Lets Talk Property London Jan 10


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After having travelled to USA, Scott Picken, IPS CEO shares his insights into the South African Property market. He covers the property investors life cycle, as well as the 12 essential items someone needs to know about the South African property market.

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Lets Talk Property London Jan 10

  1. 1. Invest with Confidence<br />Let’s Talk Property –<br />London<br />12 Essential Items <br />you need to know!<br />Jan 2010<br />
  2. 2. Introduction<br />Why you here? – write it down!<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />Understand the World Market<br />Information on the SA market<br />Understand the mortgage situation<br />Understand the legal process<br />Understand management<br />Buy a Home<br />Find an Investment Opportunity<br />Other<br />Financial<br />Independence / Freedom / Abundance<br />Make some money?<br />www.ipsinvest.com<br />
  3. 3. Life Cycle of Property Investor<br />Learning Curve<br />Legacy<br />Birth<br />Leave Home<br />Renting<br />Start earning and can save a little<br />Go on a course?<br />Start walking the streets?<br />Most do very little!<br />Infancy<br />Buy your first house & plenty of fear<br />Struggle with the purchase<br />Struggle with understanding the process<br />Waste lots of money<br />Often don’t buy very well, depends on information<br />Very close to cashflow death – tough to survive and often ask for support from parents<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />Toddler<br />1st one is working and so get some confidence and buy another one<br />No systems<br />Cashflow issues<br />&lt;5 properties<br />Focus on capital growth<br />No structures in place<br />Teenager<br />Problems with getting finance<br />Focus on cashflow<br />Attend courses<br />Build business plans<br />Think laterally to succeed<br />Meet tax and structuring expert<br />Start building a team<br />Start exploring international property and / or commercial property<br />Maturity<br />Young Adult<br />Golden Years<br />Mid Life Evaluation<br />Teenager<br />Toddler<br />Infancy<br />Aging<br />Birth<br />Death<br />Financial Independence/ Freedom / Abundance<br />www.ipsinvest.com<br />
  4. 4. Life Cycle of Property Investor<br />Learning Curve<br />Legacy<br />Young Adult<br />Use capital growth<br />Buy your 1st international property (cashflow +)<br />Buy your 1st commercial property (cashflow +)<br />All in structures<br />Keep buying properties but only if cashflow +<br />Have working formula which replicate<br />Have team of people<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />Maturity<br />Young Adult<br />Golden Years<br />Teenager<br />Mid Life Evaluation<br />Toddler<br />Infancy<br />Aging<br />Birth<br />Death<br />Financial Independence/ Freedom / Abundance<br />www.ipsinvest.com<br />
  5. 5. Life Cycle of Property Investor<br />Learning Curve<br />Legacy<br />Maturity (The Zone)<br />Banks view you as a sophisticated investor<br />Can leverage assets to gain more properties<br />Reliable team<br />Deals come to you<br />Great cashflow<br />Time consuming with individual investments<br />Looking at doing big deals in consortiums<br />Mid Life Evaluation<br />Very time consuming and wonder if should sell and consolidate<br />Great cashflow<br />Maintain what have or move to Aging<br />Move to Golden Years<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />Golden Years<br />(Zone of knowledge and wealth creation)<br />Investing globally with best of breed partners to achieve maximum returns<br />Need to work with younger energetic players <br />Leverage knowledge, assets & resources to take advantage of opportunities (84 old)<br />Legacy<br />(Zone of fulfilment and contribution)<br />Live in financial freedom<br />Contribute to society<br />Pass on inheritance to people close to you!<br />Maturity<br />Young Adult<br />Golden Years<br />Mid Life Evaluation<br />Teenager<br />Toddler<br />Infancy<br />Aging<br />Birth<br />Death<br />Financial Independence/ Freedom / Abundance<br />www.ipsinvest.com<br />
