ZERO [Part 2]

From Zero to Hero.

You have heard the term; a kind of Rags to Riches phrase.

It has extreme application to this blog. You see Hero as You if you function as a sole trader or commissioned estate agent or bond consultant and certainly, it has application to every business.

The Business [read, if applicable: You] is the Hero. Nothing you do, nothing you say, nothing you commit, no contract or future promise or anything that you spend or save, should be done for you as opposed to your business. Your business is your steed in war, your comfort in distress, your source of funds and funding, your means to grasp opportunity, your tax-breaker and your tax-maker, your alter-ego , your income and cashflow, your means to success, your source of wealth and that of others – your business is the Hero under every circumstance. Keep it alive and you and every dependent upon it, is kept alive. Allow it to fail and you and every person dependent upon it fails. If you are a breadwinner in your family or a significant portion of your household income, You, in your individual capacity, are the Hero. You or your business become the reason for your commercial existence.

Too extreme a view? Consider this. It’s May 2008 and you are about to retrench the first employee. It’s painful, not according to plan, and she is your friend. But all you can say is, even though you have had a very good profit for the month, you know that sub-Prime will shut those profits down within 8 months as the banks pull in their credit granting and go into an underground shelter that only an annuity mortgage business can provide. You have to begin retrenching while you still have the resources to give your people an adequate retrenchment package that profits and cashflow allow. It is horrible to face them but if you keep the company, the Hero, alive you know you have a chance. Cull it and it culls you. We succeeded and the company survives to this day. If the view had been different, a kind of Winner Takes All mentality, the company would have folded and the people would have been seriously hurt. This way, we all felt the pain but everybody was cared for to the best of the company’s ability and we all retained our dignity. A tough, true story.

After a Zero to Hero story, the above shows you that you need not be Hero to Zero on the other side and even in the most extreme of global economic circumstances since the Great Depression in 1929.

On the 31st of October 2016, we received the news of Pravin’s [and his SARS colleagues] release from fraud charges. These little good-news windows, provided by the one-and-only Shaun Abrahams, are an opportunity to take a breather and blow a fresh breath of life into your Hero, your business. Don’t be surprised if the long-winded retraction of the charges, spurred by the Helen Suzman Foundation and Freedom Under Law submissions, is not already being taken into account by Moody’s [open to correction] in their 25 November pronouncement regarding the possible downgrade of their rating. A fight well fought and won – Justice prevailed!

So with that firmly stated, three more things to watch for as Zero remains our stagnant growth path.


Income is obvious to every business but what I want to highlight here are some tips for its measurement. Strangely enough, more is not necessary better. Watch for:

  • What proportion of your income comes from one or more sources? You see, a mix of income sources is better than “client reliance.” One or few big clients have the ability to call the shots, and the ability to cripple your income if they leave for whatever reason. The Pareto Principle, 80% of income comes from 20% of clients is as significant in 2016 as it was when Pareto posited the theory. Don’t be caught and lulled into thinking that the “one big client” won’t have you for breakfast one day. A golden rule is to have the courage to deduct a big client’s income and work the business on the balance.
  • Your geographical spread is important. The Western Cape is growing, the Northern Province declining and Free State Province and KZN may be in decline. Is your business showing this or not? If not, expand where growth is occurring and be wary where growth may be in decline. You are not special, business follows trends and if not, the note above this one may apply.
  • What proportion of your Income is new business versus existing business? Are you dependent on old business? Could it dry up? Have you become complacent that you can hold onto all those existing relationships? Or should you be hunting for a greater proportion of new business? Do your sums and check your stance to them; you may avoid a huge surprise in the near future.
  • What proportion are paying customers and what is not? Turnover is a fool’s paradise if cashflow does not result. Debtors are real assets until they are not; then they drain every ounce of resource out of you – your time, your emotions, your facilities [more about this below], and your cash. Your Debtors Ageing Analysis says it all. It is the tool of your past and the measure of your future. When it ages, you age. You have to keep income coming from debtors who are experiencing Zero just like you; tirelessly hunt payment or it will hurt you. Debtors and Rentors are very similar. Either one may not pay you and you need to nip the issue in the bud and get paid or get out.
  • Finally, the health of your income lies in the margin. For the traders, your Trading Account says it all. Turnover less Cost of Sales plus Opening Stock less Closing Stock reveals your margin [Gross Operating Margin]. You may keep turnover by reducing margin but the more you allow it, the less your Hero can afford one mistake. Hear me please. The big client with the reduced margin that squeezes you for extended terms – yes, that client – could be the rod that strikes your back. One bounced cheque could be all it takes to reduce your Hero to Zero. And that old fact, played out in so many businesses over the decades, unwinds all the goodwill with bankers and funders built over years. Identify them, and deal with them – at least, having read this, understand the risk you face.

