Avid property investors say investing in the South African property market offers higher returns with average risks compared to offshore investing.
While locations globally differ depending on what is happening in those markets, South Africa remains attractive for property buyers with limited cash or for those who prefer to keep it invested in the local market.
According to Scott Picken, chief executive officer of International Property Solutions, South Africa offers many opportunities for property buyers and for many investors, as it is a gateway to Africa.
He says the risks involved are average compared to what an investor may encounter when buying property elsewhere.
For example, Picken says when compared to offshore investing, property in South Africa will not afford the buyer the rand hedge or diversification of portfolio but will certainly give an investor the ideal situation to plan around family financials.
“There are great opportunities when looking to invest in repossessed properties at the moment,” says Picken.
He explains that many first-time buyers and seasoned investors are buying bank repossessed properties. When looking to buy property for investing, he suggests buying a property based on its value and how much rental income one would generate from that property.
“Even though banks are still strict when it comes to granting home loans, a good credit record always helps especially when buying bank repossessed homes.”
As for investing offshore, he suggests that buyers do a lot of research into the locations they want to buy into. They should also ensure that they buy at the right prices and know the fundamentals.
With the riots going on in London at the moment, many buyers may be put off this market. He says London will always be a good investment location, particularly for buyers with cash, as obtaining mortgage finance is a hindrance to many would-be investors in that market.
The USA property market has huge potential for investing, however, he warns that the risk is too high. One is likely to buy a home at a good price but the problem then is finding tenants to live in that home.
Picken says many South African investors have found themselves in a situation where they buy properties linked to getting an American Green Card when all they really need is an investment property. He urges investors not to be confused between buying a passport and an investment property.
He says many of the High Net Worth Individuals who have successfully ridden the economic recession have two things in common - they buy existing properties and buy homes based on rental income. - Denise Mhlanga
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