Real Estate Investor Magazine South Africa July 2013 | Page 55

REI Offshore

US Housing Crisis Is Over

Q1 Strong For Europe

PIC Set To Expand Into
Africa

The infamous US housing crisis which
spilled over into worldwide markets and was
a major cause of the 2008 global f inancial
crisis seems to f inally be over in the US at
least. Residential real estate prices released
by S&P/Case Shiller recently show that the
US residential market has begun to recover
after 5 years of negative growth. The results
show that in the 12 months to Februar y
2013, US house prices rose by 9.3 percent.
This index is based on the property values
in 20 major cities. The largest gainers were
Phoenix with 23 percent growth, followed by
San Francisco (19 percent growth) and Las
Vegas (18 percent growth). The two largest
US cities, Los Angeles and New York, also
both recorded price grow th over the 12
month period.

The first quarter of 2013 saw high levels of
direct real estate investment across Europe,
building on the momentum at the end of 2012,
as both international and domestic investors
targeted real estate assets.
Transaction volumes in the large markets of
UK, France and Germany grew as they retained
the bulk of investor attention. This resulted
in London, Paris and Moscow all ranking in
the top 10 global cities by volume, accounting
for US $11.5 billion of the $40 billion total
investment. Over 50% of transactions in
these three cities was cross-border, as overseas
investors sought to gain exposure in the largest
European markets. Richard Bloxam, Head
of European Capital Markets at Jones Lang
LaSalle explained: “Buyers are scrambling
for opportunities in the largest European
commercial real estate markets and this strong
competition for the best product means we have
seen a widening of search criteria, including
location, asset class and risk level.

The Public Investment Corporation (PIC) is
awaiting final approval to invest up to R12 billion
in commercial real estate in various countries
across Africa, the PIC’s first foray into property
markets outside SA’s borders.
PIC recently overtook JSE-listed Growthpoint
Properties as the biggest player in the SA
commercial property space, with real estate assets
under management now at a colossal R62,5bn at
March 31. That’s up from R25,7bn four years ago.
Lesiba Maloba, GM of PIC says given the
shortage of existing stock in most African
countries, the PIC is looking to partner SA
developers, institutions and retailers to develop
new properties. “We don’t want to be a passive
investor in a property fund. We prefer to be
involved directly on an operational basis.’’
But Maloba concedes that Africa is still “virgin
territory”, with such vast potential that the PIC’s
African investment strategy is not yet set in stone.

Valuable Input

Craig Illman, CEO,
Propwealth

Michael Bauer, GM,
IHFM

Jenny Ellinas, CEO,
Cypriot Realty

Dr Andrew Golding,
CE, Pam Golding

Andrew Rissik,
Director, Sable FX

“Invest to hold, not to
flip or on-sell. Property
is a slow wealth creation
process with a 10-15
year outlook in London.
Buying UK property
for cash f low is what
most savvy buy-to-let
investors are looking
for, capital growth is a
bonus.”

“The introduction of
REITs to the South
African propert y
investment market is
a huge advantage as an
international property
investment vehicle for
South Africans.”

“Cy pr us is t he on ly
Eu ropean count r y
of fer ing Per ma nent
R e s i d e n c y w it h o ut
prescribing that you
have to physically live
there.”

“London has an
e x t raord ina r y t rack
record of rental and
capital growth which
makes it an ideal longterm investment - and
inflation hedge, not to
mention potentially a
currency hedge - for a
residential buy-to-let
investor.”

“Now more than ever
when using Rands
to ma ke an offshore
investment, look for
value in your purchase
pr ice. A wea k R and
and inflated asset prices
offshore can contribute
to some hefty losses in
the event that the Rand
turns the corner.”

www.reimag.co.za

July 2013 SA Real Estate Investor

53