all.

In a paper published on the UN’s humanitarian affairs website IRINNEWS.org it is opined that with little access to the formal job market, most rural people lack the resources to live in cities for long periods. They often maintain homes and families in rural areas and return there for marriages, burials and when they fall on hard times.

It seems this ‘circular migration’ is muddling the conventional assumption that Africa’s urbanizing so quickly. Based on latest census material there are more and more countries ‘urbanising‘ this way. There are also more countries that are showing evidence of de-urbanisation.

In a paper released by the Africa Research Institute in February, researcher Deborah Potts, a reader in human geography at King’s College London, makes the case that the high standard of living and poor employment opportunities in African cities has created an air of economic insecurity in urban areas. The gap between rural and urban living standards has narrowed in some cases not making it worthwhile to venture into towns.

In South Africa for example Social grants for the elderly, children and the disabled can support a family living in a rural area where the cost of living is comparatively low. This has even kindled the growth of cash economies in some areas.

Then there’s what’s being termed ‘hidden migration’. It seems that many households have multiple locations given that some family members live in informal settlements and others at a rural location and there is movement between them. People keep moving until they find a reasonable standard of living.

South Africa’s  Independent Electoral Commission uncovers a very mobile population, “People are drawn to areas of greater economic opportunity, but also where infrastructure and housing is provided”  says the commission.

Fears about urbanization can hardly be dismissed given that overpopulation has played a major role in the lack of basic services, high unemployment and a general sense of hopelessness and political dissatisfaction. High crime and service delivery protests are a worrying knock-on effect.

Interestingly there are other dynamics at play elsewhere in Africa. Local traditional authorities in some countries provide the stability of access to land. In such communities people are at least assured of the opportunity to grow their own food for the extended family.

An example cited by Potts is Malawi, a profoundly rural country. Due to the lack of jobs and the high cost of living in urban areas people don’t settle in the towns but rather engage in very basic subsistence farming in the rural areas.  Some remain mobile and move from place to place traveling, moving with the food as it were.

None of this suggests that sub-Saharan African villages and cities are dwindling. The urban population continues to increase, however so does the rural population. There is still a general move towards urban life, but it is a slow shift, not a tsunami.

Eduardo Moreno, head of the Cities Programme at UN-Habitat, says “It is very clear that urbanization is slowing down, and African cities are not growing as fast as they were 10 or 15 years ago. But when you compare it with Asia or Latin America, Africa is still experiencing the highest rate of urbanization of the entire developing world.”

The warning in all this, is not to become complacent. Although the floodgates haven’t opened and the cities haven’t been swamped to the extent anticipated, negligence of the country’s urban poor would be huge mistake. Expectations of those who seek better lives in the cities and towns have been largely dashed. People with nothing to lose are a powder keg waiting to explode.

This isn’t to be melodramatic; civil disobedience around South Africa is arguably at an all-time high.  But no country in history has been lifted out of poverty by remaining rural. China, in its five-year plans says that urbanization is its driver of development.

A hiatus in the urban growth rate should, if anything, give those in authority a moment to catch their breath to deal with maladministration and corruption so that improving infrastructure and creating jobs can be brought up to speed. If not we will reap the urban whirl wind originally feared.

On-shoring in the USA with notes for SA

onshoring3Onshoring is seeing a resurgence in manufacturing in the United States. The knock on effect for industrial and commercial real estate is debatable. What lessons, if any, are there for the South African market?

Firms like Ford, Carlisle Tire and Wheel Company, Otis Elevators, General Electric and Whirlpool have relocated some jobs back to the U.S. or opted to upgrade existing U.S. plants rather than resort to off-shore operations. This is in the wake of the World Financial Crisis.

There is some political incentive; it may be the patriotic thing to keep manufacturing plants at home. But in the end it’s the big buck that cracks the whip.  Master Lock a world player in the manufacture of security products, has brought over one hundred jobs home that had been previously off-shored.

US President Barak Obama used the ‘on-shoring’ of the Master Lock factory in Milwaukee to highlight the Democrats Blueprint for an America Built to Last. The ‘blueprint’ is essentially an incentive scheme for the on-going creation of manufacturing jobs in the U.S. Coupled with this is the removal of deductions for offshoring jobs overseas. The political message is clear.

Heavy equipment manufacturer Caterpillar is opening a giant facility in Victoria, Texas, in the process of shifting production from Japan back to the U.S. In February, the firm announced it would also shutter a 62-year-old plant in London, Ontario – Canada that makes locomotives and move production to Muncie, Indiana.  Jumping on the bandwagon is Japanese carmaker Honda which is investing $98 million in its largest vehicle engine plant in Anna, Ohio. A significant number of firms have moved some jobs back to the U.S. or opted to upgrade U.S. plants rather than resort to off-shore operations. So there is significant movement on the manufacturing landscape.

