Nedbank Launches New Products
Before Nedbank goes public with its new brand campaign, it is strategically launching a platform of new and unique product offerings, to differentiate the financial institution, including two new Affinity programmes.
Boniswa Pezisa, Net#work BBDO’s Deputy MD says: “Over the years Nedbank has championed affinity marketing, which has enabled its clients to contribute towards sports, arts and culture and the conservation of endangered wildlife.
“Nedbank has now unveiled a new affinity product – Children’s Affinity. Using the new Children’s Affinity credit card, debit card or cheque book results in Nedbank making a contribution to the Nelson Mandela Children’s Fund. ”
Some of the little people who will actually benefit from this philanthropic action are also the actors in the ‘Oliver Twist’ themed tv commercial.
Creative team Mariana O’Kelly and Gary du Toit say they wanted to move away from the previous inaccessible image of Nedbank to reveal a softer and kinder image to the country’s viewers.
The commercial was shot by Director Leigh Ogilvy from Frieze Films: “The kids immediately seem more empowered, less like victims. They’re not beggars but salesmen encouraging us to go shopping because it benefits them in the end.”
The second product offering is Nedbank’s The Eyethu Ownership Plan – Eyethu means ‘ours’. This enables customers, employees and business partners to own shares in a broad based BEE deal.
“The commercial uses the analogy of worker bees getting a share of the hive to explain what would normally have been a complex concept. The song – ‘come with me down paradise road’ – was used to further enhance the message that this is the broadest BEE deal to date,” says Pezisa.
Source: Bizcommunity
[04 Sep 2005 12:32]
FNB presents: ‘Loans of Our Lives’
Issued by: C-Cubed Communications
First National Bank (FNB) has followed its highly entertaining launch and awareness campaigns for the One Account with a tongue-in-cheek take on one of television’s most successful ’soapies’ – Days of Our Lives.
Developed by FNB’s marketing partner, FCB Johannesburg, the new One Account campaign is called ‘Loans of Our Lives’.
The brief put to FCB Johannesburg’s strategic team was to produce infomercials to explain the benefits of the product, launched 18 months ago, and demonstrate the relevant savings. A customer depositing his or her salary into the One Account and consolidating all his debt into a One Account, enables the customer to shave years off his loan and pay the combined debt off at one low rate.
Explaining the creative treatment, FCB South Africa group executive director, Ashley Bacon, said One Account has always had an ‘irreverent’ personality so there was an opportunity to push the envelope even further than usual.
“Once the ’soap opera big idea’ had been mooted and given the go ahead by the client, the FCB strategists and the account management teams, FCB Johannesburg’s creatives Ulric Charteris and Jean Roux Bezuidenhout developed the scripts,” he said.
“Briefly, information about the One Account is written into typical ’soapie’ scenarios and dialogue – a central character is used to ‘incidentally’ demonstrate the savings as the soap opera ’stars’ talk through their financial woes and are then – in true soap style – given advice. In one scene, the character appears as an artist in the park and his canvas becomes the medium on which the savings are calculated; in another he is a waiter but this time his menu board is used as the vehicle.
For example, a character called Minky says: ‘You have to pull yourself together, Lesley. For once listen to your mother, now I know that I’m not your real mother, and when your real mother was abducted by the Russian mafia after your father joined that religious sect I took you into my home and it wasn’t much of a childhood being raised as a girl till you were eighteen, but we only had sons and your stepfather would have died if I had told him the truth after all those years, but that’s the past’. Lesley responds: ‘Mum, I can’t seem to manage my finances’ to which Minky suggests: ‘Why don’t you just get a One Account?’. She goes on to explain, among other points, that ‘Now, with a One Account, because your income goes straight into your account you’ll save about R300 a month on interest. And if you keep that R300 in your account every month in total you’ll save about R80 000 over the term of your loan’. The central character is present in this scene as a waiter chalking up the savings on his menu board.
“As the information to be communicated is relatively technical in nature, Ulric and Jean had to strike a perfect balance between entertainment and education; to further enhance the ’soap opera’ concept, we cast ‘real-life’ soap stars in each commercial. I think the result is spot-on,” said Bacon.
The two commercials were shot in studio over three days by Red Pepper.
Full article available on Biz-community
To Buy or To Rent, That is the Question
Most financial advisors are agreed that it is wise to get into the property market as soon as possible in order to start paying off your own bond rather than pay rent and pay off someone else’s bond.
However the property boom in South Africa over the last few years, which has pushed house prices sky high, has made buying a home increasingly difficult for many first-time buyers. Angelo Haggiyannes, director of Auto & General Insurance, says that while it has always been relatively common for couples to pool their income and buy a property together, now friends are doing the same in order to be able to enter the property market.