2. Facilities

As an old banker, there is a saying that bankers lend you an umbrella in the sunshine and take it away in the rain. True, and the reason is that bankers have a fiduciary duty to the investors and not to their lenders. In the massive size and excellent capitalisation of our banks, we forget this truism. But I can tell you, it is built into their DNA from the day they join the bank, and will come at you in times when you need facilities most. Hero needs to arrange facilities when Hero’s financial figures are good. Yes, the bank can call the facilities in but it is useless you going to the bank when you need the money; it’s just too late. Facilities, well positioned and used from time to time and managed immaculately, are not optional when you need it as Zero growth slowly takes hold of your business. Extend your bond in the good times as a precaution; afford your business facilities when the Income is great. Many of us, who have had to survive the bad times and this consistent “Zero” growth, know that those facilities are life savers if and when you need them. Of course, I’m not suggesting a lack of discipline. Don’t have the facilities, use them to continue to fund your lifestyle and then cry that they are used up when you really need them – Please No!

3. Staff Morale

One thing you know as the steward of Hero is that People Matter. Be careful that you don’t adopt a haughty “if you don’t like it, leave it” attitude with your people. Some of those people are the reason why you are where you are. And so help them, they could become the reason why you end where you don’t want to be. I know a business that is highly dependent on a Rep, another which is highly dependent on an Owner, another that requires a Specialist Team to thrive [I remember the day when the Syfrets traders broke away and formed Coronation Asset managers – and the rest is history], another that has lost key resources and another that needs to address Ageing Ownership in order to survive. All Heroes in their own right, but all dependent on the people who run them.

Don’t think that your people don’t read the papers and get worried about their futures. Ook maar net mens, I could say. But, it is your responsibility to lead them for the benefit of Hero. They deserve to know where Hero is at – going bad, they tighten belts, going good, they benefit. But if you look like you’re against the ropes every day and they don’t hear you trading in Hope, they also become miserable. Bear in mind this truth I have learnt many times: People don’t leave you when they leave, they leave you long before they go. Up to that time, they are expense but when they leave, as much as they may leave a huge hole, they at least don’t cost money. It sounds callous but those of you who have worked in tanker-type Corporates know how much damage an unhappy person can do for so long before they finally leave. How much more pronounced is the effect when in a small company, someone is miserable, unhappy, unproductive, toxic and just plain obstructionist. When Hero is the reason for being there, at least you have a mirror to hold the person to until they get happy or leave. How many times I haven’t said to someone, You can leave but leave a good report behind you. In Zero, people get unhappy; they feel Hero’s strain and pain [in your face!] but it is your responsibility, your sovereign duty, to ensure that the morale of your people is as high as you can make it. As a leader, you trade in Hope and Zero needs you to fulfil that responsibility.

I have written my heart out. Years of boom and bust and Sub-Prime have taught me the little that I share. The quality of your income, long-arranged facilities and motivated people can bring you through, You and Hero, your business.

Just a word on Homeloan Junction. This Hero may not be  the biggest but it is a conqueror. October 2003 feels like history but it was founded then in a single garage in Brackendowns. Courage, intelligence, facilities, discipline, trusting relationships, and hard work carried it through. Entrepreneurship of the highest order with inexhaustibility [if that’s a word] kept it alive and made it the success it is today. People always mattered and have been the foundation of all it has achieved. Bottomline, with guts like that, you are well placed as an associate and a client.

