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By: Jeremy Lawson
I won't bore you with useless commentary, but instead get right to the point so you may understand my reasoning.
If I had a million dollars, I would buy real estate in South Africa (SA) for investment. Why? Its simple, Economics & Location! Here's my logic:
My recent visits to Southern Africa have taught me many things. One of which is that it's relatively easy as a foreigner and/or US citizen to buy property in SA. SA approximately ranks 30th in the world in accordance to its GDP. The depreciation of the South African Rand (currency) is a major reason in why I would invest there. When compared to the United States (US) currency, 1 South African Rand is worth approximately $15 US. Imagine the returns!
Actually, Jonathan Kohler, CEO of Landsdowner Investment Properties illustrates for us.
"Kohler uses the example of two apartments located in the same complex in Johannesburg’s northern suburbs. If you buy a one-bedroom ground floor apartment for R740,000 (US $57,045), you can receive up to R7,000 (US $540) a month in rent and spend roughly R977 (US $75) on levies and R320 (US $25) on rates. You can expect this apartment to appreciate at 8% per annum, which means you could get a net rental return of 9.25% per annum, a remarkable overall return on investment of 17.25%."
The returns are great and as SA's economy continues to improve over the next 5 years, the South African Rand will continue to get stronger. Instead of seeing 8% gains, capital appreciation will net an ROI of more like 600%.
Lastly, the most important aspect is Location!
South African properties are undervalued in respect to other countries, such as America and the UK. And with the current exchange rate, buying property in a developing country can be done rather cheaply. Pair this with SA generally having a great climate and its seasons working opposite of the Northern Hemisphere, this makes SA the perfect destination for travel by nonnatives.
Properties in Cape Town and the Western Cape continue to outpace all other areas. Its housing market and house price inflation, which has risen by over 10.35%, is attractive because of the countless young professionals and first-time home buyers. The major industries growing in SA are Technology, Retail, and Manufacturing, all of which are capable of capturing tenants that can afford to rent/buy housing.
In this short article I've explained what I would do with one million dollars and why I would invest it in South Africa's real estate market. The questions you may be asking now are:
How will you do this? What advantage(s) do you have to be successful in the market? Well that my friend is proprietary information!
What would you do? Like, Share, and Comment.