When one looks at the economy, current markets and political environments both here and abroad, it seems that we are certainly living in interesting times.
However, the CEO of ClareMart has always been of the philosophy that even under conditions of uncertainty there are opportunities to be had. “Our Group maintains that the purchasing and disinvesting of property via the auction mechanism is as viable an opportunity now as at any time, interesting or not” says ClareMart Chief Executive, Jonathan Russell Smiedt.
Jonathan Russell Smiedt is founder and CEO of the ClareMart Auction Group
Many consumers are seeing petrol price hikes, higher interest rates and mining sector instability as well as political uncertainty in an election year as being pivotal in how they perceive markets and property in particular. “The latest petrol price increase will mean that 95 unleaded petrol will be just a few Cents under R14 per litre for the first time in South African motoring history” says Smiedt.
The recent announcement by Reserve Bank Governor, Gill Marcus, of an increase of the repro rate by 50 basis points to 5.5% which increases the prime lending rate to 9% from 8.5%, has a weak Rand and inflationary risks as the main reasons. “This decision by the Reserve Bank has created a stricter and tighter monetary policy in regards to those who are financing debt” says Smiedt.
Other factors affecting the Rand and thus markets are the resumed strikes in the platinum and other mining industries. Internationally we are seeing European shares experiencing recent losses as well as growth worries in the US, all of which ties in to our own markets and currency” says Smiedt.
According to Smiedt, the property market and auction mechanism in particular are not necessarily to be seen in the same theme of doom and gloom. “Both sellers and buyers of property can look for the opportunities in economic conditions such as these and it is always important to remember that properties in good locations or which yield a viable return or are desirable due to their appeal, will in general terms always be a solid choice for investment”. Smiedt adds that smart money always points in the direction of investing in the opportunities that present themselves in these times.
The current lending rate may see many buyers who were looking at conventional real estate purchase find it difficult to actualize their ambitions. Sellers who are considering off-loading property should take note that doing so via auction often allows for interaction and access to national investors and a broader bank of informed buyer and can result in a quick and effective sale, where there are no suspensive conditions attached to the offer and the true market value can be achieved openly, competitively and immediately.
“Having a property marketed for months where the initial price is countered progressively lower can in fact see a resultant price achieved, far below the actual market worth. Auctions prevent this from happening and can in fact achieve higher results than the seller’s initial expectation due to the nature of the competitive bidding atmosphere” says Smiedt.
Smiedt believes that buyers also benefit from the opportunities existing due to the current economic climate. “There are invariably many who are unable to continue the maintenance of their properties or the financing thereof in these times. Our Group, for example, holds monthly multiple auction events where we are able to showcase various models and portfolios of properties from across all sectors and structures in the property market. These monthly events coupled with our numerous weekly on-site auctions offer those buyers and investors who are able to finance property without the concerns of the lending rate, a veritable wealth of opportunities that are placed on the market by serious sellers” says Smiedt.
Globally, the property market is seen as a stable, sound investment in lean times and a lucrative investment in upward swings. “I encourage those who are looking at entering the real estate market to look around, look at properties, speak to our auctioneers who have a wealth of knowledge and find an investment that suits your portfolio capabilities. Let interesting times dictate what you could make of them”.
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