Real Estate Investor Magazine South Africa September 2018 | Page 13

TOP FUTURE TRENDS
M
ajor trends that are likely to shape Africa’s prop-
erty market in the future show that the property
sector is getting smarter. It is responding to infra-
structure and social challenges, and easing the ability to do
business on the continent. These trends also reveal exciting
opportunities for property investment across its multiple
distinct markets.
Future homes are smaller, smarter and
greener
Affordability, convenience and security are the key factors
driving a distinct buyer preference at the moment for small-
er homes packed with “green” features and “smart” technol-
ogies.
That’s the word from Rudi Botha, CEO of BetterBond,
SA’s biggest bond originator, who says that affordability re-
mains a serious concern for most buyers because they are
still labouring under relatively heavy debt loads and worried
about rising taxes and the increasing cost of food, fuel and
utilities. “SA consumers are much more conservative spend-
ers than they used to be and really careful now about getting
in over their heads.
“Consequently, while the banks are keen to lend to home-
buyers and our bond approval rate is at 80%, the highest
level since the 2008/ 09 financial crash, the latest statistics
from Absa show that the total of outstanding household
mortgage balances is currently growing more slowly than
it did last year. The year-on-year growth rate is down from
3,6% in November 2017 to 3,1% currently.”
This does not mean, he says, that South Africans are
buying fewer homes – only that they are buying less ex-
pensive homes. “This is confirmed by our own statistics*,
which show that more than three-quarters (78%) of the
bonds granted in the past 12 months have been for less
than R1,5m – and that 60% were actually for less than R1m.
“In general terms, these cheaper homes are also smaller,
as indicated by recent FNB research showing that the aver-
age size of new homes being built in SA has shrunk from a
peak of 203sqm in 1974 to around 162sqm now – and that
accounts in large measure for the current slow growth in
home prices (2,9% year-on-year) in spite of a drop in the
prime interest rate and increased sales volumes.”  
However, Botha says, affordability is not the only rea-
son for the increased popularity of smaller, cheaper homes.
“Changing lifestyles also play a big role. Household sizes
are shrinking, for example, so buyers generally need fewer
bedrooms. Many homeowners now are also short of time
so don’t want a large garden or home to maintain. Traffic
congestion is also driving a significant shift from the large
homes of the suburbs to smaller homes in urban centres.  
There are four sectors that you can benefit from as an
investor:
Industrial Property
Due to a lack of professionally managed logistics infra-
structure and inefficient supply chains across sub-Saharan
Africa, logistics cost as a percentage of product retail costs
is still very high at 30-40%.
According to Toby Selman, CEO for Africa Logistics
Properties, there is currently almost no grade-A warehous-
ing on the continent.
“It tends to be the ugly duckling in the property sector
SA Real Estate Investor Magazine SEPTEMBER/OCTOBER 2018
11