Real Estate Investor Magazine South Africa July 2018 | Page 8

Q&A Property Advice KOBUS LAMPRECHT Economist with Rode & Associates SIMON DIPPENAAR Founder and Director of Si- mon Dippenaar & Associates Q Q Q A A A I’m interested in investing in industrial property, what are the num- bers saying about this asset class? Most major industrial areas had a solid rental performance at the end of 2017. In the fourth quarter of 2017, nominal market rentals for prime industrial space (500m²) in the Cape Peninsula again performed the best of the four major industrial regions in South Africa, with yearly growth of 14%. Top areas in this region include Brackengate (R75/m²), Paarden Eiland/ Metro (R67/m²) and Woodstock/ Salt River/ Observatory (R66/m²). Rent- als in Durban, Central Witwatersrand and the East Rand grew by 7%, 6% and 4% respectively. Durban remains the most expensive nationally, with an average rental rate of just below R60/ m² for prime space of 500m². The ma- jor industrial areas all have low vacancy rates below 10%. Vacancy rates in other industrial areas, such as Pretoria, Port Elizabeth, Bloemfontein and Nelspruit, average comparatively higher between 10% and 20%. ASK THE EXPERTS 6 ADRIAN GOSLETT Regional Director and CEO of RE/MAX of Southern Africa I’ve read a lot about converted container homes - what are some of the things to look out for before making a decision? The reality is that while the container itself is far more af- fordable than the traditional bricks and mortar building costs, purchas- ing vacant land – particularly in ar- eas where regulations allow container homes to be erected – is still a costly and somewhat complicated thing to achieve Most banks are reluctant to provide financing on vacant land, as they view it as a high risk investment. As a re- sult, the best deal a buyer can usually secure is a 60% bond. The rest will have to be sourced from their own savings, or by taking out additional credit elsewhere (which would in- crease the likelihood that the bank will deny the home loan application). This explains why the trend is only getting picked up by the middle to higher income sector rather than by low-income buyers. I am looking to move back into my property, but I currently have a tenant. What steps can I take? Your rights largely depend on what is in the lease agreement. Under PIE, your tenant is protected against illegal eviction. The Consumer Protection Act (CPA) provides a further layer of protection. In terms of the CPA a tenant is protected for the full term of the lease if there is no material breach on their part. The landlord can cancel the lease if there is a material breach of contract by giving 20 business days’ no- tice of the breach; but the landlord must give the tenant the opportunity to rem- edy the breach. Provided they do so, you don’t have the right to evict the tenant and move back in until the end of the contract. When drawing up the lease, it is permissible to include a clause allow- ing the landlord to cancel the lease, with two months’ notice, if the landlord elects to sell the property or move back in. If the tenant agrees to this clause and signs the contract, then there does not need to be a material breach for the landlord to give notice of eviction. Do you have a property question you would like answered by our experts? If so, post it on ASK THE EXPERTS on www.reimag.co.za or email [email protected] JULY/AUGUST 2018 SA Real Estate Investor Magazine