Now is the time for investors and property buyers looking for newly constructed properties to purchase greenfield developments. As from here on out, it is going to get significantly more expensive due to soaring raw material prices. This is according to Chris Renecle, the MD at Renprop, a Johannesburg based developer and rental manager.

“On new builds or future builds there will be an inflationary increase so buy now at current prices. In the coming years, you will be paying significantly inflated prices,” says Renecle. He adds that more and more inflationary pressure is going to be brought to bear on new residential property builds in the future thanks to much higher input costs due to the fallout around the Covid-19 pandemic.

“Construction prices have already increased dramatically with raw materials prices, such as concrete and steel, all on the up. In fact steel prices have gone up some 50% in the last year, despite demand for new builds in the residential market being generally low,” says Renecle.

According to the CRB Commodities Index1, steel rebar prices were 60% higher on May 12, 2021, than they were the same time last year. They were sitting nearly 30% higher on June 27, compared with last year.

American-British information provider, IHS Markit2 predicts that steel prices will remain elevated and supply chain disruptions will delay price declines into the second half of 2021. Steel of course is just one of the raw materials that is expected to come under increasing inflationary pressure.

Renecle says there is also a shortage of bricks, aluminium, and glass because of production slowdowns due to the Covid-19 pandemic. All of this creates a price premium with the costing of all recent development tenders for Renprop being considerably higher than they were previously.

Mining vs construction

Another problem for the construction sector is that it is competing with the mining industry for raw materials such as steel.

The mining sector, which is experiencing a boom at the moment, is snapping up all the available steel that comes to market, while at the same time there has not been enough local steel production to keep up with the demand.

While there has been little activity as far as new developments in the general commercial property sector is concerned, residential real estate is still experiencing pockets of demand. 

“But even though demand isn’t where it should be at the moment, this won’t keep prices from rising,” explains Renecle.

His advice to those wanting to get into the residential market is to do so while they still can. This is particularly true for those wanting to purchase investment properties as expected higher prices are going to eat into any potential future returns.

As it stands, Renecle says the properties that are best placed at the moment to provide strong rental returns for investors are those priced between R800,000 and R1m, particularly two-bedroom, one-bathroom apartments with open planning living.

Renecle says this price range is the sweet spot at the moment, based on rental demand and generally provides the strongest rentals for investors.

New developments

Renprop, which recently introduced a rental guarantee product that delivers an 8% net return to investors that beats money markets, says there is healthy demand at two of its new developments, which are both in the R800,000 to R1m price range.

These include Fern Valley Apartments in Ferndale, which borders Bryanston, where two-bedroom units are selling from R799,000 and Brooke Manor in Rivonia, where the group is selling two-bedroom units from R979,000.

“Both new developments have rental guarantees in place, which offer comfort to investors in difficult times. This means the developer guarantees a rental income for an investor buying a property. Typically this is set between 6-12 months depending on the value of the property and mitigates the risk for investors wanting to enter the buy to let market.  At the same time investors do not have the hassle of finding their own tenants with Renprop securing them and making sure investors earn rental income from day one after transfer,” concludes Renecle.

References:

1. https://tradingeconomics.com/commodity/steel
2. https://ihsmarkit.com/solutions/steel-forecast.html

Kigali, Lusaka and Dar es Salaam are open for business and are showcasing their future land and development plans at the African Real Estate Summit in Cape Town from 2-3 November 2016.

“We passionately believe that Africa is a continent of opportunity. With improving economies, rising populations, rapid rates of urbanisation and burgeoning middle classes, some African cities are expected to grow between 70-100% in the next 15 years.”  This is according to Mr Jean-Pierre Elong Mbassi, Secretary General of the United Cities and Local Governments of Africa (UCLG).

The UCLG Africa is the patron of the upcoming African Real Estate Summit in Cape Town - an international platform that will bring together the full spectrum of the continent’s real estate sector. The summit will assist African cities and governments in securing new international investment for economic development based around commercial real estate and infrastructure projects that will contribute to Urban Development Plans (UPDs).

Mr Mbassi adds: “it is our hope that the African Real Estate Summit can help African cities and local governments highlight the need for quality commercial and residential real estate that this growth creates. And in turn generate the partnerships and investments from investor groups, developers and operators to deliver on this worthwhile opportunity”.

The summit will provide an invaluable opportunity for investors, developers, landowners and the cities themselves to conduct business, sign contracts and develop the future cities of Africa. Alongside the Urban Development Plan City Showcase sessions, the two-day high-level conference will also offer private companies case studies and practical guidance on how to do business in new markets.

