Throughout the property boom of 2000 to 2007, people were asking him, “Have I missed the boat?” This was said recently by Jason Lee, Rawson Commercial National Manager.
“This is a very natural anxiety,” said Lee, “and it almost always precedes any investment in property. It causes many to hold back and wait for the ‘perfect storm’ or for ‘all their stars to become aligned’, but if one thing in property investment is certain right now, it is that the current conditions are ideal for South African property investors. They are indeed as close to perfect as any investor could hope for and those who miss the boat now will only have themselves to blame.”
Asked to give the reasons for this, Lee said, “The first reason is that the current interest rate of 8, 5% is lower than almost anyone living can remember - and, what is more, it could go down a further 1% or stay at low levels for another year or more because many people are saying that until the global economic recovery becomes truly detectable there is no point in raising interest rates.”
The second reason for believing that now is the right time to invest in South African property, said Lee, is that in all sectors, residential, commercial and industrial, property in many cases is selling not only well below the prices of the boom levels but also below its list price. Possibly never before in South Africa’s history, he said, have so many bargains been available for so long a period.
“Thirdly,” said Lee, “there are now signs that, with residential property now growing at 8% per annum, the slow but consistent price rise that people have been longing to see is becoming a reality and could speed up next year. To wait longer, therefore, could be a mistake.
Yet another reason is that the rental market, particularly the residential market – is being boosted by the difficulties potential home owners have in getting bonds, it is therefore improving even faster than house prices, with the result that buy-to-let investors are returning to the market and in some cases (for example, Rawson Developers’ Rondebosch Oaks development) they are already seeing annual capital appreciation of close to 10%.”
“It is quite clear, therefore, that the investor bandwagon is once again on the move,” said Lee.
Those who plan to take action on buy-to-let property in the next year, he added, should endeavour to follow the example of many current investors who are successfully managing to pay above the rate stipulated on their bond agreements. This, said Lee, is definitely possible in many cases now because of the low interest rates. It helps significantly to increase the value of the investment at a fast pace. It will also, he said, improve their credit rating with the bank, making it easier to get new finance in the future.
Within 11 months of being founded, Rawson Commercial has established 20 franchises, one of which is in Namibia. Lee expects to establish a further six franchises this year: the challenge, he says, is not so much finding new applicants but processing the many applications coming across his desk weekly.