In some cases, firms are actually reopening mothballed factories. In others, firms surveying the landscape have opted to open plants in states within the U.S. with the lowest labour costs and unionization rates. Something South African corporates wouldn’t be able relate to given the uniformity of unionisation across the country’s provinces.

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In South Africa labour remains arguably at acceptable levels in the manufacturing industry – for example we aren’t seeing PE’s motor manufacturing plants moving to Botswana due to unmanageable wage demands. South Africa’s Chemicals and the Agriprocessing industries are geographically anchored and aren’t able to be moved offshore. So labour in those industries is unlikely to fear offshoring any time soon.

Onshoring in the US though has contributed to a steady revival in manufacturing jobs within the U.S. since mid-2010. Employment in the sector is expanding at an annual pace of approximately two per cent. But manufacturing as a percentage of the U.S. workforce will continue to fair lower down the scale since higher productivity is one of the draw cards for Onshoring.

Higher productivity means fewer workers producing the same amount of goods. Without appearing cynical, it must be said that this would not bode well with labour in South Africa since it would seem more desirable to have greater numbers employed to produce the same amount of goods for the sake of employment figures. But since there is no such incentive in South Africa onshoring is not a relevant dynamic in the economy for that reason. There is also the migrant labour dynamic to consider.

But there are lessons to be learned from ‘the equation’ used by U.S. corporates when it comes to deciding on the location of new factories. Factors weighed include: shipping costs and real estate; infrastructure and supply chain competence; cost, quality and obtainability of labour; proximity to suppliers and customers; taxes and incentives.

Previously, cheap labour and shipping costs clinched it for China and other emerging countries. However the labour market in those same countries is not putting up with the pay and conditions heretofore endured. Labour costs in China for example have risen on average almost 20 per cent per year over recent years. The result is that there’s a higher premium to pay. Similarly volatile oil prices are being felt on the transportation leg. Some estimates have transportation rising 20 to 25 per cent in the next three years!

But back to labour, in the U.S. over the previous four decades, productivity has hit the roof. Output per worker in the manufacturing sector has grown 136 per cent since 1987. According to William Strauss, senior economist at the Federal Reserve Bank of Chicago, what it took 1,000 workers to do in 1960 requires only 184 workers today. In 2005 goods produced in China and shipped to the U.S. were 22 per cent cheaper than products made in the United States. By the end of 2008, the price gap had dropped to just 5.5 per cent.

Despite productivity gains, the manufacturing sector has stopped losing jobs, instead there have been gains. Hitting rock bottom at approximately 11.5 million workers in January of 2010, the U.S. market has since added 421,000 new manufacturing jobs. The sector is growing at an average annual rate of about two per cent, the fastest rate of expansion since the mid-1990s.

A lesson for South Africa is that U.S. analysts believe that production never really disappeared. But there are factors that are strengthening it, including a lowering of wages for manufacturing employees. Real hourly wages for U.S. manufacturing employees have remained flat since 1970. In 2000 average wages were $14.35 an hour in 1970 and $14.63 in 2009, according to the U.S.’s Bureau of Labour Statistics. Would S.A. unions put up with that?  Could S.A. workers settle for less for the sake of keeping their jobs and still increase productivity?

Then there’s the issue of what is referred to in the U.S. as ‘right-to-work’. This legislation prohibits agreements between unions and employers to create “closed shops” and limits auto-payment of union dues. Closed shops are workplaces where every employee must belong to the union as a condition of employment. It could be argued that in S.A. the social/political pressure makes it impossible for such legislation to be considered or even at ground level, enacted.

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Currently, 23 U.S. states have some sort of right-to-work laws in place and that’s where the plants are being reopened or built.

The difference in quality of U.S. labour is a factor too. “Many of the manufacturers moving back from Asia and India say the quality control there is atrocious,” says K.C. Conway, executive managing director of market analytics with Colliers International. “We have quality control, a well-trained work force. It’s much more robust here than in Asia.” South African manufacturing labour quality seems to vary in reputation across the board but excels in the automotive and agriprocessing industries for example. There doesn’t seem much to tempt local manufacturers to move to Lesotho or Swaziland for example since workers from those and other Southern African countries populate our workforce anyway.

Both the U.S.’s President Obama and S.A.’s President Zuma have spoken much about the improvement of infrastructure. In President Zuma’s case there has been large allocations to infrastructural improvement in this year’s budget. Theoretically this should reduce the cost of moving goods around the country. Obama has proposed $476 billion through 2018 on highways, bridges and mass transit projects for example.