  6. 6. Life Cycle of Property Investor<br />Learning Curve<br />Legacy<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />Aging<br />Most mortgages are interest only<br />Can’t remortgage<br />Selling off assets<br />Living off cashflow<br />Death<br />Property is passed on in personal name to people in the will<br />Large Death Duties left to those who receive property<br />Often cant afford and so sell (Mc Intosch)<br />Maturity<br />Young Adult<br />Golden Years<br />Mid Life Evaluation<br />Teenager<br />Toddler<br />Infancy<br />Aging<br />Birth<br />Death<br />Financial Independence/ Freedom / Abundance<br />www.ipsinvest.com<br />
  7. 7. Life Cycle of Property Investor<br />Learning Curve<br />Legacy<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />Information <br />& Partners (Your Team!)<br />Maturity<br />Young Adult<br />Golden Years<br />Mid Life Evaluation<br />Teenager<br />Toddler<br />Infancy<br />Aging<br />Birth<br />Death<br />Financial Independence/ Freedom / Abundance<br />www.ipsinvest.com<br />
  8. 8. Dealing with Uncertainty<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />Ian Fife, Financial Mail, “How do we deal with this uncertainty? Through Knowledge; by concentrating on the actual realities of the market we operate in. An index is a theoretical figure. A transaction is concrete and specific. If you know how property actually works, we know that it remains the biggest store of wealth in the world for ordinary people. That is so because it remains the most predictable and conservative of asset classes. And it is more often than not a home, too.”<br />www.ipsinvest.com<br />
  9. 9. 12 Essential Items<br />USA and double dip<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  10. 10. 2: Global Economy<br />Great results from Goldman Sachs and JP Morgan<br />Lively recovery in Asia (Singapore, Korea & China from 8% to over 10%)<br />USA recession is over = 3.5% growth in 3Q2009<br />Only 10% of stimulus package has so far impacted – most in 2010, although concern is 2Q2010 when fiscal stimulus ends<br />US industrial activity roaring back in Q32009, imitating Asia, with Europe slower.<br />UK came out of recession yesterday – last country in the G20<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  11. 11. 2: Global Economy<br />Stock markets, banking spreads, industrial and export recoveries are in process<br />Central banks are in cruise control<br />FED (unemployment issues – 12 million jobs, peaking 10.7% in 1Q2010)<br />ECB and BOE same<br />At least another year of low rates <br />Some starting to increase<br />Australia, Norway & Israel<br />Emerging Economies have stopped dropping interest rates<br />Hungary, Russia, South Africa & Turkey<br />Global economy entered recovery from Mid-2009 (earlier in Asia)<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  12. 12. 3: Global Property<br />First World<br />USA<br />UK<br />Australia<br />Emerging<br />South Africa<br />Brazil<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  13. 13. 4: South Africa Economy<br />Internal<br />Economic decline –1.5% to -2% in 2009, worst since 1992, after 3.1% in 2008<br />Budget deficit of -8% of GDP, compared with +1% in early 2008<br />Supported by Asian growth<br />Much more resilient<br />R400bn in infrastructure – 10 years<br />Interest rates – 15.5% to 10.5%<br />Unemployment = 1 million jobs or 10%<br />Political<br />Manuel/ Mboweni/ Mbeki policy mindset<br />Zuma/ Gordhan/ Marcus - 17th Nov 09<br />Service Delivery & Nationalisation<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  14. 14. 