Apartments Make For Good Property Investments
Apartments in South Africa make an ideal property investment for South Africans living abroad, says Scott Picken, MD of International Property Solutions.
"Apartments are ideal in many ways for South Africans living overseas to get on the property ladder back home.
For one, they are generally a lot cheaper than houses or townhouses, because the land cost is divided up by more properties.
So from a price perspective, they are a lot more affordable, which is a major plus if you're living abroad and still travelling a lot, because you don't want a large mortgage that is going to chain you to your job until your visa runs out.
" "They are also ideal because there is a lot less admin involved in owning and maintaining an apartment, compared to a house.
A lot of tenants couldn't be bothered with maintaining a garden, for example.
They live in your house for a year or two, and when they move out the garden is in a complete state - which makes getting the next tenant that much more difficult.
The hassle of co-ordinating a garden service is not an issue with apartments, sometimes even if you're on the ground floor and have your own private garden, as the body corporate will take care of it for you.
External areas like the walls and roofs, as well as communal areas like the swimming pool and clubhouse, are also maintained by the body corporate, which reduces the hassle, especially for buyers that live overseas.
" It's not just the fewer hassles that makes investing in sectional title apartments attractive, according to Picken.
The numbers are also favourable from an investment perspective.
"If as an investor you want to dig deeper into housing trends, you will see there is an unprecedented demand for sectional title apartments in South Africa at the moment, which should continue for a long time.
It's partly a global phenomenon of changing population demographics.
People are staying single a lot longer, so they don't need or want large houses.
Record divorce rates mean that there are more people coming back into single households than ever before.
Economic growth is attracting people to the cities, particularly Johannesburg, and South Africa in general does not have a good track record of providing for the cheaper end of the housing market.
The emerging black middle class, for example, is now starting to move out of the townships and into the suburbs, looking for properties to buy or rent.
" "At the confluence of all these factors, you've got a surge in demand for more affordable properties - those in the R400,000 to R800,000 range - but especially for those that are easily commutable to the local business districts.
I've often heard them referred to as GASH properties - Good Address, Small House.
" This increase in demand is also pushing up rentals, according to Picken, which makes for a more attractive investment option.
"When I grew up, we lived in a large house with a massive garden, and I always thought that's the type of property I want to live in.
I still want a house like that, but those properties sell for upwards of two million rand today.
So that's what I'm working towards.
At the moment, I'm taking advantage of the demographic changes in South Africa.
I'm building my own portfolio with smaller, more affordable investments.
One day I'll have my four bedroom house with a pool, tennis court and a huge garden!"
"Apartments are ideal in many ways for South Africans living overseas to get on the property ladder back home.
For one, they are generally a lot cheaper than houses or townhouses, because the land cost is divided up by more properties.
So from a price perspective, they are a lot more affordable, which is a major plus if you're living abroad and still travelling a lot, because you don't want a large mortgage that is going to chain you to your job until your visa runs out.
" "They are also ideal because there is a lot less admin involved in owning and maintaining an apartment, compared to a house.
A lot of tenants couldn't be bothered with maintaining a garden, for example.
They live in your house for a year or two, and when they move out the garden is in a complete state - which makes getting the next tenant that much more difficult.
The hassle of co-ordinating a garden service is not an issue with apartments, sometimes even if you're on the ground floor and have your own private garden, as the body corporate will take care of it for you.
External areas like the walls and roofs, as well as communal areas like the swimming pool and clubhouse, are also maintained by the body corporate, which reduces the hassle, especially for buyers that live overseas.
" It's not just the fewer hassles that makes investing in sectional title apartments attractive, according to Picken.
The numbers are also favourable from an investment perspective.
"If as an investor you want to dig deeper into housing trends, you will see there is an unprecedented demand for sectional title apartments in South Africa at the moment, which should continue for a long time.
It's partly a global phenomenon of changing population demographics.
People are staying single a lot longer, so they don't need or want large houses.
Record divorce rates mean that there are more people coming back into single households than ever before.
Economic growth is attracting people to the cities, particularly Johannesburg, and South Africa in general does not have a good track record of providing for the cheaper end of the housing market.
The emerging black middle class, for example, is now starting to move out of the townships and into the suburbs, looking for properties to buy or rent.
" "At the confluence of all these factors, you've got a surge in demand for more affordable properties - those in the R400,000 to R800,000 range - but especially for those that are easily commutable to the local business districts.
I've often heard them referred to as GASH properties - Good Address, Small House.
" This increase in demand is also pushing up rentals, according to Picken, which makes for a more attractive investment option.
"When I grew up, we lived in a large house with a massive garden, and I always thought that's the type of property I want to live in.
I still want a house like that, but those properties sell for upwards of two million rand today.
So that's what I'm working towards.
At the moment, I'm taking advantage of the demographic changes in South Africa.
I'm building my own portfolio with smaller, more affordable investments.
One day I'll have my four bedroom house with a pool, tennis court and a huge garden!"
