Property for Africa – how real estate boom can shape economic development

South Africa is home to 15 million sqm of office space, while the rest of Africa, including North and Sub-Saharan Africa, contains a mere six million sqm, according to a report by Jones Lang Salle.  But this is set to change.

Africa is witnessing a remarkable growth of its city economies, with a rate of urbanisation that in some areas is pushing 9% a year.

The commercial real estate sector in Africa has been described as poised for lift off by expert analysts. But how will the continent capitalise on this sector to ensure that property markets foster economic growth and development?

It is to address this challenge that the Department of Construction Economics and Management  at UCT has partnered with Nedbank Corporate and Investment Banking (NCIB), to form the UCT-Nedbank Urban Real Estate Research Unit under the directorship of Associate Professor Francois Viruly.

The primary source of funding for the Unit is NCIB’s Property Finance business, which has committed ZAR1 million per year to the Unit for the next four years.  With this generous funding, the Unit will develop an interdisciplinary research platform to identify issues within and solutions to urban real estate investment, finance, economics and management problems in Africa.

“The success and long-term sustainability of African cities is a function of vibrant property markets,” explains Viruly.

“It should be founded on an understanding of how these markets function and what they can be expected to deliver.”

The Unit aims to develop a unique research alliance between UCT, industry and society at large to collaborate with public and private sector partners, thereby ensuring a community and industry aligned agenda.

“This engaged research aims to ensure that the property sector is able to play its role in fostering the needs of investors and other stakeholders”, says Viruly.

“There is a growing understanding that the performance of the built environment is not merely the outcome of economic growth, but has a critical role to play in creating the physical and social environment from which economies are able to prosper.

According to Viruly, the risk of letting the African real estate sector boom take place without the accompanying research and understanding of the impacts of property development is huge.

“A great example of this was the 2008 global financial crisis which clearly demonstrated the social risks of an unmanaged property boom.”

A core research team in the Department of Construction Economics and Management which includes Associate Professor Kathy Michell and Rob McGaffin, has already been active in this area.

Research projects under way include an investigation into the challenge of developing high-density affordable housing in the inner-city of Cape Town; the role of property markets in post-conflict countries; and how to leverage technology in the commercial real estate sector.

“Investment in and funding of property ventures and developments necessitate taking a long-term view that is properly informed. The importance of high quality real estate research in investment and financing decisions cannot be understated. Both our association with UCT and commitment to research are consistent with our aspiration to promote thought-leadership in the property industry, explains  Robin Lockhart-Ross, NCIB Property Finance Managing Executive.

“Nedbank’s interest in urban real estate economics extends beyond the pure property aspects. It includes the efficient functioning and sustainable financing of cities, which will fall within the scope of the research Unit. “In NCIB we have a division that provides banking facilities to metropoles and term funding of infrastructural programmes essential to the growth of the urban property sector”, Lockhart-Ross says.

Growth for Cardiff broker

Cardiff-based broker Pure Commercial Finance has grown following a surge in new business in 2015.

The value of finance it has brokered topped pound;90m last year, up 60 per cent on the previous year.

Recent finance deals include the Tramsheds development in Cardiff; Pump House in Barry and the redevelopment of the historic Sunbeam motorcycle factory site in Wolverhampton.

The company has also taken on two new staff, taking its headcount to 11, and moved to a new 2,000 sq ft office at its Llanishen business park base. Office manager Jade Thomas joins Pure after about three years with networking and exhibition company Introbiz while recent graduate Colin Moloney takes on a new role as property finance specialist.

Founder Ben Lloyd said: Jade has already established herself as a key asset to the business, helping to keep communications and information flowing between Pure and our clients.

Colins knowledge and passion for property, coupled with his strong relationships with the financial partners with whom we work has ensured he has quickly become a key member of our team.

Pictured: Ben Lloyd, managing director of Pure Commercial Finance (centre) with new office manager, Jade Thomas and property finance specialist, Colin Moloney

Buy to let demand keeping UK housing market buoyant say surveyors

The UK housing market saw an unseasonal rise in demand in December with anecdotal evidence suggesting this is due to an increase in buy to let investors.

