“An investment in property is emotive and tangible – you can see, touch and feel it,” says Tshepo Matlala, CEO of the Indite Property Fund and Chairman of the South African Institute of Black Property Practitioners.
“Investing in property defines who you are and gives you the kind of self-worth that other asset classes can’t. It’s a unique investment – everyone should aspire to invest in property from the day they start earning a salary.”
Zenzile Geleba of the Just Property Group agrees, pointing out that property has a number of benefits over other asset classes. “Property offers a steady income stream that acts as a hedge against inflation. There is also the potential for capital growth – the increase in the price of the property over time behaves differently as an investment from equities and bonds, so there is a diversification benefit.”
Matlala sees the tangible nature of property as an important part of its appeal. “An investment in property feels far more real than one in equities. And because it’s a tangible asset, you should always have something to salvage, even if something goes wrong. A company may go bankrupt and its equities may become worthless, but with property, you’ll always have something left to sell.”
Samuel Seeff, Chairman of Seeff Properties says more than 85% of all residential sales are under R1,5 million and this sector is where the bulk of rental demand lies. Security estates and sectional title complexes in high-demand areas make excellent investments.
He suggests investing in these five areas in South Africa:
1. Atlantic seaboard (Cape Town)
Buy up older properties and upgrade, renovate or rebuild in suburbs such as Clifton, Bantry Bay, Fresnaye and Camps Bay. Demand will always be high, including from foreign buyers, since the area is ring-fenced by mountains on one side and the ocean on the other.
2. Blouberg / Big Bay (Cape Town)
This is a massive growth area, where demand outstrips supply. It boasts top transport infrastructure, good schools, a bustling commercial node and is close to the beach.
3. Sandton (Joburg)
This is the richest real estate strip and most powerful financial hub on the continent. There is high demand for residential property, flats and security complexes in and around the CBD, supported by increasing traffic congestion.
4. Centurion / Midrand
There is a strong demand from the rising black middle and upper classes for housing in the area, driven by government employment in Pretoria.
The massive investment growth plans for KwaZulu-Natal all point to this as a high-growth area that is set to benefit from substantial value growth.