The current Cape property market, says Tanya Jovanovski, co-franchisee with Victor Schonborn for the Rawson Auctions franchise in the Western Cape, is now definitely feeling the effects of the weakening rand, which makes Cape property increasingly attractive to overseas buyers.
“The number of foreign investors is increasing month by month and this trend seems likely to continue for the foreseeable future,” says Jovanovski.
In general, she comments, commercial investors are looking for any premises where the return is 10% or more per annum. This type of investment, she says, is increasingly seen as a safe haven, particularly by those buyers now, for whatever reason, wishing to avoid higher risk asset classes.
“Although demand is picking up, says Jovanovski, those selling property by auction have to recognise that buyers at auctions are, for the most part, still looking for exceptionally good value and this applies equally to the commercial and the residential markets.”
Quite frequently, says Jovanovski, a seller who has had a property on the market for some time, but who has failed to find a buyer for it on account of its price being unrealistically high, will come to the auctioneer and somehow expect him to achieve an unrealistic price.
“Such people should take a good look at the prices recently achieved in the area in which they are selling. In our office it is standard practice do a comparative market analyses with data sourced directly from the Deeds Office. There is a huge difference between prices that properties are marketed for and what they actually sell for.”
While it remains true that those investors who attend auctions do from time to time pick up bargains, it is also true, says Jovanovski, that she and her team have on occasions achieved prices far above the market value. This is generally due to the property being in an area or of a type that attracts a high demand.
One of the misconceptions surrounding the whole auction process, adds Jovanovski, is that it can lead to the seller having to accept a very low price.
“This is simply not true,” she says. “The seller signs a mandate with the auctioneer which includes a reserve price. If this amount is achieved it is considered sold. If however a lower price is achieved, it will be sold subject to the seller’s confirmation. The seller has the right to accept or reject it.”