An extra 3% stamp duty levy due to come into force in April which will affect buy to let property and second homes could be behind the lift in demand, says the latest monthly residential report from the Royal Institute of Chartered Surveyors (RICS).

It says that demand for properties reached a three month high in December and the month saw the first rise in new instructions since the beginning of 2015 with anecdotal evidence pointing to a jump in buy to let interest leading this demand.

Since the Chancellor George Osborne announced the extra stamp duty levy in his Autumn Statement last November some 16% more chartered surveyors reported a rise in new buyer enquiries.

lsquo;The housing market has experienced an unusually buoyant December. Those in the industry have been speculating that this is the result of the Chancellors announcement last November, said RICS chief economist Simon Rubinsohn.

lsquo;Potential buy to let investors are looking to pick up properties before the increased stamp duty levy comes into force next April. If that is the case, then we can expect to see the housing market heating up further over the next few months, he explained.

The belief that demand was fuelled by announcements included in the Autumn Statement was further supported by qualitative responses to the survey. lsquo;December was busier than normal as stamp duty changes have brought buyer back to the market, ahead of April, said chartered surveyor Robert Green of Chelsea based estate agent John D Wood amp; Co.

While James McKillop of Knight Frank in London said: lsquo;The 3% Stamp Duty Land Tax (SDLT) proposal in the Autumn Statement has led to more buyers firming up their intention to buy additional residences in my region before April 01.

The RICS report also says that house prices in London, the South East and East Anglia look set to rise by a further 5% per annum in each of the next five years, compared to a UK average of 4.5%, despite offering the poorest value for money in the UK.

Some 62% of respondents said that homes in the South East were either expensive or very expensive given the relative benefits they offered, with 57% of contributors in the capital taking the same view. By way of contrast, 100% of Northern Irish respondents and 92% from the North of England believe that homes in their areas offer fair value for money.

A net balance of 50% of respondents reported that UK house prices had risen since November, with East Anglia and the South East of England witnessing the strongest growth.

Robert Grigg, managing director of Property Finance at Hampshire Trust Bank, said that the report highlights that 2015 was yet another year in which becoming a home owner was out of reach for many.

lsquo;The governments Help To Buy scheme provides some light on the horizon for first time buyers but there remains more that can be done. With demand far outstripping supply, SME house builders are in desperate need of financial support to help resolve Britains housing crisis, he added.

Close Brothers Group plc 24.2% Potential Upside Indicated by Peel Hunt

Close Brothers Group plc using EPIC/TICKER code LON:CBG has had its stock rating noted as ‘Reiterates’ with the recommendation being set at ‘BUY’ this morning by analysts at Peel Hunt. Close Brothers Group plc are listed in the Financials sector within UK Main Market. Peel Hunt have set a target price of 1600 GBX on its stock. This indicates the analyst now believes there is a potential upside of 24.2% from today’s opening price of 1288 GBX. Over the last 30 and 90 trading days the company share price has decreased 54 points and decreased 220 points respectively.

Close Brothers Group plc LON:CBG has a 50 day moving average of 1,377.93 GBX and a 200 Day Moving Average share price is recorded at 1,493.70 GBX. The 52 week high share price is 1707 GBX while the year low stock price is currently 1235 GBX. There are currently 1,647,953,799 shares in issue with the average daily volume traded being 224,630. Market capitalisation for LON:CBG is £1,915,821,974 GBP.

Close Brothers Group plc is a United Kingdom-based merchant banking company. The Company provides lending, deposit taking, wealth management services and securities trading. The Company operates through three divisions: banking, securities and asset management. Its portfolio of solutions include asset finance, broker finance, brewery rentals, asset-based lending, commercial vehicle rentals, invoice finance, motor finance, property finance, savings, treasury, bespoke investment management, self-directed service, employee benefits solutions, leasing and insurance premium finance.

Namibia: NUST Supplementary Exams Cancelled

Exams scheduled for today included modules like Business Ethics, Property Finance, Basic French, Basic Surveying, Cadastral Surveying, Childrens Literature, Contrastive Linguistics and Introduction to Human Resources Management, among others.

It was announced that students who were meant to write these exams will receive an SMS from the school with their rescheduled date.

