Resicom – Holiday Investment – 04-21 – LB

Property Market Robust In South Africa

An expert in South Africa has suggested that the country’s property market is set to remain active and robust, despite some contrary views. Managing director of Renprop, Chris Renecle, revealed that there are large supply issues in some areas, resulting in increased demand for property. With both the rental and sales market making progress, there are varied opportunities for savvy investors; in addition, a number of large developments in Johannesburg combined with a number of busy business districts for which workers require housing, mean it is hard to go wrong with housing purchases in 2016.

Much of South Africa’s housing construction and development has been subdued over the past few years, with the global financial crisis of 2008 and 2009 affecting both the nation’s residential and commercial markets. With a lack of construction and the resultant limit on the number of homes available, demand now outstrips supply in many areas. This is leading to lucrative price gains and rental rate increases. Mr Renecle revealed that although South Africa’s real estate markets were not as affected by the recession as they were in many countries, recovery has not been as quick or vibrant. However, a return to normal conditions is now being seen, with the real estate consultant saying he believes the residential market will continue to remain robust in the coming year.

For investment purposes, Mr Renecle says the northern suburbs of Johannesburg remain a safe bet for savvy buyers. ‘While South Africa’s financial markets, currency and resources have been volatile for most of the year, residential property in most areas throughout the country has remained on an even keel, and even though growth has been mediocre overall, it has still been a solidly performing asset class,’ he said. Mr Renecle adds that investors can be encouraged by the fact the nation has not noted negative equity on housing as inflation rises, nor is this expected to be a problem in the near future.

Away from sales, South Africa’s rental market continues to do well. Many people have not been able to qualify for mortgages because of the difficult financial climate, which means they have had no option but to turn to the rental market. Several large private investors have financed schemes purely focused on the rental market, Mr Renecle said, which indicates that there is an attractive prospect for both domestic and foreign parties wanting to get involved in the housing sector. Johannesburg in particular has a large enough demand around its business areas that continued development is likely, leading to rental growth as demand for homes increases.

Despite South Africa’s housing market performing less spectacularly than those in many other countries, it remains robust and therefore offers a good investment opportunity; in addition, development booms are being noted in Johannesburg’s Rosebank, Bryanston and Rivonia/Sandton precincts, making these areas perfect for overseas buyers wanting to take a share of the rental sector. As long as investors do their homework and understand the micro-market they are buying in, Mr Renecle suggests purchasers in 2016 can’t go far wrong.

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