He says, “First time buyers must be aware that buying a home has many hidden costs, insurance being one of them, along with legal fees, registration costs and even moving costs. The owner of a bonded house is legally obliged to get House owners’ Comprehensive Insurance, which covers the property as security for the home loan in the event of fire, flood or any other disaster that damages the structure and fixtures. In addition, whether you are buying or renting your home, household contents insurance is a must today. The risk of burglaries remains high and many uninsured victims of theft find themselves in real financial trouble and unable to get back on their feet after losing their household possessions.”
However, if you can easily afford your bond repayments and if you manage to pay off your bond quickly, your investment will become a true investment – hopefully paying great dividends. For one thing, owning a home, with no monthly bond repayments to cough up for, is the ideal situation for anyone.
The “To Rent” camp believes that renting can provide you with a more cost-effective option, particularly if you are young and need flexibility to travel or move around. Furthermore, buying in the area of your choice may be prohibitively expensive, so renting provides you with the option of living in your ideal choice of neighbourhood, until you can afford to buy in the area or one similar. Says Haggiyannes, “According to an article published on property24.com by Neville Schaefer, CEO of national property manager, Trafalgar, the rental market is continuing to develop worldwide. This provides tenants with greater variety of choice and increasingly competitive rentals.”
Haggiyannes concludes, “Ultimately, the decision to buy or rent is an extremely personal one, and one of the most important financial decisions you can make. Whichever option you decide upon, it is essential to make sure that you know, upfront, what the hidden costs are, what the benefits will be and what could possibly go wrong. If you ensure that you do your homework properly, your decision should be financially sound and ideally suited to both your pocket and your lifestyle.”
Established in 1985, Auto & General Insurance is a leading provider of short-term insurance solutions, with a core focus on innovative administrative efficiency and a service-orientated approach. For more information on Auto & General, or to read the full Bill of Rights, please visit www.autogen.co.za.
Now’s the Time to Stake Your Claim in the Property Market
18 December 2005
The bubble inflated, then burst, then inflated again. Now finally it looks as if property prices are seemingly slowing or even decreasing. According to Robyn Farrell, director of 1 st for Women, “Now could be the right time for South African women to take a page out of celebrity property moguls such as Britney Spears, Angelina Jolie and Catherine Zeta-Jones’s book, and invest in the booming South African property market.”
“An article on the website cyberprop.com reported earlier this year that, on a month-on-month basis, nominal growth in house prices was 0.6% in April this year, compared with 0.8% in March. According to ABSA, the current declining trend in month-on-month growth started in January 2004. While the growth is still continuing, it has definitely slowed. This does not however mean that prices are coming down – at this stage, prices are remaining at the same levels rather than increasing. This is good news for those looking for independence, empowerment and an excellent investment opportunity,” said Farrell.
According to the Absa House Price Index, in a statement released on 3 November 2005 , “Nominal house price growth, declined further in October 2005 to 15,8% year-on-year. Absa said that this was the lowest year-on-year growth since August 2002 when it was 15,9%. The current declining trend in house price growth is expected to continue into 2006, largely driven by higher interest rates during the course of the next twelve months. As a result, nominal house price growth of between 5% and 10% is projected for next year. This implies that nominal house prices may decline on a month-on-month basis at some stage in 2006.”
“Women are an economic force in the country today and it is said that women tend to make excellent property investors because they were often better able to visualise the potential of a house . Moving into your own home only when you’re married is a thing of the past, women should be shifting social norms and traditions and take advantage of this optimistic period in the property market,” says Farrell.
While the time might be ripe for buyers who can afford to purchase a house at the current prices, potential homeowners must bear in mind that there are a number of hidden costs associated with buying a home. These include costs such as transfer fees, bond costs, home loan initiation fees and deeds office registration fees, as well as the expense of moving and connecting water and electricity. In addition, a homeowner is required legally to have homeowners’ insurance, which protects the actual structure, thereby protecting the investment of the financial institution with whom you have your bond. All of these add up to a very expensive exercise that is not for the financially unstable. According to Iona Minton and Dave Welmans in their book, “The Property Game: A Guide to Property Ownership in South Africa ”, there are two main reasons for homeowners’ insurance, namely protecting your house and other structures; and protecting your personal property. They also remind homeowners that, while your monthly insurance premiums aren’t buying a tangible product, you are buying peace of mind.
Farrell concludes, “Buyers must remember that the choice of who to take out homeowners insurance with is always yours. While the financial institution who grants you your bond can give you suggestions on who to use for your insurance needs, you are not obliged to opt for their suggestions. As always with any financial decision, it is terribly important to shop around for the insurance product that best suits your particular budget and needs.”
