From our CEO: Finding hot properties in a cool market

No matter what the economy is doing, it is always a good time for someone to be buying property - and now is actually a great time for several different types of investors and home buyers.

For example, the current phase of the real estate cycle is favourable for buy-to-let investors, especially those who focus on areas where there is perennial demand. These include the well-known student hubs close to SAs major tertiary institutions and the business districts of main metros where an increasing number of executives and professionals spend the working week before flying home to their family properties for the weekend.

Among the hottest properties for this type of investment at the moment are the apartments we have for sale in The Emerald development in Hyde Park at prices from R2,169m, and the 10 one and two-bedroom apartments we have for sale in a development opposite Melrose Arch for a total of R19,75m, which are also available separately and offer a proposed rental yield of 13,8%.

These are all close to the financial centre of Sandton and the sought-after new CBD of Rosebank.

There are, however, also very good opportunities currently available in more decentralised suburbs, where some developers are offering two and three-year rental guarantees on very well-priced new units.

And with the latest available numbers from StatsSA showing a high rate of new household formation, a high rate of urbanisation and a high rate of rental (almost 25% of all SA households), demand is set to keep rising.

In addition, the latest PayProp statistics show that the average rate of tenant income growth has shot up from 1,06 % a year in 2018 to 3,02% a year currently, which is much closer to the annual rate of rental growth and, more importantly, the rate of inflation growth. It indicates that tenants should be under less financial stress going forward, and thus less likely to default.

Meanwhile, this is also an opportune moment for first-time buyers to get into the market, primarily because the banks are currently competing strongly for new home loan business and offering excellent terms and interest rates on low-deposit loans. In fact, rates are so favourable right now that buyers can cut thousands of rands a year off their home loan repayments - and tens of thousands of rands off the total cost of their homes over 20 years. But with the changes to the Credit Act coming soon, this situation may not last.

As for the luxury sector, this is the season for buyers with cash and a longer-term view to find almost the same kind of value they did in the crash of 2008/ 09 - because luxury property asking prices are currently being reduced by up to a third.

In short, in real estate as in equities, the best time to take a risk and buy is always when everyone else is selling, and vice versa.

*This article first appeared in the September 2019 issue of Concierge magazine. Concierge is the official guest magazine for Premier Hotels & Resorts, which offers luxury business and leisure accommodation in prime destinations in the Western Cape, Eastern Cape, KwaZulu-Natal, Mpumalanga and Gauteng.