Buy­ers and in­vestors face co­nun­drum as eco­nomic woes make choice crit­i­cal

Weekend Argus (Saturday Edition) - - PROPERTY -

THE UN­CER­TAIN eco­nomic cli­mate has prospec­tive home buy­ers and in­vestors queu­ing for ad­vice on the best in­vest­ment op­por­tu­ni­ties.

“The big­gest ques­tion on buy­ers’ and in­vestors’ minds to­day is what sort of prop­erty they should buy,” says Martin Schultheiss, chief ex­ec­u­tive of the Har­courts Africa prop­erty group.

“They weigh the ben­e­fits of older prop­er­ties against those of units in new de­vel­op­ments, ur­ban against sub­ur­ban units, and ru­ral homes against units in golf es­tates. But the sim­ple an­swer is that the sit­u­a­tion changes all the time.

“For in­stance, at present there is no doubt the big­gest growth in value is at the bot­tom end of the mar­ket due to the num­ber of peo­ple mi­grat­ing to a bet­ter life­style. But less than five years ago, golf es­tates yielded re­turns of 30 per­cent or more and in­vest­ment in leisure was one of the best choices you could make.

“How­ever, there is a golden rule in prop­erty in­vest­ments that se­ri­ous in­vestors and keen home buy­ers should heed, namely, prop­erty re­turns don’t de­pend on when or what you buy or sell, but how long you are pre­pared to hold on to the prop­erty.”

Schultheiss says lo­cal in­vestors be­came ac­cus­tomed to mak­ing re­turns of up to 30 per­cent in the rel­a­tively short space of 18 months. Now that this fig­ure has dropped sig­nif­i­cantly there has been much talk about prop­erty be­ing a bad in­vest­ment.

“How­ever, we fir mly be­lieve prop­erty re­mains a sound in­vest­ment that will yield good re­turns for in­vestors who are pre­pared to stay in the mar­ket over the medium-to longer-term, with the time that you re­main in the mar­ket de­ter­min­ing the re­turns you fi­nally make,” he says.

“For in­stance, if you ask an el­derly cou­ple still liv­ing in their first home, they will prob­a­bly tell you they bought the prop­erty for R25 000 – which was a huge sum in those days – but the cur­rent value is close to R1m.”

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