1 st for Women Insurance offers women “Cover with Care”. For more information on 1 st for Women Insurance Brokers, visit www.firstforwomen.co.za
Real Estate – Managing Risk
23 January 2006
In the world of property investment, there are various points along the ‘just looking’ to ‘ready to sell’ spectrum. Protecting your investment takes on different hues at different points.
When first looking for property you have to consider the amount of ready cash available, the state of the current market, as well as your own level of experience with the many aspects of investing.
The first lesson of risk management is: know the law. Whether a novice or a savvy investor of long experience, few things can put your investment at greater risk than ignorance of the rights and requirements of regulations. No need to become an attorney, but a working familiarity is a must.
After investigating the current market — what’s available at what price, and what’s the current level of buyer interest — judging the likely future is required. Property values have been rising in most markets for several years. In a rising interest rate environment, that can’t last forever. No one knows with certainty how long the trend will continue, but you can look at some signs.
Is the economy in general still on the upswing? Are employment prospects good for most individuals? What is the rate of new home construction, relative to the last five years? All these and more are good indicators of whether property values are more likely to continue to rise, level off, or even see a correction.
Once you’ve purchased a property there are several ways to minimize the risk of seeing your investment wind up ‘under water’. At the moment of purchase, make every effort to invest in a large down payment. Seriously consider putting in at least 10%. You’ll create instant equity and usually get a lower interest rate.
That level of initial outlay decreases your liquidity — you have less cash after the deal is closed — but there are few alternatives that have the return rate, low level of risk, and degree of capital appreciation of a real estate investment.
When looking at funding options, consider how long you intend to keep the property. ARMs (Adjustable Rate Mortgages) get you in with less cash and an attractively low relative rate. There are 1 year ARMs, 5 year, even 7 year — the number signifies how long the offered rate is good for, after which the lender adjusts it according to prevailing interest rates.
But if you intend to keep the property longer than the initial period, you can see that attractive rate climb several percentage points. Unless you sell, or have paid down the principle substantially within that time frame, you can see yourself saddled with much higher monthly payments.
At the same time the ARM rate is going sharply up, property values are under pressure to level off or even decrease — because of the rise in interest rates. Your investment gets hit twice. Of course, it’s possible for rates to go down, but that’s less common and refinance is usually toward a fixed rate, in those cases.
There are insurance options that can cover the increase in payment in such scenarios but if you pay more than a couple of years of premiums, they are usually not worth the extra outlay. Better to use the extra funds to pay down the principal by making more than twelve annual payments, or paying more per month than the minimum.
If you can’t come up with a large initial down payment, weigh the value of continuing to rent versus any tax break you get from owning a property acquired with low or no down payment.
So, invest as much as you can up front, make at least one extra payment per year, lean toward fixed rate mortgages of the minimum length you can afford. A 15 year mortgage pays down the principle quicker, so you spend less on interest, increases your equity rapidly, and usually carries a lower rate.
Take a long term view; real estate is still one of the least risky, highest paying investments around.
Tips on Managing Risk — Part II
30 January 2006
Investors have a hard life. Rising insurance rates, legal liability, security concerns and increasing interest rates may not be actually conspiring to give them early heart attacks, but it can seem that way. Managing risk is in large part about how to lower uncertainty by dealing appropriately with those and other stress factors.
Start by exercising common sense and gathering as much information about the local market and the general economy in addition to the specifics on an interesting property. Study the numbers on rates of new home construction and the ratio of new to existing property sales. Narrow down to your local market(s) by looking online at existing comparables, but also talk with other local property owners about their concerns and plans.
When building new structures, manage risk by reviewing trade area demand — by demographic and daytime population for commercial structures, for example. Look also at site characteristics and examine local competition and contrast with regional differences. Take some time to find out about upcoming environmental regulations.
Be sure to set aside the needed amount for insurance, and err on the side of too much insurance rather than too little, if minimizing risk is an important goal.
Go into a deal with the maximum available capital by not spreading your resources too thin. Keep borrowing low and avoid ARMs (Adjustable Rate Mortgages) unless they’re longer than three years and you expect to sell well within that period. ARMs are inherently higher risk, and the ‘interest only’ type even more so. Rates tend to rise more quickly than they fall, over the long term.
If you have an ARM and rising monthly payments occur, due to interest rate increases, while the market price is dropping (as may soon be the case), consider selling. Even stocks have to be sold sometimes during a period of declining prices. Capital preservation is important for long term investing, and part of that involves keeping liquid during a ‘market correction’.
