New Property Finance Loans in the Western Cape region from Nedbank Corporate's Property and Asset Finance Division are up some 30% on the combined totals for COGHB, BOE, NIB and Nedbank Property Finance for the same period last year - before the merger into the new structure within Nedbank Corporate.

Peter Smith, Regional Head of Nedbank Property and Asset Finance in the Cape, revealed recently that Nedbank's property lending through its residential development, corporate and commercial property lending activities, together by the end of September, had committed well over R3 billion worth of new loans to property projects. This had been achieved in the nine months since they started operating under the Nedbank banner.

"These excellent results " said Smith, "are primarily due to the strength of the Western Cape property market which is currently booming as never before - and to our leading position in this market, a position that has been consolidated through the merger and enhanced through focussing specifically on the different elements of this region’s property sector.

"By separating our activities between Commercial Property and Residential Development (headed up by myself and Richard Edwards) on the one hand and, on the other hand, the Corporate and Major Development markets sectors (headed up by Timothy Irvine) we have been able to service most aspects of the market in the Cape."

Smith said that time and again in recent months developers had reported 60% to 100% sell-outs on projects within the first two to three weeks of the launch."In certain cases projects were sold out in two or three days and the fast sales in Tyger Falls, Big Bay and The Island Club at Century City quite frankly amazed us all."

This increased demand, added Smith, has resulted in more contracts being awarded with positive spin-offs for the construction and professional sectors. This is likely to increase as new projects come on stream and as the year-end close down approaches.

Asked how long he thinks the present bullish scenario could last, Smith said, "At least a further 12 months - and possibly even beyond 18 months. The difficult-to-assess factors are impact and quantum of the foreign buyers and those from upcountry.

"Recent figures indicate that the Western Cape is likely to experience a 12% to 15% increase in tourism this summer. That, I believe, will further boost sales, particularly in the upmarket areas like the Atlantic seaboard, Constantia and Hermanus, even though in some areas house prices are probably now very close to their peak.

"Then, too, the recent drop in the interest rate and the likelihood of a further drop before the end of the year will go a long way to keeping the residential property market alive."Nedbank, said Smith, has noticed a "substantial" shift in the buying patterns of many home occupiers from areas of traditionally lower demand to those in the slightly more expensive districts like Ottery, Rondebosch East and Wynberg East. This, in turn, is putting pressure on areas in the middle and higher price brackets.

"People who a decade ago tended to live in rental accommodation, often with their parents or other relations, are now becoming home buyers. The whole trend is encouraging," said Smith.

One result of the boom, he added, is that prices have often escalated at over 20% in under 12 months - again, something not seen before. Certain areas like Fresnaye, parts of the West Coast within commuting distance of Cape Town and the southern half of the Constantia Valley are becoming as popular as the top priced areas, he said.

The downside of this rapid development, Smith added, is that infrastructures, particularly roads and services, are beginning to prove inadequate in many areas. "The West Coast road and the main arteries into Cape Town will definitely need attention and supplementing within the next two or three years," he said. "Traffic congestion is now becoming unacceptably high and rendering commuting inefficient."

At Nedbank, Smith added, the increased turnovers, coming on top of the challenges of making the new merger operative, created "challenges". Clients had, however, been supportive "which had helped enormously at a time when increased sales volumes left us little time to breathe!"

"We are certainly not complaining about the increased volumes and welcome the market acceptance and support received to date. Although we do not foresee turnover in the next 12 months growing at quite the same rate as the year past, a list of measures had been put into place to ensure we are able through our Commercial and Corporate Property teams to service clients quickly and with the innovative flexibility for which our businesses have always been known."