Leading African cities
The African Real Estate Summit has invited some of the top cities in Africa to showcase their UDPs in the form of models or presentations. This will allow for delegates and exhibitors to understand the future plans of developing cities and build business relationships with key city officials including: city managers, city mayors, city council members, town planners, town clerks, district officials and city and finance directors amongst others.

Some of the development opportunities to be showcased are in Lusaka, Kigali and Kigamboni in Dar es Salaam:

* The City of Lusaka’s vision is of an ECHO Garden City by providing a world class and competitive business and living environment by the year 2030. Lusaka will showcase the following urban developments and infrastructure projects:

• Chibolya Urban Renewal
• Grade Separation Junction improvement
• Dual Central Business District Development
• Industrial Parks Development

* The Rwandan capital of Kigali says its vision is to become: ‘The Centre of  Urban Excellence in Africa’ and will be showcasing:

• Nyarugenge: ‘‘The Green Financial Hub and vibrant Growth Centre of Kigali”
• Gasabo: ‘‘Diverse Employment Hub and Cultural Heartland of Kigali”
• Kicukiro: ‘‘Knowledge Hub and Green Gateway of Kigali”

* Tanzania’s capital Dar es Salaam will be showcasing the Kigamboni New City Master Plan, including residential, commercial, trade and business, industrial, educational, and tourism facilities.

The African Real Estate Summit is organised by Spintelligent, leading Cape Town-based trade exhibition and conference organiser, and the African office of Clarion Events Ltd, based in the UK. Spintelligent is well known for organising exhibitions and conferences across the continent in the infrastructure, energy, mining, agriculture and education sectors. Longstanding flagship events by Spintelligent include African Utility Week, East African Power Industry Convention (EAPIC), West African Power Industry Convention (WAPIC), Agritech Expo, DRC Mining Week and EduWeek.

UCGL Africa
The UCLG AFRICA is the umbrella organisation and the united voice and representative of local government in Africa. It is an institution that gathers 40 national associations of local governments from all regions of Africa as well as the 2000 cities that have more than 100.000 inhabitants. Therefore UCLG AFRICA represents nearly 350 million Africans citizens.

Dates for African Real Estate Summit 2016:
Showcase and conference: 2-3 November 2016
Location: CTICC, Cape Town, South Africa

Website: http://www.african-real-estate-summit.com/
Twitter: https://twitter.com/ARES_Summit
Linkedin: African Real Estate Summit

Media contact:
Senior communications manager:  Annemarie Roodbol
Telephone:  +27 21 700 3558
Mobile:  +27 82 562 7844
Email:  This email address is being protected from spambots. You need JavaScript enabled to view it.

“Exciting to see that intra-African investment is gaining momentum”

“Investing in the power sector in Africa can be very lucrative and we have the success stories to prove it”, says Evan Schiff, event director of African Utility Week, taking place in Cape Town from 12-14 May. During the largest annual power and water conference and expo on the continent, a high-level Finance & Investment Forum will specifically focus on project finance, risk management, IPPs and case studies.

Says Evan Schiff: “$42 billion a year will be required to meet Africa’s energy demand by 2040, including a private-sector financing increase of up to ten times the current levels. In order to achieve this governments and business must work together and fresh approaches will be vital.”

He continues: “private equity fund raising for Africa increased by 136% in 2013 to US$3.3bn, up from US$1.4bn a year earlier. Greater private sector participation and competition has been encouraged through power sector reform and long-term power purchase agreements through the state utility or other credible off-takers. IPPs are considered a solution to persistent supply constraints. It is also exciting to see that intra-African investment is gaining momentum. African investors nearly tripled their share of FDI projects over the last decade, from 8.0% in 2003 to 22.8% in 2013 according to EY’s latest attractiveness survey.”

The Finance & Investment Forum will also have a special focus on renewables and innovative ways of financing green energy while creating sustainable jobs. Evan Schiff adds: “with the African Development Bank SE4LL Fund recently confirming a $777,000 preparation grant to support a 72MW solar power plant project to become the first renewable IPP in Cameroon, it shows that there are creative investment vehicles and initiatives out there for energy projects on the continent that previously were considered too marginal for project financing”.

Bringing deals to point of bankability
Power Africa, US President Barack Obama’s initiative to improve access to power in sub-Saharan Africa, will be the official country partner of African Utility Week. Power Africa works with African governments, the private sector, and other partners to add more than 30,000 megawatts (MW) of cleaner, more efficient electricity generation capacity as well as increase electricity access by adding 60 million new home and business connections throughout all of sub-Saharan Africa.

