BUYING COMMERCIAL PROPERTY

Buying commercial property means buying space or a building that will be used specifically for business purposes. Considering the money you could earn from either renting out or using the property for your own business, buying commercial property can be a worthwhile investment. Here are a few tips to consider when buying commercial real estate.

Take Your Time

You should never rush into buying commercial property. This is a process that should be considered with great care. Do you know exactly what you are looking for? Do you want an empty building or one with tenants? Is the area suitable for what you plan to do on the property? How is competition (regarding your business) in this area? Is it in a part of town where your services will be needed? Make sure you know exactly what you are looking for and whom you want to target before deciding what commercial property to buy.

Financial Planning

Once you have decided what kind of commercial property you are looking for, you need to think about finances. You will probably need a long-term loan for this new investment, so take the time to discuss your various options with Mortgage Plus “mortgage broker”.

Make sure that you get pre-approved before starting to ‘shop’ for commercial property, so that you know exactly what you can afford and what you shouldn’t bother looking at.

Find A Suitable Real Estate Agent

When you are pre-approved, the next thing for you to do is find a realtor who is an expert in commercial property. Be very clear on what you are looking for, as this will help the estate agent to find the perfect place you are looking for. If the agent does not have a clear idea of what you want, it might waste a lot of time running around looking at places you are not interested in.

Business Partners Properties

Business Partners Properties owns, manages and develops properties throughout South Africa and offer rentals that are normally at market related levels for the areas where the properties are situated

Khula Enterprise Finance

The dti (Department of Trade and Industry) recognises that support in the form of advice from specialist organisations is vital and the offer support groups to SME businesses. One such arm is Khula Enterprise Finance which is a wholesale finance institution that has well-developed ties in the public and private sectors. Through these channels – which include commercial banks, retail financial institutions, specialist funds and joint ventures, they play an effective role in order to bridge finance gaps that are not addressed by commercial financial institutions in the small business sector.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

The May SARB Leading Business Cycle Indicator points to further possible weakness for the residential mortgage market

With oil prices still troublesomely high, the global impact of QE2 (the second round of US quantitative easing) wearing off, and a lack of further interest rate cutting locally, yesterday’s news that the May SARB Leading Business Cycle Indicator had weakened further came as little surprise. On a month-on-month basis, the indicator showed negative growth for the 3rd consecutive month to the tune of -1.6% On a year-on-year basis, the indicator also entered slightly negative growth to the tune of -0.08%. The significance of this for the residential property market is that the growth rate in the value of new residential mortgage loans granted tracks the Leading Indicator trend quite closely, with residential mortgage grants growth trends also typically “leading” the business cycle.

The extent of the correlation between the two is witnessed in the bottom right hand graph, where the year-on-year growth in value of new residential loans and re-advances granted has also been steadily slowing since around mid- 2010, dropping into negative growth territory by March 2011 (-4.8% using a 3-month moving average).

The explanation behind the simultaneous decline in growth rates of the 2 indicators is that a deteriorating economy implies pressure on household sector income growth. This, along with a lack of further interest rate cuts implies nothing significant to further improve households’ ability to pass the affordability criteria required to obtain a home loan.

While it is difficult to use the SARB Indicator as an indicator with which to predict the movement of another leading indicator, the economic environment that has led to its weakening does not look good. In the USA, the August 2^nd deadline to raise the legal government debt ceiling to avoid defaulting sees that country at risk of having a downgrade in its credit rating. Even should it manage to raise the ceiling in time, there appears a general recognition by its policy makers that fiscal deficit reduction in order to reduce its borrowing requirement is needed, and this is a negative for the

world’s largest economy. On top of this, the US remains the main oil guzzler, and oil prices remain stickily high. No surprise that key global leading indicators have seen growth rates tapering.

Domestically the SARB has had interest rates on hold since November, and the stimulus is wearing off, while the household sector is busy rebuilding its balance sheets..

Further slowing in growth in the May Leading Indicator, and even beyond, should therefore come as no surprise given the state of some of the world’s biggest economies, along with a lack of monetary stimulus at home. For the residential mortgage sector, it probably means more weakness to come in the near term.

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Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za