Western Cape a lucrative battle ground

Posted On Friday, 06 September 2002 10:01 Published by
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The risks in the SA property market are high, but the disadvantages are limited, says German investor Mathias Bode
The risks in the SA property market are high, but the disadvantages are limited, says German investor Mathias Bode

THE battle is on for the lucrative top end of the residential property market in Western Cape, where competition between estate agents has increased to the point that foreigners are entering the fray as entrepreneurs as well as buyers.

German businessman Mathias Bode, who recently acquired franchise rights in Western Cape from Engel & Völkers SA, plans to expand it by buying out other real estate agencies.

'Our new shop in Camps Bay, which will be opened this month, is a positive reflection of our aggressive expansion strategy in this highly sought-after residential area,' Bode says.

His interest in the Cape was inspired by his purchase of a property in Llandudno last year. The sale was handled by Engel & Völkers. He was their first client in SA.

'I am extremely confident in SA's future,' says Bode. 'Although the risks are high, there are limited disadvantages which are completely overshadowed by the upsides.'

Bode, whose family owns an optician retail chain in Germany, bought his first company at the age of 23. He has subsequently acquired and sold numerous other companies, and set up Xpansion AG, his financial vehicle for buy-outs, mergers and real estate developments.

Engel & Völkers was first established in Hamburg in 1977. It has grown to become Germany's leading service company for upmarket residential property, with 60 offices and more than 750 employees across Germany, Switzerland, Spain and SA.

Andrew Golding, CE of the Pam Golding Property Group, welcomes Bode's move. 'The fact that foreign companies are coming in is very encouraging,' he says.

Pam Golding is the dominant player in the Western Cape market, with a 30% share by value. It has a strong association with leading British agency FPD Savills, which is represented throughout Europe, and has its own offices in London and Munich.

'We have worked hard for 10 years in promoting SA as an option for people wanting to buy property outside their own countries, and those clients are finally buying,' says Golding. 'The market has been buoyant for two years, and in the last 12 months there has been a significant increase in the number of foreign buyers. It looks as though the floodgates might open.'

Pam Golding's average price for properties sold to foreigners is R1m, compared to its national average price of R500000.

Andrew Golding says the low barrier to entry has seen a number of new estate agencies in the Western Cape market, which is 'highly traded and very competitive'. Some agents have established niches for themselves on the peninsula.

One company making a concerted effort is Durr Holdings, which was formed in November after the liquidation of Durr Estates International. Major shareholders Eskel Jawitz Real Estate of Gauteng and Wakefields Real Estate of KwaZuluNatal are planning strategic licence agreements with niche estate agents in the target regions. Licensees will be given shares in the company.

Engel & Völkers, meanwhile, is fast-tracking its international expansion, opening a new 'residential property shop' every 20 days.

Bode is confident it can make a big impact in SA. 'We are a one-stop service company with well-established relationships with investment banks and law firms in this country,' he says. 'This significantly decreases the risk of foreign investment, which is a unique selling point for our overseas customers.

'We will also launch a state-ofthe-art information technology network in the last quarter of this year. The SA offices will be the first to be connected to this virtual real estate environment.'

Director Caren Henschel, who sold Bode his Llandudno home, says the agency aims to win 10% of the Western Cape's 'high profile' market within 18 months. Henschel, an attorney who worked with Engel & Völkers in Germany, opened the local offices in April last year.

Sep 04 2002 12:00:00:000AM Trevor Bisseker Business Day 1st Edition


Publisher: Business Day
Source: Business Day

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