In overview one school of thought is that U.S. manufacturing has never really gone away. The U.S. produces 18.2 per cent of all goods globally, of course it used to be so much more, and China has surpassed the U.S.  2010 marked the first year since the late 1800s in which the U.S. was not the largest producer. China, with $1.92 trillion in manufacturing output has taken the title.

Along these lines, one is pointed to the fact that although it’s true that the majority of consumer goods are produced in China, the U.S. specialises in heavy machinery and goods that are the product of highly-skilled labour. Automobiles, airplanes, aerospace components and pharmaceuticals are all divisions where the U.S. retains a hefty share of world production.

In the final analysis the assumption we may make is that the U.S. commercial real estate industry should be strengthened by on-shoring though not as dramatically as we may be tempted to conclude. The total industrial market vacancy rate has stood at 9.5 per cent. It declined in every quarter of 2011 and is down a full percentage point from its recessionary peak of 10.5 per cent at the beginning of 2010 the rest is history. For flex space, vacancies are a bit higher—12.6 per cent at the end of the fourth quarter—but there too the rate has declined from a peak of around 14 per cent.  Manufacturing space tends to be very specialized and often manufacturing companies build their own buildings and they don’t need to buy the space that existed previously. The exceptions to this might be smaller secondary and tertiary suppliers that support larger manufacturers. Those kinds of firms tend to locate in flex space.

Although South Africa doesn’t find itself in an on-shoring situation the lessons above remain for us to observe. Manufacturing activity in South Africa rose to a two-year high last quarter, fanning expectations that growth in the economy’s second-biggest sector is gaining impetus. This surpassed those recorded among South Africa’s main trade partners during the same quarter. Manufacturing accounts for 15% of South Africa’s economic output and 13% of formal employment. In the fourth quarter of last year, it recovered from a recession in the previous two quarters, expanding by 4,2%, according to official data. The knock on effect on industrial and commercial property is presumed and likely but can be unreliable and inaccurate to monitor.

Landlords Are Back With a Vengence

shoppingIf anyone thought bricks & mortar retailers were going to lie down in the face of an online invasion they are very much mistaken. Likewise any retail landlord who hasn’t heeded the ‘adapt-or-die’ writing on the wall, is in for a shock.

South Africa’s traditionally big names have learnt to have an online presence to supplement their physical shop experience. Woolworths and Pick n’ Pay have online shops. While Look n’ Listen, for example, has become so integrated online it’s basically a hybrid retailer. Kalahari and Spree remain purely online vendors.

The next phase of integration is being previewed in places like the UK, from whom SA retailers can learn a great deal in this regard.  Enter the “Student Lock in”: some of the UK’s largest shopping centres are using this marketing tool to draw in younger clientele,

Students-from-across-the-north-west-participated-in-a-mock-protest-before-doors-opened-to-the-Lock-In-PRESS-SHOT-670x457After weeks of promotion on social media sites such as Facebook and Twitter, shopping centres close at the normal time, and then reopen from 9pm until 11pm for the ‘Student Lock-in’, only admitting shoppers who can show a valid National Union of Students (NUS) card.  The events are intermittent and planned long in advance.  Special offers, entertainment, food and music all add to a festival atmosphere. One of the UK’s largest shopping centre owners is  Land Securities(LS). Events like ‘Student Lock-ins’ at LS shopping centres in Cardiff and Dundee have raked in the sales.

Other Student lock-in events revolve around online media promotions of film events. For example Gok Wan’s “How to look Good Naked” was promoted on line and shot at the Hammerson mall, packing in the crowds with retail benefits all round. Combining online promotion and social media with fashion, restaurants and leisure seems to be a way of keeping up with the attraction of online stores. People come to shopping centres for the vibe, to eat and be entertained.

But there’s more: in the US, Land Securities has brought the convenience of online shopping into seven of its malls, where Amazon.com collection lockers have been installed. Customers who cannot be at home, or are ordering things too bulky to fit through a letter box, are sent a code and date to pick up their parcel from the shopping centre. When customers collect in store, or return an item it’s another sales opportunity.

A MasterCard survey indicated that the number of people who make use of mobile phone access and thus using their phones to do online shopping in South Africa has increased hand over fist. Growth of mobile smart phones and iPads allows shoppers to shop anytime or anywhere. This can’t be ignored, so if-you-can’t-beat-‘em-join-‘em. Enter the QR Code.STD

A QR code (or Quick Response code) is a kind of barcode popular due to its large storage capacity and quick readability. QR Codes make it easy for a person to perform a certain action by scanning a code on their smart phone. The use by retailers to market products to consumers is obvious.  Every Smart-phone owner is a potential user. More and more retailers are adding QR codes to their merchandise adding a further dimension to their shopping experience.

qrcode.23545541This allows shoppers to scan products via a QR code reader on their smart phones, and order and pay for the product directly without needing to do the transaction at a point of sale. Of course this is just one of many ways of shopping in a multifaceted shopping experience. Woolworths South Africa made use of this technology during its last big sale earlier in the year. Standard Bank is making big waves with its QR ‘Snap Scan’ for purchasing without cash or card.

