Property better than money market | Margate Property | Scoop.it

PUBLISHED 26 AUG 2012
24 Aug 2012 Property is now a better investment than the money market and most other equities, says Bill Rawson, chairman of the Rawson Property Group.


Quoting STANLIB Property Fund manager, Keillen Ndlovu, Rawson says that a properly managed property investment will always reduce the volatility of a diversified investment portfolio and has the potential to outperform most other classes.

Rawson says the Reserve Bank’s decision to reduce its repo rate by a further 0.5 percent will speed up the movement of capital from the money market and cause investors to look harder for better returns elsewhere.

This being the case, the logic of investing in property needs once more to be emphasised, he says.

He says the simplest and easiest way to do this is to invest in a Johannesburg Stock Exchange (JSE) listed property fund. 

In 2011 these funds outperformed bonds, cash and other equities and are again doing so in 2012, despite the difficulties experienced by tenants.

Rawson says in 2011, average returns on listed property were 8.8 percent and certain of the top performing funds achieved returns of 19 percent to 24 percent.

Those investors wanting a more hands-on and potentially more profitable investment should consider investing, either alone or with partners, in commercial property, he says.

Jason Lee, national manager of Rawson Commercial, has recently said that his franchisees’ stock on average gives them an 11 percent rental return and some are achieving 15 percent or 16 percent returns.

Paul Henry, managing director of Rawson Developers, says every one of the 500 residential units brought on stream by his company in the Rondebosch area in the last two years will appreciate by an average of 8 percent year-on-year and are already giving returns of 7 percent.

“This is a better-than-usual performance, based on very careful selection of the site by the developers, but it does indicate how an investor, prepared to do careful homework, can find real value in the property market.”

Quoting STANLIB Property Fund manager, Keillen Ndlovu, Rawson says that a properly managed property investment will always reduce the volatility of a diversified investment portfolio and has the potential to outperform most other classes.

Rawson says properly managing the investment is key and fortunately, there are highly reputable, well managed JSE funds and excellent property managers giving a close hands-on service. 

If the investor takes the right advice from a reputable property group, he can avoid most risks and sleep happily at night in the knowledge that his investment is sound, he adds.

 

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