Some lenders allow borrowing more than 100% of the value of the property. Unless you can use the extra cash in a way that more than compensates for interest and other charges, that’s burdensome debt.
Take the time to seek out trustworthy and competent people — don’t settle for an uncooperative or arrogant Title company or an unreliable contractor because you’re busy. Think in terms of long term relationships. Otherwise, the long term will involve counting financial losses.
Risk can be spread by forming partnerships and, in come cases, by incorporation. Incorporation can allow you to separate personal from business assets, protecting you in case of severe decline. But there are limits — you don’t automatically get to walk away from debts by being incorporated. Partnerships though, if you can find reliable and compatible individuals with whom you’ll feel comfortable over the long haul, can strengthen your position.
Partners can help fill in gaps in your knowledge and experience, provide additional capital and someone to bounce ideas off of. But choose carefully. Differences of outlook can lead to stagnation when it comes time to take action. Remember, risk can never be reduced to zero.
More Affordable Housing Now a Critical Requirement
October 2006
The recent revelation by the Department of Housing that banks have to date advanced R16bn of the R42bn they agreed two years ago to lend to low-income earners has once again focused attention on SA’s need for more affordable new homes.
“Families are getting smaller, but the new homes that are being built seem to be getting bigger and bigger and more luxurious which, contrary to what many people think, is a bad sign for our housing market,” says Berry Everitt, MD of the Chas Everitt International property group.
“For home values to keep rising, demand has to keep exceeding supply across the board, and to achieve that, one has to enlarge the pool of people not only keen to buy and get their foot on the first rung of the property ladder, but financially able to do so.
“And this is the market criterion which government and banks were no doubt addressing through their agreement to ensure improved access to home loans for low income earners. However, housing director-general Itumeleng Kotsoane says a major obstacle now to the faster implementation of this agreement is a serious shortage of suitable housing stock.
“In short, although they can now obtain loans more easily, there is very little that low-income earners can afford to buy, and very little new stock being delivered in this market sector.”
This is not surprising, Everitt notes, since high land and building costs mean that the profit incentive currently for the development of affordable housing units is low, and is often further eroded by high holding costs as a result of unwieldy local building regulations or rezoning red tape.
“However, a concerted effort is now needed to resolve this problem because affordable homes are key to the future of the property market in SA.
“If such homes are well-built and well-located they will, in time, appreciate in value, enabling owners to build equity and increase their personal wealth and buying power as well as their ability to scale the property ladder – and, ultimately, to sustain the demand for the mansions that developers love to build.”
(Chas Everitt International, Oct 2006)
Building Costs Rocket By 19%
17 October 2006
Pretoria – Building costs in South Africa are rocketing, according to anew report released yesterday by Industry Insight, a construction industry market intelligence firm.
Avenge building costs had increased by 19.1 percent year on year during the third quarter of this year compared with an annual increase of 11.4 percent in the second quarter and 52 percent in the first quarter. The increase was based on more than 60 projects awarded in Gauteng, the Western Cape and Kwazulu-Natal.
Building costs increased most rapidly in Gauteng (rising by 31 percent), KwaZulu-Natal (11.9 percent) and the Western Cape (8.5 percent).
A drop in housing activity in the Western Cape had dampened output costs in new property development, it said.
The report added that profitability had come under pressure because of the continued rise in input costs, with the availability of material playing a key role in the final deternination of the price.
The average building rate a square metre rose rapidly last month and increased the overall rate for the third quarter to a smoothed average of R4200 from R3 900 in the last quarter.
However, it said more than 80 percent of the projects surveyed last month had an average building rate of R5 000 or more a square metre.
Tendering activity in the residential property market had eased significantly during the past 12 months, leading to more competition in tendering.
If output costs continued to rise, the average building rate per square metre might start to exceed the purchase rate per square metre of the existing property market, particularly when house prices were cooling.
The differential between new and existing properties was only marginal at a national scale during the last five years, with discrepancies only visible at a microgeographical level.
Ignoring everything but the cost of the structure, it was better to build in Cape. Town, Bloemfontein and Limpopo, and cheaper to buy existing property in Ekurhuleni, Johannesburg and Port Elizabeth.
The composite building cost index for building materials rose year on year to 11.8 percent in August, the report said.
(Business Report, 17 Oct 2006)
Source: Nedbank Property Talk
Property Prospects Still Buoyant
16 October 2006
The industry should absorb negative effects of interest-rate hikes, reports David Jackson. The South African property market remains in a relatively buoyant and upbeat phase, despite underlying concerns about rising inflation and a new round of interest-rate hikes.
