hy buy property and end up worrying about maintenance and coll e c t i ng r ent f r om dodgy tenants when you can just buy listed-property shares and let someone else do the worrying for you?”
That was a question put to me by an acquaintance a few years ago while we were discussing the pros and cons of investing in bricks and mortar. It was a fair question and one that I hadn’t considered carefully enough given that, at the time, residential property was the proverbial ‘ in thing’. Everyone was piling into the ‘ buy-to-let’ market with two bed, two bath f lats in the Northern suburbs of Johannesburg, racking up annual price gains of between 20% and 30%. Of course, that in itself should have been a warning sign. After all, seasoned investors will tell you that when your hairdresser starts giving you investment advice, it’s time to sell out of whatever it is they’re buying.
It wasn’t long after my conversation when the residential property sector took a hit thanks to the 2008 f inancial crisis, leaving many a would-be Donald Trump licking his wounds. In the ensuing aftermath, interest rates were eventually cut to multidecade lows in an effort to prop up the faltering economy. The result was a boon for listed property, which has enjoyed a remarkable run in the last few years, racking up returns of almost 20% in the last five years.
This boom- andbust tale also serves as the ideal template from which to explain the overall workings of the listed-property sector. Much like bonds,