Part 3 awaits. Hope you’re gaining some nuggets to think about.

Yours in Property

ZERO [Part 1]

If it were debt, this would be a seriously catchy title for my blog.

Sorry for you, but it isn’t debt unless you are one of those very fortunate few who have been wise and able to reduce your lifestyle to zero debt; more of that later.

It is the prospect for future growth in a given scenario in South Africa. And the really good news is that it seems we will avert it if can all work together. This blog will toggle a little, but I really want you to know two things up front:

  1. I believe we will not see Zero growth in our country.
  2. In case you have a jaundiced view of SA growth, bear a thought for Britain as it falls asleep economically at 0.5% growth post Brexit. SA is not the only egg in a tough economic tray. Brazil is -1.22% over the last 5 quarters, Russia was -3.7% in 2016 (estimate) and -1.2% in 2016 (forecast). India and China, both slower at present, carry BRICSA at 7.5% and 6.7% respectively.

The Medium Term Budget Policy Framework was another brilliant outline by Pravin Gordhan. At the heart of it was mutual co-operation. My belief is that SA Inc does understand that pulling together at this time could bring us through without a downgrade. In addition, despite the national debt at an all-time high, [frightening at R2tn and interest per year of R149bn!], he projects a reduction of Debt:GDP over the next 2 years. Unfortunately, in the absence of growth, that reduction will come through cutting government expenditure and higher taxes. I have made the comment many times before that our economy is well-managed under Treasury and SARB but we need, with SARS, to dig ourselves out of a (w)hole (lot) of debt.

So why Zero if all this positive belief abounds? Well, Pravin reduced our growth forecast yesterday from 0.9% to 0.5% before telling us this would change upwards next year. You can argue with me, but with the IMF also downgrading the growth forecast to 0.3% and the Sword of downgrade Damocles hanging over us, whatever the growth will be before the upturn of it, Zero sound like a number to capture my attention. Bear in mind that when you have a dramatic, quick drop in growth, you cope abruptly. It is this slow [“zero”?] growth that worries me on behalf of my readers. You can be lulled into believing that “everything seems to be okay” and then only get caught that first month salaries are late. The same applies for companies as for individual households, so whether you’re a housewife, an estate agent, a principal or a company owner, the rules apply.

If you buy what I’m saying, let’s look at how you cope with this slow growth scenario. No rocket science, just some sage input from 40 years of being in business. The real good news is that you can survive and even flourish if you just heed some simple actions.


Nothing beats a careless attitude oblivious to reality. The good times end so slowly in low growth that complacency can set in easily. Remember the Rand when it bounced up to R15:US$1 and then came back “as it always does” to under R8.50? Oh really! Well it’s a little stickier this time and struggling to stay under R14. But, complacency says, we’re learning to cope. Oh really! If you’re reading this and thinking: “Hmmm….”, you’re probably not complacent. You’re probably aware that the only thing that is saving the world’s bacon right now is the Oil price and quite low inflation, both of which retain low interest rates. An attitude of: “Ag, we’ve coped with bad times before”, may belie the slow constriction of your business causing things to simply slow down.

Let me be clear, I would take what is currently happening any time, rather than some of the sudden sub-Prime medicine of recent economic history and the Boom/Bust cycles of our past economic history. The former was a gut-wrenching blow to every part of every business; but the latter was completely unstable. It was easy then to solve the problem of inflation by raising the interest rates, suppressing demand, until you could release the throttle again – binary monetary policy with a little fiscal help. These days, with the world so small and money flows almost instant, the monetary and fiscal armoury is far more complex and difficult to assess. In all of this, complacency settles in and weaves the relaxation of business to the reality that is gathering like storm clouds. Beware!