5: South African Property<br />Nominal +3.7% in 2008<br />Nominal -3.5% in 2009, real -8% to -10%<br />Affordability has improved, but most households cant take advantage<br />Transactions improving, after Aug 09 lows<br />Improvement in early 2010<br />Nominal = 3%, real -3.8% in 2010<br />14% buyers are first time buyers<br />BTL = 11%<br />Downscaling – 34% of sales, emigration = 8% - takes 21 weeks and 1 day to sell<br />African buying is rising<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  15. 15. 5: South African Property<br />South Africa<br />12 / 13 million homes<br />5 / 6 million ‘bankable stock’<br />60 000 units built per year<br />40 000 affordable units<br />Need 200 000<br />Slow down is because interest rates rising 5% since Mid 2006 & NCA<br />Building activity has dropped– 44.9%<br />Affordability – interest rates, building prices & land prices & economy<br />Supply side constraints- municipalities – planning, bulk services & electricity<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  16. 16. 6: Future of South Africa<br />Interest rates & Global Economy caused a disruption to growth<br />Demand is from the middle class<br />2.6 million Black Diamonds (Black families) have joined the middle class in the last 15 years. Grown by 30% in 12 months<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  17. 17. 6: Future of South Africa<br />Next 10 years<br />China will dominate coming global expansion, commodity exporters will benefit greatly!<br />Ease balance of payments constraint<br />Growth of at least 3.5% annually<br />Real GDP will expand by 40%-50%<br />Increase in population from 48 million today to 50 million = a gain of some 30%-40% per capita<br />Formal employment from 9.5 million today to 12 million<br />Informal employment from about 4.5 million today to some 6 million <br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  18. 18. 6: Future of South Africa<br />Next 10 years<br />Ranks of the middle and working classes are set to expand further<br />South Africa is currently about 50% urbanized, but another ten million people can be expected to urbanise this coming decade. <br />Great infrastructure<br />Soccer world cup<br />Gautrain & modernized taxi fleet<br />Improve our electricity supply buffer<br />Modernize and expand our road network, ports and airports.<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  19. 19. 6: Future of South Africa<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />Next 10 years<br />Huge national income gains<br />Expansion of the middle and working classes<br />The regional urban concentrations<br />A greatly expanded infrastructure<br />Inspect huge gains, even compared with recent gains in the last decade!<br />www.ipsinvest.com<br />
  20. 20. 7: Interest Rates<br /><ul><li>Inflation below 6% in 2010, but 45% increase in Electricity tariffs over 3 years
  21. 21. Interest rate
  22. 22. 2010 – 8.5% to 11%
  23. 23. 2011 – 13%
  24. 24. 2011 – 2012 – depends on external</li></ul>Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  25. 25. 8: Exchange Rate<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  26. 26. 9: World Cup<br /> Global TV audience = 1 billion & 3.6 <br /> billion will watch at least 1 game!<br /> 3 million tourists for tournament<br /> R30b cash will flow into SA<br /> 159,000 jobs created<br /> R8.7b transport upgrades<br /> R5b for 10 stadiums<br /> R21.3b generated for SA economy<br /> R12.7-be in direct spending<br />Grant Thornton<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  27. 27. 9: World Cup<br />Effect of the Olympics<br />(5 Year % increase Host City/ Host Nation)<br /><ul><li>1992 Barcelona 131% 83%
  28. 28. 1996 Atlanta 19% 13%
  29. 29. 2000 Sydney 50% 39%
  30. 30. 2004 Athens 62% 53%</li></ul>Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  31. 31. 9: World Cup<br /><ul><li>Over 20% of the people who visited Barcelona for the Olympic games returned for a second visit
  32. 32. 6% for a third visit and in subsequent years a further 2% (i.e. nearly 150 000 people) ended up buying property or arranging long term leases in southern Spain as a direct result of the Barcelona games.
