Peter Gilmour, Chairman of RE/MAX of Southern Africa, believes that 2011 will mark the beginning of accelerated BEE transformation in the real estate industry, which has to date, lagged behind other sectors. Gilmour says that BEE initiatives will be spearheaded by some industry leaders and will pave the way for new entrepreneurs to be attracted to the industry: “These new and young business people will no doubt add youth, energy and enthusiasm to an industry which is ageing.” Overall he believes that the South African property market and the economy as a whole will largely be governed by external forces over the next 12 months. These include the move towards currency strength by emerging markets around the world, and the continuing recessionary climate in Europe and the US. “These external economic conditions will play a large role in influencing our economic landscape here in South Africa. World economic powerhouses, such as China and India will also have an influence on the South African economy; however I anticipate that South Africa’s currency will remain relatively strong in the first half of 2011.”Gilmour says it is uncertain at this stage how the recent announcement by the Reserve Bank around the proposed loosening of exchange controls will play out in the months ahead.Current market conditions show that there is an imbalance between the high levels of residential property stock and demand for it. Gilmour says that there is no doubt that current conditions are very favourable to those who have a good credit standing and are looking to buy property.Buyers, he says, should take advantage of the fact that the current interest rates are lower than they have been since 1974. “Lower interest rates also mean that consumers will be able to make some headway in reducing their high levels of debt. I expect that interest rates will remain stable, within the narrow band between 9% and 10%, for the most of 2011.” Gilmour says that the high levels of household debt compared to disposable income will mean that property demand will remain fairly flat for the majority of next year. “We are anticipating that demand will remain at much the same levels as the second half of 2010.” He says that while he expects to see some increase in property values in the middle- to lower-end of the market, the upper-end of the market is expected to remain stable or possibly even see a nominal price decline.Gilmour believes that the number of distressed properties will increase significantly in the coming year, in line with what is happening in the US and the UK. “Increasingly more distressed homeowners will no doubt be taking part in the various financial programmes offered by the banks to reduce their personal debt levels, and sales in this sector of the market are expected to increase sharply.” He says that as much as 30% of all residential property sold in 2004 could potentially become listed as distressed properties in the year ahead.In the commercial sector however, Gilmour expects to see an increase in sales activity, along with an increase in vacancy levels, as he believes that businesses in general are still feeling the pinch and have not yet made a full recovery from the recession: “There are a lot of great deals out there - so those investors with available cash can and will grab some great bargains. However, in general, many businesses are playing things conservatively as they struggle to walk the financial tightrope as a result of recessionary times, and as such, many of them will be looking at various ways of cutting back their overhead expenses in order to survive.” Consumers however, also have a lot to look forward to in the next year or two as there are also some positive advances to be expected in the South African property market. Gilmour sees the qualifications that estate agents need to complete by the end of 2011 in order continue in the industry, as another major influence on the South African property market during the course of the upcoming year.“To date, only around 25% of the registered agents and principals have successfully completed the relevant NQF4 and NQF5 qualification, which means that a whopping 75% of the industry will be taking time out to study during the course of the year. We foresee that the number of registered estate agents will drop off even further towards the end of 2011. However, by the beginning of 2012, all real estate agents continuing in the industry will be qualified, and will have invested time and resources to raise the standard of service delivery, which can only be good for the real estate industry and the consumer going forward.” As the Internet and social networking continue to play an increasingly important role in the marketing of properties and in consumers’ search for the ideal home or investment opportunity, great advances in technology are expected in 2011 - specifically pertaining to the marketing of real estate. “Technology is always changing, and at a rapid rate too – it is a matter of constantly innovating or being left behind. I believe that technology is and will remain a business imperative when it comes to the marketing of property.”The year ahead promises to be one where service delivery and transformation will become paramount to doing business successfully: “Business is there to be had, but agents will need to work hard and deliver value in order to get ahead - those who are dedicated, deliver exceptional service and have a quality offering will be successful, and those that don’t go the extra mile will be left behind,” Gilmour concludes.
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