Andrew Herscowitz is the coordinator for Power Africa and panellist at the Finance & Investment Forum: ”we’ve seen that there is plenty of investor interest in the continent and there are plenty of people with great ideas and potential to execute power projects, but the problem that we see is getting those deals to the point of bankability.  So I really see that Power Africa has this sweet spot, working with all of our partners including the World Bank, which committed USD5-billion, the African Development Bank which committed USD3-billion, the government of Sweden that committed a USD1-billion, and our private sectors partners that committed over USD20-billion. I think we have this opportunity to align our efforts to figure out what role we can play to bring those projects to bankability so that investors will find a place to put their money.”

More speaker and programme highlights at the Finance & Investment Forum:
•    Case Study:  Lake Turkana Wind Power Project, Kenya
-    Erik Wandrag, Senior Investment Director for Energy, Harith General Partners

•    Case Study: Gigawatt Global, Scatec Solar and Norfund PV Park, Rwanda
-    Chaim Motzen, Managing Director, Gigawatt Global Coöperatief UA (GWG) Rwanda

•    Case Study: “Develop your clean energy projects into bankable opportunities”
-    Peter Ballinger, Managing Director, Africa, Overseas Private Investment Corporation, USA

•    Panel discussion: “The fundamentals you must consider for structuring a bankable PPA”
-    Moderator: Gregory Nott, Director, Africa, Norton Rose Fulbright, South Africa
Open floor discussion on fixed tariffs, foreign exchange, transmission and grid connection risk, off-taker payment support, political FM, dispatch risk, put call option agreements (PCOA) and other PPA elements.

•    Inge Stølen, Senior Investment Manager, Clean Energy, Norfund, Norway
•    Marc Leistner, Deputy Head of Regional Representation for Africa, European Investment Bank, South Africa
•    Roland Janssens, Deputy Head: Emerging Africa Infrastructure Fund, Frontier Markets Fund Managers, UK
•    Eric Olojugba, Chief Commercial Officer, North South Power/Shiroro GENCO, Nigeria

Utility professionals from across the globe
The 15th African Utility Week and Clean Power Africa bring together utility professionals from across the globe to learn, share knowledge and debate the key topics that will secure the future development of Africa’s power and water industries. The event is expected to again attract more than 5000 attendees and features 250 exhibitors, 190 speakers, eight conferences, free technical workshops on the expo floor, three high-profile plenary sessions and the coveted industry awards gala dinner.

DNV-GL has already confirmed its exclusive diamond sponsorship of the event while Accenture, Building Energy, MarelliMotori and Edison Power Group are the platinum sponsors.

African Utility Week and Clean Power Africa are organised by Spintelligent, leading Cape Town-based trade exhibition and conference organiser, and the African office of Clarion Events Ltd, based in the UK.

African Utility Week and Clean Power Africa dates and location:  
Exhibition & Conference: 12-14 May 2015
Industry awards: 13 May 2015
Site Visits: 15 May 2015
Location:  CTICC, Cape Town
Website:  www.african-utility-week.com   
Twitter:  https://twitter.com/AfricaUtilities

Contact:
Communications manager:  Annemarie Roodbol
Telephone: +27 21 700 3558
Mobile: +27 82 562 7844
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Notes for Editor
Spintelligent (Pty) Ltd is an African media business, specialising in Exhibitions, Conferences and Publishing. Head-quartered in Cape Town with a team of 90 experienced professionals, Spintelligent is a dynamic and recognised organiser across multiple industry sectors and geographies. A specialist organiser with the ability to deliver key growth projects in the early emerging markets of the African continent. Spintelligent is the African partner office of Clarion Events Ltd, the UK based organiser operating in 36 countries worldwide with 9 subsidiary offices delivering over 500 exhibitions and conferences annually.Spintelligent delivers projects in African growth industry sectors; Power & Utilities; Energy; Mining; Education & Careers; Agriculture; Infrastructure; Military & Defence. Spintelligent delivers projects in the emerging African markets; South Africa; Nigeria; Ghana; Kenya; Tanzania; DRC; Angola; Mozambique; Zambia.

Aneesa Razack of FNB talks about the importance of not spending that 13th cheque this holiday season. Here is how a Savings or an Investment Account can save you from starting off the New Year on a bad foot.