Another UK innovation that emerged this year was “click and collect.” Department store House of Fraser moved its pick up facility from the back to the middle of the store reporting that customers are more likely to purchase items in addition to their online purchases they had come to pick-up. Being present meant that online customers are able to try on and exchange goods whilst in the shop.

The concept developed further into House of Fraser “virtual department stores”, a fraction of the size and cdownloadost of a full department store – which can get virtually any products on next day delivery. The stores consist of a customer services area, and many change rooms, making it easy for customers to pick up, try out, pay for or return items.

Innovations like this have brought out a creativity and an aggressive response to the so-called onslaught of on-line shopping, blurring the lines between worlds.

Interestingly there are even online-only and catalogue retailers who have started opening small shops to improve their customers shopping experience and to compete with finer tuned bricks and mortar customer service. What’s certain though is that shopping centre landlords are getting creative, innovative and fighting back by taking on the online retailers at their own game.

Office REITs Recovering

REITSIn the US the latest economic recovery has been very different from previous recoveries for office REITs, as job growth has been lukewarm and didn’t produce the anticipated demand for office space. In its place, tenants are using space more efficiently, so they require less space as their headcount grows. For example, banks, legal entities, consulting firms and accounting companies have all been growing their employee base, but their overall real estate requirements have actually reduced.

During last year, office market fundamentals improved moderately. Overall vacancy dropped to 16.0% from 16.7% a year earlier, and direct asking rents were up 2.2%, according to Cushman and Wakefield. Likewise, office REIT portfolios showed little, if any, improvement in occupancy and rent growth. Due to their high quality assets and professional management, REIT-owned properties started with stronger fundamentals and had less room for improvement.

• S.L. Green (SLG) occupancy for Manhattan properties was 91.7% at year-end 2012 versus 91.5% one year earlier. Its suburban portfolio occupancy was 81.3% in 2012, down from 82.6% in December 2011.

• Total occupancy for Boston Properties (BXP), the largest office REIT, measured 91.4% at year-end 2012. This was down slightly from 91.7% one year earlier. BXP’s CBD properties, with 96.4% occupancy, are performing significantly better than suburban properties, with 83.6% occupancy. (Source: REITCafe)

Limited new construction has helped maintain balance in the office market. Pipelines are growing, though few markets have had strong enough recoveries to rationalize significant office construction. Cushman and Wakefield reported 4 million sqm of new construction underway at year-end 2012. REITs are well positioned to undertake development projects because they can raise inexpensive money on the secondary market or borrow from lenders with confidence in their track records. Some REITs are turning to development because they can achieve better returns than by acquiring existing properties at aggressive price levels.

• Kilroy Realty completed the redevelopment of two projects in Southern California in 2012. Two additional projects totalling 50,000 sqm, which were 70% pre-leased, were close to completion at year end. The company is increasing its presence in the San Francisco Bay Area and has another four buildings totalling 1.4 million square feet under construction.

• Boston Properties is developing eight office projects in New York, DC, San Francisco, and Boston totalling 250,000sqm. The buildings were 66% preleased at year-end 2012. The Company, along with Hines Interests, recently broke ground on the 130 000sqm San Francisco Transbay Terminal Tower, which is scheduled for completion in 2017.

REITs have expanded through acquisitions by taking advantage of the current low borrowing rates. In 2012, Boston Properties acquired four properties totalling 240 000sqm that were 93% leased, while S.L. Green acquired a fee interest in four properties totalling 81,000 sqm that were more than 90% leased. Kilroy acquired 14 buildings totalling 163 000sqm in 2012 and two additional buildings totalling 30,000 sqm located in Seattle in January 2013.

Office REITs have been sturdy so far this year. As a result of high occupancies, the largest REITs have experienced limited improvement in occupancy and rent growth. Like all REITs, across the board, they are continuing to use their balance sheets, taking advantage of low interest rates, to grow their portfolios through acquisitions and to some degree new construction.

Welcome to Matt’s Writing Blog…

Welcome to Matt’s blog. I’m a full time copy writer. I have written for periodicals and websites, composed speeches and sermons and prepared copy for web advertisements and research papers. I can tailor my work according to your needs. I love a challenge and enjoy building work relationships. I hope to hear from you.