  33. 33. The Tour de France cycle race, the world’s third most popular sporting event, had had a similar effect on property throughout France but particularly in the southern regions.</li></ul>Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  34. 34. 10: Short term rentals<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />R1200 per bedroom per night<br />Furnished Apartments<br />60 000 units<br />www.ipsinvest.com<br />
  35. 35. 11: Rental Demand<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />It is the most NB thing<br />Remember how I said investor change over time to focus on cashflow!<br />Ensure success in all markets!<br />www.ipsinvest.com<br />
  36. 36. 12: 5 to 10 year trends<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />Property is going Global<br />Best of Breed Partners<br />Funds<br />www.ipsinvest.com<br />
  37. 37. Life Cycle of Property Investor<br />Learning Curve<br />Legacy<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />Maturity<br />Information <br />& Partners (Your Team!)<br />Young Adult<br />Golden Years<br />Mid Life Evaluation<br />Teenager<br />Toddler<br />Infancy<br />Aging<br />Birth<br />Death<br />Financial Independence/ Freedom / Abundance<br />www.ipsinvest.com<br />
  38. 38. Opportunities<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />Six – Cape Town CBD<br />www.ipsinvest.com<br />
  39. 39. Location<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />CBD<br />Vibrancy<br />Offices<br />Shops, bars & Clubs<br />Traffic<br />Less 1 km from centre<br />Less 10 min from Waterfront<br />Less 15 min to beach<br />20 min Airport<br />
  40. 40. Price<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />R589 000 to R1.299 million<br />R15 000 / m2<br />R25 000 / m2<br />Leisure Developments<br />40 years experience<br />Quality<br />Market has spoken<br />Even in the current market this project has sold very well<br />Available Units are due to people not getting mortgages<br />
  41. 41. Deposit<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />Deposit = R25 000<br />Occupation Jan - Apr 2010<br />Growth - basic Example:<br />R500 000<br />5% growth, inflation 9%<br />R38 125<br />166% growth on your investment<br />Risk – Rental Demand!<br />Serviced suites<br />Long Term Lets Cape Peninsula University of Technology<br />
  42. 42. Living the dream<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />Take a look at this picture:<br />
  43. 43. Living the dream<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />My Easter holiday!<br />
  44. 44. Living the dream<br />www.ipsinvest.com<br />Close your eyes!<br />180 degree views<br />Table Mountain – Devils Peak to Signal Hill<br />Harbour – V&A Waterfront – Blouberg<br />Pool, Braai, Entertainment Area & Running track<br />Gym & Sauna<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />Everything you have dreamed of!<br />
  45. 45. Opportunities<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />Grand Central - Wynberg<br />www.ipsinvest.com<br />
  46. 46. Another Great Option<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />Grand Central, Wynberg<br />From R410 000<br />R10 000<br />Great Mountain views<br />Close to Claremont, UCT and CBD<br />Pre let units<br />9% yield<br />Head lease with Leisure for 2 years<br />
  47. 47. Opportunities<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />JHB - Kelvin Manor<br />www.ipsinvest.com<br />
  48. 48. Another Great Option<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />R15 000 deposit<br />From R720 000<br />9 % yields<br />5.7 km from Sandton<br />Completion in early 2011<br />Walking Distance to Gautrain<br />
  49. 49. Conclusion<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />49% of the world’s wealth is in property!<br />&quot;To become financially independent you must turn part of your income into capital; turn capital into enterprise; turn enterprise into profit; turn profit into investment;<br />and turn investment into financial independence.&quot;<br /> Jim Rohn<br />www.ipsinvest.com<br />
  50. 50. Next steps<br />Fill in Feedback forms<br />Set up a meeting<br />Choose property<br />Sign Documentation<br />Arrange Finance <br />Manage the purchase process – Lawyers, Developer, Inspections, etc<br />Occupy and live or<br />Management<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  51. 51. Conclusion<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />“Whatever you do, or dream you can, begin it. Boldness has genius, power and magic in it. Begin it now!”<br />Johann Wolfgang von Goethe<br />
  52. 52. Questions?<br /><ul><li>Contact us - Website
  53. 53. www.ipsinvest.com
  54. 54. Phone – +44 (0) 203 1399 018
  55. 55. Blog – www.ipsinvest.blogspot.com
  56. 56. Go to Twitter – www.twitter.com/IPSInvest
  57. 57. You Tube – www.youtube.com/spicken09</li></ul>www.ipsinvest.com<br />
  58. 58. Happiness<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  59. 59. Happiness<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  60. 60. Happiness<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />www.ipsinvest.com<br />
  61. 61. Why are we here?<br />Introduction<br />Life Cycle<br />12 Elements<br />Opportunities<br />Conclusion<br />“You can get everything in life you want, if you just help enough other people get what they want.”<br /> Zig Ziglar<br />www.ipsinvest.com<br />