The property and related construction industry is gearing up for four years of heightened activity in the build-up to the 2010 Soccer World Cup and the Gautrain project. And the buying power of first-time black home-owners in the residential property market is being recognised.
Neil Gopal, CEO of commercial property organisation Sapoa, says the rising interest-rate environment as a result of increasing inflation and consumer debt levels wilI no doubt have certain implications, but certain segments of the market may be affected more than others. He says township retail developments will probably be affected as the target market will feel the effects of the rate increases.
“I believe if rates continue to increase then it will have an effect on property values. However, I don’t foresee any significant increase in rates immediately and believe an increase will be absorbed by the market.”
Gopal says that international issues such as the Iranian-US standoff could have more of a negative effect on the economy as a whole due to the effect on oil prices. Mike Lomas, CEO of Group Five, says a notable trend in the residential property sector is the number of first-time black buyers entering the market for houses in the R400000 to R700000 category, showing the long-predicted arrival of the emerging black middle class is a reality.
“This segment of the market has changed, and it is driven and underpinned by black economic empowerment. There are a lot of people reaching this level of affordability who were not in the market before.” He says the property market is also set to reap beneficial spin-offs from mega projects such as the Gautrain rapid-rail link in Gauteng and the construction and infrastructure build-up to the 2010 Soccer world Cup.
Lomas says that if construction work goes ahead to the tune of the reported R300bn to R400bn “the money will find its way into the pockets of people who will want to buy
assets, and it would underpin another phase of growth in the residential market.”
There are potential spin-offs in property development from the Gautrain project, for example at stations, says Lornas. He says that although demand may vary and flatten out a little after 2010, the impetus of World Cup-related projects is likely to see investment sustained to about 2014. Group Five, which has a strong focus on industrial and commercial segments of the market, is fmding there is a lot of demand for industrial land. Group Five Property Development Services has launched the Woodmead Business Park in Gauteng as part of a wider development known as Waterfall City. Waterfall City will cover about 2200ha.
Development plans include a residential golf estate, a retirement village, retail shopping, an equestrian estate, office and commercial parks, a clinic and a school, all to be developed on a large-scale leasehold basis. Meanwhile, there are signs of a revival in demand for office space that could slow down the rate of conversion of redundant office blocks to residential apartments, notably in Cape Town.
Keen demand for office space in central Cape Town has been spurred by both demand-side and supply side factors, says Gavin Klerck, development director of CBS Property Group. Market fundamentals have swung back in favour of the office sector and demand is on the rise, he says.
“We haven’t seen this volume of demand for offices in the Cape Town city centre in more than a decade.” Allister Long, MD of Powerhouse, says that with a growth rate of more than 12%, the property market is still a sound place in which to invest.
(Businessday, 16 Oct 2006)
Homeowners’ Bad Debt on the Rise
11 October 2006
Arrears on mortgage repayments are likely to rise sharply over the next few months unless homeowners start curbing their borrowing and spending. This is the message from Standard Bank economist Elna Moolman who’s view echoes that of other market commentators who in recent weeks have warned that consumers could be heading for a credit crunch on the back of rising interest rates.
In a Standard Bank housing review released last week Moolman says that small cracks have started to appear in consumers’ financial health due to record-high indebtedness, an all-time low savings rate and rising interest rates.
Moolman says there has already been a marked up tick in the percentage of mortgage loans that are in arrears (for three months or more) since May this year. This is despite the fact that the latest data doesn’t capture the full impact of the recent two half percentage point interest rate increases.
Moolman says the percentage of non-performing mortgage loans is likely to keep on rising given the expectation of more rate hikes to come and the fact that households’ savings levels — consumers only buffer against rising rates — are at an historical low.
Economists have been somewhat surprised by the continued strong growth in mortgage lending over the past few months, Absa senior economist Jacques du Toit points out that August’s growth in mortgage advances remained high at 30,3% (y-o-y). Mortgage advances have grown at record 30% since March this year.
Du Toit says the ongoing growth in demand for credit from homeowners will be one of the factors that the SA Reserve Bank’s Monetary Policy Committee (MPC) will consider next week when deciding on the way forward for interest rates. Du Toit expects rates to rise by at least half a percentage point next week and another half percentage point in December with further hikes likely during the first half of 2007.
However, economists say homeowners’ bad debt situation is not expected to become dire relative to previous rising interest rate cycles. Moolman says currently the percentage of mortgage loans in arrears is still at a relatively low 2,17%, which is far less than the high of 8% recorded at the beginning of 2003. she also argues that SA consumers’ indebtedness is not nearly at the same level yet as that of their American and UK counterparts.
(Property 24, 11 Oct 2006)
Source: Nedbank Property Talk