Johannesburg, South Africa – You've worked hard and with the festive season around the corner, it’s almost time to enjoy the results of your hard work, especially if you are looking forward to a very welcomed bonus or thirteenth cheque.  Before you spend your bonus on holidays, meals out and fun-in-the-sun activities, it is important to take stock and consider your financial situation to prevent starting the New Year off on a bad note.

“Apart from the fact that it’s just a good idea to put aside some of your bonus in an emergency fund to prepare for unforeseen events such as your car or home repairs, or to cover things like school fees and new school uniforms at the start of the year, there are a couple of excellent additional reasons to save a portion of your bonus,” says Aneesa Razack, Head of Strategic Growth at FNB Investment Products.

The South African government wants to help South Africans kick-start a savings routine and is set to launch a tax-free savings incentive in March next year.  “Consider setting aside some of your bonus now and be ready to take full advantage of these benefits when this is launched,” says Razack.

All signs indicate that there will most likely be another interest rate hike in 2015. “While this is going to hurt those of us that have debt, the positive side is you also stand to earn more interest on your savings,” says Razack  

Save now, not later

Decide up front how much of your bonus you want to save and set it aside in a savings account now, before the festive season starts.  “If it’s out of sight, it’s out of mind, and you won’t be tempted to splurge because your bank balance looks so healthy,” explains Razack.

In fact, this is a great tip to apply all year round. Pay yourself first by setting up a direct debit into a savings account at the start of the month. “Say you decide to start your savings habit by giving up your morning coffee on the way to work. That could be around R400 a month. Transfer the money at the beginning of the month before you’ve had a chance to spend it,” continues Razack.    

Choose the right savings account for yourself

Generally you have various options to choose from, such as the amount saved, length of time you save for, and amount of notice you need to give to access your money. These factors can influence the amount of interest you earn and the penalties you will pay if you need access sooner than anticipated.

“Think about why you are saving, what your personal banking habits are and choose accordingly. For instance, if you know you’ll need some money soon, you can still set it aside in a short-term savings account, earning interest, so that you don’t spend it. Or, if you are sure you won’t need the money for some months or even years, forfeit immediate access to it in return for a higher interest rate,” says Razack  

Get rewarded

Make sure your bank’s rewards programme thanks you, for opening a Savings or Investment Account. The benefit of your bank rewarding you, allows you to make your bonus go even further. 

“If you open an FNB Savings or Investment Account, you will increase your reward level points and earn more eBucks. This means you could use your eBucks to purchase discounted gifts this festive season instead of your hard-earned bonus,” notes Razack.

Think about encouraging your friends and family to do the same by giving the gift of actually saving this festive season. “By sharing the savings love, you’ll be doing your bit to encourage a savings culture, and ensure that your friends and family avoid the anxiety and panic of being caught short of cash in the New Year,” concludes Razack.  

For more information contact:

Christine Burrows – Corporate Communications Manager Tel: 087 312 8632, Mobile: 078 355 9390, Email: This email address is being protected from spambots. You need JavaScript enabled to view it.  

About Company

FNB offers a diverse set of financial products and services including transactional and deposit taking, card acquiring, credit facilities and FNB distribution channels. FNB is structured into clearly demarcated segments. This enables focused business units to develop specialised, innovative technologies and products to meet specific needs. An owner-manager culture directs decision-making in the numerous business units. Autonomy and accountability underscore FNB’s entrepreneurial culture.

A new innovative technology company has been born in South Africa, from the capital city or let me say the silicon city Pretoria. Pretoria is one of the first cities to provide free internet access through wifi to its residents and it is no surprise that one of the world's social networks has been created there.

A South African internet start-up, Red Diamond World has partnered with other companies in the launch of Cybatar, a new social network available to everyone with internet access on mobile or computer. The website launches on 07 October 2014 at midnight and they invite everyone to sign up for accounts. This social network will run from trusted servers and and the company assures users of security as they use the site. A unique feature that the social network comes with is the ability to also share .PDF and .doc documents which Facebook, Twitter and other social networks do not do. This means that users will not have to use email to leave the social network to email websites and other file-sharing sites to share files making life easier.

The social network also brings solutions for companies and professionals to increase their online presence. Social and online marketing experts advise companies to utilize website and social platforms to reach more people and Cybatar comes as another website that will have a great impact on you online presence.

Be part of the first group to register for accounts. Visit www.cybatar.com and register today.

{pp}The Innovation Fund is inviting investment proposals from all South Africans with novel and inventive technological ideas that are commercially viable.