The fate of other students due to write exams is still unknown.

Loans week January 15-21

Australia syndicated loan volume down 30% year-on-year in 2015

  • BlueScope Steel (Finance) secured an AUD 850 million facility in December 2015 through joint mandated lead arrangers ANZ, Bank of Tokyo-Mitsubishi UFJ, Commonwealth Bank of Australia, Credit Suisse, HSBC, JPMorgan, National Australia Bank, Standard Chartered Bank, Sumitomo Mitsui Banking Corp and Westpac on a club basis. Proceeds are to repay existing debt.
  • The deal was the sixth largest Metal amp; Steel sector facility signed in Asia Pacific (ex Japan) in 2015 while the largest was Tianjin Zhongwang Aluminium Co lsquo;s $3.3 billion fundraising signed on 24 July 2015.
  • Australialoan volume totaled $95.9 billion in 2015, down 30% from the record high of $137.1 billion borrowed in 2014.

Utility amp; Energy sector led India syndicated loan market in 2015

  • Bindu Vayu Urja, Mytrah Vayu (Krishna), Mytrah Vayu (Pennar) and Mytrah Vayu (Manjira) have inked an INR 26.9 billion facility through joint mandated lead arrangers IDFC, Oriental Bank of Commerce and State Bank of India on a club basis. Proceeds are to repay existing debt and for working capital purposes.
  • Utility amp; Energy sector led the India syndicated loan market with $12.7 billion in 2015, accounting for 25% of Indias total loan volume in 2015.
  • Utility amp; Energy was the third largest sector for Asia Pacific (ex Japan) loan market in 2015 with a total of $59.0 billion borrowed via 160 deals, down 4.6% from $61.8 billion in 2014.

Asia Pacific (ex Japan) HKD-denominated syndicated loan at second highest record in 2015

  • Fortune Real Estate Investment Trust has signed a HKD 3.2 billion 5-year term loan through joint mandated lead arrangers Bank of China, China Construction Bank, Credit Agricole CIB, DBS, OCBC and Sumitomo Mitsui Banking Corp on a club basis. The deal is spilt into a HK$1.2 billion portion and a HK$2.0 billion facility. Proceeds are to repay an existing facility signed on 11 April 2011.
  • The largest HKD-denominated syndicated loan in 2015 was CK Property Finances $5.2 billion facility including a HKD 22.4 billion term loan tranche signed on 30 April 2015.
  • Asia Pacific (ex Japan), HKD- denominated syndicated loan volume reached $39.6 billion in 2015, marking the second highest full year level on record behind 2014s record high of $39.8 billion.

Bond joins property team at Blandy & Blandy

Reading law firm Blandy amp; Blandy has expanded its property team with the appointment of Andrew Bond, who joined the firm from Taylor Vinters.

Bond (pictured) has more than 35 years of experience in acting for commercial property investment companies and individuals in the acquisition and disposal of mixed property portfolios nationwide.

He is also involved with the financial structuring of these transactions, including negotiations with funders where appropriate. He has also acted for UK banks in relation to their loans to property investors and institutions.

In addition, Bond has been involved in major infrastructure projects, ranging from developments related to the 2012 Olympic Games which included advising on the new cable car link across the Thames in East London, now known as the Emirates Air Line. He has also advised a major consortium of land owners relating to renewable energy and off-shore wind farms as well as leading educational charitable institutions on property matters.

I am excited to join Blandy amp; Blandy and very much look forward to working with the firm to further develop the UK and international property practice, he said.

Partner and team head Jane Gunnell added: We are delighted to have Andrew on board. He brings significant experience in inward investment and property finance, which will be of great interest and benefit to our clients.

Shares Of Close Brothers Group (LON:CBG) Rated As Buy By Analysts At Numis

Close Brothers Group plc is a United Kingdom-based merchant banking company. The Company provides lending, deposit taking, wealth management services and securities trading. The Company operates through three divisions: banking, which provides a range of lending products to the United Kingdom small and medium enterprises (SMEs), as well as installment payment solutions to the United Kingdom retail borrowers; securities, which provides dealing and execution services to financial institutions through Winterflood, and asset management, which provides wealth management service for individuals, incorporating both financial planning advice and investment management. Its portfolio of solutions include asset finance, broker finance, brewery rentals, asset-based lending, commercial vehicle rentals, invoice finance, motor finance, property finance, savings, treasury, bespoke investment management, self-directed service, employee benefits solutions, leasing and insurance premium finance.