Costs creep up on you like complacency. Simple really – you start complaining how expensive things have got. The stationary bill rises 12% year on year, your staff need increases, transport gets expensive as fuel taxes rise, your medical aid goes up 10.2% [that’s Discovery for real in 2017 and rising!], and SA communication costs are world record-beating. But the first year you don’t feel it, the second gets tough as you discuss business over a beer and then the third……… well, that’s when you realise that it’s not about the costs, it about whether the cost is really necessary. Big difference!

Reinstate your quarterly meeting with your accountant and start to analyse those Income Statements year on year and one year before that. Have a look at the trends that highlight movement upwards. Go home and sleep on it. If no trend is too dramatic, pat yourself on the back and make sure you diarise the next meeting; your turn will come. If there is something obvious, begin the journey to recuperation sooner rather than later. One of the great ways to do this is to assess each line of cost as a percentage of Total Cost or as a percentage of Turnover. It is much easier to go up than come down. But, coming down saves businesses despite the hardship for some. Little is sacred when it comes to cost reduction. You probably never had the cost or its proportion a few years ago. Now you have allowed it to escalate out of proportion and it’s dragging you down. Ke Nako – It’s Time – to deal the issue before Zero tightens its grip.


Cash is king. Old but ever-true. Let me bottomline Zero when it comes to cash in your business – if your cash reserves are draining, you have a problem; plain and simple. Cash reserves accumulate when you have a healthy turnover with healthy margins, controlled expenses, managed capital investment and paying debtors. In our blog, Overtrading, we discussed growing too quickly and running out of cash to carry investment and debtors. Here in Zero, we consider turnover and margins declining while expenses and debtors increase. The answer to the latter is spelt N-O-N-E and it refers to your cash in the bank. Please remember if you’re reading this blog but you don’t have a business that you are nothing more or less than a one-person business. If you are not experiencing cash accretion, Zero could be at your back door. Awake from complacency, assess and manage every cost downwards or out of the system, and then re-build your cash reserves.

I say this many times but it bears repeating. Quoting Jack Welsh, “Take control of your life or someone else will”. In this blog I have offered some advice to stir any complacency and ensure the health of your business. In Part 2, I will continue this down-to-earth message as we all cope with very low economic growth. “This too will pass”, said Og Mandino and the one thing I know is that despite the tough times [Mr Gordhan says two years], we can and will come out stronger.


Yours in Property.


Never heard the word?

Well, BREXIT stands for: Will Britain exit the European Union? MUNEXIT stands for: Will the ANC exit the municipalities of Tshwane, Joburg and Port Elizabeth? One, or two, or all three and/or in any significant proportions?

The lovely thing about democracy is that you don’t know. Many polls have seen the DA and the ANC neck-and-neck but, like the polls that had the world on a high 48 hours before BREXIT, they could be wrong. Then, of course, even before the result, we have the political commentators talking about who would be good bedfellows – the ANC and the EFF, the EFF and the DA or the DA and other smaller parties etc, etc. Finally, there is the talk of the smaller parties falling away from the South African political landscape as the larger parties warn voters that a vote for “small party” means they could not have enough to get into Council but the ANC could have one more proportional vote for their candidates.

Politics is not boring and one thing we know, this is the most important election since 1994 and probably the forerunner of a few “most important elections” to come. The reason? The ANC is fractured and caught between reason and the President – it’s centre, so critical to political power in any party, is cracking. No attempt to heal the rift has been successful and they are now dependent on a massive show of support in Gauteng even as I write.

On 31 December last year, Clem Sunter gave us 10 Flags to watch this year. A number have been playing out in global economics and politics. Very interesting that BREXIT wasn’t mentioned but SA Elections 2016 was. Here are the Flags and I’m sure, in no particular order of importance:

  1. The oil price [into the $30’s, back to $50 and now early $40’s [and I read to day the mega-oil companies are making mega-losses whilst the over-supply continues]
  2. Global temperatures, floods and droughts [we have not been left unscathed]
  3. The US Federal Reserve Bank [read: “US interest rates”]
  4. The Chinese economy [who could ever forget those January collapses in the Chinese stock market where falls were faster that the “close the market” stop-losses could trigger in?
  5. The war in Syria [Europe has changed for many, for ever]
  6. Vladimir Putin [“Mr Putin is a strong leader who wants to restore the superpower status”]
  7. The American presidential election [Donald is chosen but Ted Cruz won’t even endorse him and Hilary may be sanctioned before she even has a chance to run – amazing]
  8. A global pandemic [the Vika virus hasn’t just concerned the Pro golfers and antibiotics failed to heal a person in the USA this year – all’s gone very quiet]
  9. The municipal elections in South Africa [THE FULL STORY IS RETAINED, FYI]

“The results of these elections will indicate to what extent all the controversies of 2015 have affected the popularity of the ruling party and its leadership. The flag is not just about the percentage of the votes that each party receives, but the total turn-out too in terms of judging the outcome of the next general election. Meanwhile, the Rand/Dollar exchange rate remains the best indicator of the world’s take on developments in South Africa: whether we are consolidating our position in the Premier League of nations or meandering downhill into the Second Division.”

So there you have it, little ol’ SA gets into the List of 10 once again. We certainly do always box above our weight!

The one thing we cannot do is debate the stats when it comes to well-run municipalities. The DA runs the greater majority of them in the Top 10. More importantly for this blog, is what happens in well-run municipalities is that property prices rise. In fact, I would stick my neck out and say they rise at a level greater than the national rate over the long-term – that’s a dead cert in Cape Town. Probably the reason is simply that people want to live there and are prepared to “pay up” to do that.

That said, the most recent [June 2016] House Price Indices of the banks have been an interesting read:

  • According to ABSA, the Middle segment has shown the most resilient growth dropping from 6% in February to 4.9% in June 2016. Overall house price growth so far this year has been 5.7% and points to a negative growth of between 2 and 2.5% in Real house price growth for the year.
  • FNB remains quite positive. “…….little cause for concern at levels of financial stress” is the way John Loos expresses his introductory remarks in his Mortgage Barometer of 19 July 2016. However, he goes on to say that their Household Debt Service Ratio is “under pressure”.
  • Standard Bank is somewhat of an outlier but one needs to bear in mind the different ways banks measure house prices. They record house price increases at 7.3% due to the fact that credit extension by the banks remained robust for longer than expected.

A recent report from Homeloan Junction shows that volumes of Applications for bonds have remained resilient and even better than last year. That’s an excellent statistic and well done to the Team! 


So, why the interlude around the house market and its prices? People like to live in safe, clean environments. They like their kids to go to school in well-run establishments and when sick, to be cared for in sanitized, proficient hospitals. Doesn’t that sound like you and I? It’s true as well that the only way we can influence the current status of these facilities, is by using our vote. Never mind the conjecture about the ANC, the DA, the EFF and the Small parties, all we can do is put our “X” where our conscience leads us. What an act of utter individualism, what personal power with responsibility. Once every 4-5 years, we get to change the world; well, at least the one in which we live. How fascinating the process and how knife-edge it has become for some leaders!

May 3 August 2016 ushers in the local government we deserve as citizens of this beautiful, tortured country. May White and Black, Coloured and Indian, every valid citizen, go to the Polls en masse and vote with reason and conviction. No greater truth exists than that property is more valuable in well-managed municipalities. And the choice of who manages our towns and our Provinces is solelydriven by our vote.

As for the process and the outcome, we will know by next weekend how things have gone. What then follows is anybody’s guess. But, to return to Clem’s 10 Flags blog, a closing thought for you, our friends in property:

“If you are a pocket of excellence, you will thrive irrespective of how 2016 pans out and which scenario is in play. Foxes adapt and win!”

Yours in Property.



So what do we say, South Africa?

Against the backdrop of S&P’s “steady as she goes” decision, we have won a reprieve. That is until December 2016. Remember, we still have Fitch to come and if I was a rumour-monger, I would say they exited SA early this year in order to deliver bad news from afar.  But, that would be churlish as Rating agencies are particularly circumspect before they deliver judgements upon economies, especially those that result in sub-investment grade. As I recall we will have their decision within a month.

