What Global Trends can Property Investors Leverage?
COVID-related lockdowns have created a global village that is more connected digitally than ever before. While South Africa has always been an alluring short-visit travel destination, it now also appeals as an extended-stay destination to those who can remain for longer because they can work remotely. Property investors can tap into the potential offered by both short- and long-stay accommodation demands from the international community.
Look for property features that align with a discerning resident/ tenant:
- Environmentally efficient
- Digitally enabled/ smart
- Well-appointed for a comfortable lifestyle
Interest rates are at a 50-year record low, which favours investment returns. Further market indicators tell a positive story (click the link or scan the QR code above to read more). Our industry partners, BetterBond, are reporting year-on-year increases in first-time buyer income, approved loan amounts and purchase prices, and our partners Lightstone report that the current annual property inflation rate is 4.56%.
The Finance Linked Individual Subsidy Programme (FLISP) provides an opportunity for first-time buyers in the ‘affordable or gap’ market, i.e. those who earn between R3 501 and R22 000 per month, to take advantage of these market conditions.
“Individuals in these salary bands generally find it hard to qualify for housing finance; their income is regarded as low for a home loan (mortgage or pension/provident backed loan), but too high to qualify for the government ‘free-house’ subsidy scheme”1.
It’s the first step in building a property portfolio.
Featured developments that meet these criteria: Pioneer Valley
What local demands can property investors tap into?
According to Statistics South Africa’s 2020 Mid-year population estimates2, about 28,6% of the population is aged younger than 15 years. That’s almost ⅓ of our population (more than 17 million people) who still need to finish school and, for those who are able, to complete their tertiary education. The demand for student housing is already staggering and estimates place the current shortfall at more than 500 000 beds; this is predicted to grow to 781 000 beds by 2025.
If you live near a university or other tertiary institution/s, look at opportunities to meet this need.
Featured developments that meet these criteria: The Edge
The “semigration” trend offers another opportunity. Many South Africans have moved temporarily/ permanently from cities like Johannesburg in order to remote-work from smaller towns. Coastal towns especially are seeing good growth rates in property prices and the shortage of cheaper rental properties in many of them offers interesting investment possibilities.
There has not been a better opportunity in many years to enter the investment-property market or to increase one’s holdings. Do your own research and speak to highly regarded agents in the areas where you decide to focus. This is the best way to assess local value and demand.