UK house market showed no end of year let up as prices rose 1.7%

House prices in the UK increased by 1.7% in December, showing none of the traditional end of year slowdown, the latest index figures show, prices now set to keep rising in 2016.

The data from UK lender the Halifax, also shows that year on year prices have risen by 9.5% and were up 1.6% quarter on quarter, taking the average price to pound;208,286.

However, the quarterly rate of change remained below 2% for the second successive month and was at its lowest values during 2015. But the annual rate of change remained in the 8% to 10% range throughout the year.

The Halifax report also points out that the monthly house price pattern seen during the second half of 2015 has fluctuated and the quarter on quarter change is a more reliable indicator of the underlying trend.

Newham in London recorded the biggest rise in house prices among major UK towns and cities over the past year, according to separate recent research by the Halifax. The average house price in the London borough was 22% higher than in the previous year and nearly double the 12% increase in London as a whole.

Those areas that have seen the biggest house price increases over the past year are either in outer London or within close commuting distance of the capital.

lsquo;There remains, however, a substantial gap between demand and supply with the latest figures showing a further decline in the number of properties available for sale, said Martin Ellis, Halifax housing economist.

lsquo;This situation is unlikely to change significantly in the short-term, resulting in continuing upward pressure on prices, he added.

According to Rob Weaver, director of Investments at property crowdfunding platform Property Partner, the fact that house price growth was 1.7% in the traditionally quiet month of December underlines the upward pressure on prices caused by the supply and demand imbalance.

lsquo;With such extreme supply side issues, prices look set to move in only one direction throughout 2016. December may well have set a precedent for the year ahead. There will naturally be regional variations throughout the year but overall the trajectory of the UK property market will be upwards, he said.

lsquo;As ever, London and the South East are likely to outperform due to the exaggerated supply issue and overall demographic in that corner of the country. The significant house price growth seen in Newham reinforces how the balance of power in the capital has moved from the centre to the peripheries, where gentrification, regeneration and infrastructure improvements are driving price rises, he explained.

Jonathan Hopper, managing director of Garrington Property Finders, said that overall 2015 ended much as it began with demand outstripping supply in many areas and the resulting tension driving up prices.

But he also pointed out that the start of 2015 was hampered by caution as some sectors of the market paused to see what would happened with the general election, for example, but there are no such reservations this January. lsquo;With interest rates set to stay low for some time and buyer confidence strong, demand continues to surge. By contrast the squeeze on supply is getting worse with new instructions falling for the tenth month in a row in November, he explained.

lsquo;While the Halifax data confirms that in 2015 prices rose fastest in London or within commuting distance of the capital, early activity in 2016 suggests that demand elsewhere is picking up considerable momentum. The South East does not have the monopoly on low supply and as demand becomes broader based, so too should price rises, he added.

The 1.7% rise in December drives homes the extent of the demand from buyers, according to Mark Posniak, managing director of Dragonfly Property Finance.

lsquo;In the current environment, seasonal trends are arguably becoming less significant. Looking into 2016, it#39;s hard to see anything other than a continuation of the current trend of steadily rising prices, especially with interest rate rises in the near future unlikely, he said.

lsquo;The jobs market is strong, consumers are confident and mortgage rates remain very low. Against this backdrop, further price rises are almost inevitable, he added.

Record monthly completions at Dragonfly

Short and medium-term lender, Dragonfly Property Finance, has announced record monthly lending for December 2015.

The specialist residential and commercial lender completed on loans totalling pound;75.22m during the last month of the year, beating its previous high of pound;68.76m in December 2014.

Q4 also saw completions rise 11.4% by value on the equivalent quarter in 2014. In total, the value of completions in 2015 was 6.1% higher than in 2014.

The number of loans completed in 2015 was also higher than the previous year: Dragonfly completed on 949 loans in 2015 compared to 891 in 2014, an increase of 6.5%.