Who’ve we got to thank? Not Boland Bank but two institutions. The one is Pravin Gordhan and his Treasury team who must have done an amazing job in the past 6 months to avert a certain downgrade. Recovering from Nenegate, straight into Budget 2016/7, navigating Guptagate and all the speculation around it and then walking through the fire with the Hawks and their implication. What a feat for Treasury to whom we owe a debt of gratitude.

The other is Business. Thank goodness that in December 2015, they rallied around the change of mind about David van Rooyen and began what may prove to be the best Public Private Partnership [PPP] in our modern economic history. The teams that volunteered to work with government must have laid the ground for solid feedback on growth, labour and jobs to be positioned with S&P. Who knows but that in these early stages, we are not laying the foundation for progressive growth targets with the necessary compromise between Labour and Business so as to achieve meaningful employment in the balance of the year and beyond?

Of course, there were those of us [even me if I’m honest] that wondered if we could avoid the downgrade. On the back of Friday the 3rd’s news, many have said, “Well, we still have to get through December”. Let me tell you, if you had given me “stay as you are but prove yourself” as an outcome on Thursday, I would have taken it with both hands. We can face Fitch with new confidence and assuredness that we have the presentation, the evidence and the support to remain as is and work forward.

The great thing now is that we have a fighting chance. And we can come out on top. Many have referred to the Social Compact and this era could be the very galvanization that we need to find Government, Labour and Business around the table.

One thing we know is that we trade in Hope and its cousin, Confidence. With a market happily over 54000 and a Rand smilingly below R15, we have early stage Confidence. For you and I in the property industry, Confidence = Sales.

It’s a short, sweet note, this blog. Let’s hope Fitch is convinced we have the teams and mettle to improve and the wisdom to focus while we vote. Then they leave us “as is” to get on with being better by yearend. And with that decision made, that our market enjoys a fillip going into the 3rd quarter as we shrug off the negativity with a sense that all will be well.

Wishful thinking or Reality? Like Ford said: “If you think you can or you think you can’t, you’re right.” Let’s trust we’re going to surprise ourselves. And in any case, surprize yourself in the second half of 2016.


Yours in Property,

Jack Trevena


Can you believe it, the year is far advanced. And what a year it has been with probably the only gorilla in the national room being the arrest of our Minister of Finance. So far, everybody has confirmed it is not going to happen so let’s rest with that knowledge.

One of the reasons he would be hectic on government business is the soon-to-be rating by Standard & Poor which is due to make its decision on 3 June whether to downgrade SAInc to non-investment grade. The jury is out on what this could mean for us. For instance, PSG is buying Bonds because it believes the bond yield has discounted the likelihood of a down grade whilst RMB has surveyed it’s leading clients and decided the re-rating would not have a deleterious effect on the market. Moneyweb Today is reporting that the re-rating will have a dramatic effect on shares, quoting Standard Bank, and up to a 60% decline in value with a dragged bounce back over 12 months. Chris Hart, ex-Standard bank economist, is stating that under a particular set of circumstances, the Rand could collapse to R60:1US$. What a see-saw of opinions!

On the positive side, the SARB decision to hold rates was interesting. The view is that Inflation won’t stay out of the target band ie above 6%, for as long as expected. So they held the rate. Surprising to me as my sense is that that Rand will drop after the S&P re-rating and would have needed an interest rate hike to protect it. I still expect 2% this year and we are some 0.5% away from that point. You may recall that I called 2% against the general consensus of 1-1.5% for the year. Certainly I see the next 0.5% being inevitable. However, let me make it clear that I don’t believe the rate hikes are good for anything other than the protection and stability of the Rand. We simply cannot afford high interest and low growth but, if I was to choose between a devalued Rand and high inflation or raising interest rates, I would raise rates. Another point to remember is that S&P look for sound monetary policy and the independence of the SARB especially at these times – all of this is being demonstrated.

Assuming all the information above, where is property at?


