Erwin Rode

Name: Erwin Rode
Company: Rode & Associates
Position: CEO

1) Do you give any credence to the recent speculation of a potential 40% drop in the highest house prices, and what is your prediction?

One should not confuse asking prices with market values with prices. They are three different concepts. The estate agents who are so negative are so because the number of sales is down (affecting their income) and the few transactions that do take place are well below asking prices. But asking prices are determined, at the moment, by unrealistic expectations because the sellers out there are still extrapolating the furious growth of yesterday to tomorrow. I expect that house values will, on average, decline by up to 10% next year compared with December 2007 values. The upper end may be worse than this, with the exception of premium areas like the Atlantic Seaboard in Cape Town which seems to be supported by foreign buyers.

2) If residential prices are dropping now, do you agree with the assumption that the 2010 World Cup will provide a boost to the property market?

No, the 2010 enthusiasts will have to revisit their predictions, which have never been based on fact. In Germany, the World Cup contributed an estimated quarter of a percentage point to their GDP growth in 2006. How on earth could a one-month tourism orgy affect the property market? I have never understood the logic behind this assumption.

3) Demand for commercial property still appears strong. Do you see this trend continuing?

Yes, but the Eskom debacle has dented the boom, because Eskom has now placed a 7-year cap on the growth rate that the South African economy can attain.

4) For investors, which areas offer the highest per m² rental space and highest occupancy rates for commercial property?

Sandton CBD, as always, is the hub of our financial sector and doing best. But the whole of the urbanised country is doing exceedingly well; even the seedy CBD’s are growing, albeit from a low base.

5) Where would you predict the next property hotspot to be in South Africa?

It is difficult to forecast new fashions, but the golden rules of access and security and closeness to places of work will win the day. Especially proximity to work is becoming more important in light of the traffic jams brought about by new wealth and robots on the blink.

Visit TradeInvestSA every Friday for a new interview with one of South Africa’s leading business personalities.