  1. Prices continue to rise slowly but, surprisingly, real price rises around 0% are occurring. Why “surprisingly”? Well, we expected negative real growth in house prices and the figure is better than expected. Good News! What is interesting according to ABSA at end-April was that the affordable segment is performing well and pushing up the average. Their think is that down-buying [the tendency to buy a smaller house that you know you can afford] could be creating price resilience in the lower market. My sense is that government employees can afford these houses and are wanting to enter the property market.

  2. The rand is under strain whichever way you cut it. If that is so, building prices will rise and new houses will become more expensive that existing properties. That will push the price of houses in all sectors. By how much, I do not know but it is good news for ad valorem money earners like estate agents.
  3. The issue is affordability and this is driven by two things: Employment and Interest rates. Employment, whether it exists/remains and the stability around “my job” lends confidence. If rates are rising [and this must be a dead cert], I question my ability to afford a bond. The move earlier in May by the FED to hold back again on a rate increase in the USA coupled with our decision last week to hold fire is cause for positivity but we must accept rates will tend to rise – we’re in such a cycle. Rates rising has a mathematical impact on affordability but if I’m unsure about my job, I lack confidence to buy in any case. As a knock-on, that affects even my willingness to sell. The nutshell of this is that sales will be slow.

  4. The downgrade is possible and imminent. We really don’t have long to wait. I want to be with those who believe it will not occur; my heart is there. My head says it is inevitable. Unless PSG is spot-on, it will raise the cost of borrowing for government, decrease the value of shares and dent the Rand. None of this we need at a time of slow growth and drought. It will make us feel poorer before the markets rally back over a year. Let’s raise our genes of faith and trust for the best outcome for all our Peoples.

My best advice – Know what you can control and work hard at it. Rest with what you can’t control and allow things to take their course. If you really do have money to buy offshore hard currency then do so.


Yours in Property

Jack Trevena


There has been some amazing news of late. Sadly, we have become so accustomed to bad news that it washes over us in a kind of ostrich way. We duck and just hope the wind comes head-on so we don’t get swept of our feet.

So the good news!

RMB is about to build a property portfolio somewhat equal to its own portfolio of R82bn. What a vote of confidence in South Africa Incorporated [SAInc]and such good news for us all. When questioned as to the future of SAInc, the CEO, Herman Bosman said: We are South Africa optimists. Between the two companies we have around R150 billion invested in financial services in South Africa.” Quoting Moneyweb, Rand Merchant Bank Holdings (RMH) hopes its newly launched property business will eventually play a “meaningful role” next to FirstRand.

Like Redefine, RMB will not restrict itself to SAInc but will also be investing overseas. For instance, Redefine have done a mega-deal in Poland for 75% of real estate company, Echo Prime Properties, in March for R8 billion to boost its offshore exposure and will be reducing this exposure to approximately 50% in the future. Again quoted in Moneyweb, CEO, Andrew Konig says: “Poland offers us GDP growth that is more than what SA offers. And we believe we have invested in an environment where the tax rules are efficient”.

And thirdly [Wow, lots of Good News today], Moody has placed us on “negative watch”. If you ever wondered what Pravin Gordhan is doing in his day, be grateful that he and his Treasury team, with the support of business and government,  have convinced Moody Rating Agency to not downgrade Us a whole notch but rather to only move their watch-status from Stable to Negative. Negative, in this sense, is not negative but rather a wait-and-see to give us more time to implement elements of the National Development Plan and show the world that we can; not that we can’t. That we can settle down politically, that we can respect Chapter 9 institutions, that we can run a free and fair municipal election, that we can turn the tide of downward growth, that we can increase our employment, that we can reduce the cost of government, that we can continue to pay our debt, that we can keep the lights on and that we can feed our people despite the headwind of a debilitating drought. Indeed that we can continue to be the leading Constitutional democracy on the continent of Africa.

b2ap3_thumbnail_image004.pngEquity Market Response to Downgrade    b2ap3_thumbnail_image003.pngCurrency Response to Downgrade

b2ap3_thumbnail_image002.pngBond Market Response to Move to High Yield   b2ap3_thumbnail_image005.pngSA Repo Rate vs 5y Moving Average

So the bad news!

Watching President Zuma deliver his Presidency budget vote to a half-packed House of Parliament made me want to change the name to Par-Lament. What a sorry sight and what a sorry State of Affairs. It was the first time for a long time that President Zuma was able to finish a speech without interjection and walkouts. But all of the parliamentary privilege of challenge and questioning was missing from what should have been a debate not an address.  We do not intend to discuss the efficacy or otherwise of such abstinence of the Opposition parties. In fact, what I’m about to say in the rest of this blog, avoids many issues whilst it hopefully challenges us All personally to play our constructive part in SAInc.

Outside of the House, Mathew Theunissen added his sentiments to the race row that pervades our land. Other such incidents in the News went on the backburner for the week as Mathew apologized repeatedly for his late night misdemeanor. Tragic isn’t it that as millions of rands are corrupted and millions of people live in poverty in SAInc, we can be seized by race rows? Whilst they highlight the underlying inequity in our society, hopefully they also bring each one of us before the mirror to question our own ethics and stances to one another in the human race. One look at racism on Google and you are struck by how ubiquitous the problem is and how many countries are plagued by its scourge; but that is no excuse for SAInc.

These opening points bring me to the place where my heart is this Sunday morning.

We have the ability to read the negative and be part of its onslaught or read it, with introspection and wisdom together with the positive, and live like there is only upside. I’m going to write it again so you can read it again and THINK: “We have the ability to read the negative and be part of its onslaught or read it, with introspection and wisdom together with the positive, and live like there is only upside.”

An old preacher of mine used to say: “You cannot preach the measles if you’ve got the mumps”. Truth is, the house buyers of the future will be people of all colours and I can guarantee you that we have many areas in our country where 60-100% of the buyers are already people of every colour. Estate agents and professionals have already embraced the future of the Equity of People and their hard-earned Rands and are doing good business across all colours of people. Those with stereotypes entrenched over many years, have had them cracked and loosened and, finally done away with, by lovely people of all races, across all socioeconomic levels who only want the common good – a sound roof over their family’s head, a school for their children, and safety and employment for themselves and their immediate family. What could be less racist and more human for each of us to enjoy, than to recognize that this beautiful country of ours has place for Everybody in it? Will we meet horrible people? – of course! But they too will have their day as their pride is overtaken by the humility of good men and women of all races, religions and creeds who seek the beauty of this beloved country that shines through in the faces of all Her People.

So it is that I make an appeal to all of my readers. Get up tomorrow and look in the mirror. Acknowledge that we all have Rights and Responsibilities. We all have Influence for Good or for Bad. There are not Special People only Common People with Common Good in their Hearts and Souls. People who hold You in their Esteem as You hold Them in Yours. People who deserve a home and a bond and the confidence in the Future of SAInc to be able to afford it in the years to come. Acknowledge that there will be some horrible people amongst them but chose to judge them slowly for you may not have walked in their shoes – you may never know the journey that they have travailed to arrive at the door of your business. Accept them, Because they are Different. Do business with them because you Want to Help them Do and Be Better. Treat them with Dignity and with Respect – yours is not the need or right to change them but the privilege to help them with the biggest purchase they may have made to date in their lives. Take a bet with yourself that they will turn and smile before your dealings with them are over.

In essence, look at the Good and the Bad through the eyes of Patience and Kindness. Withhold Judgement until you have taken the time to be Mindful – Present in an Open and Accepting way. There is nothing like Powerful Interpersonal Skills at a time like this in our nation. We stand on the brink of Rating downgrades but we will not re-rate ourselves as People of South Africa Incorporated. No force on earth, political, social, economic, or global, should be allowed to detract from us being Men and Women of Truth and Confidence and Reconciliation in our spheres of Influence and Persuasion.

I commit myself to this Way of Being. Homeloan Junction commits itself to treating all People with Dignity and Respect. Our great property industry, full of men and women of Good Repute, would demand nothing less of us as members of it and citizens of SAInc.

Yours in Property

Jack Trevena