A bout of recent heavy power outages had both South Africans and foreign investors rethinking their investments on home soil. While the economic instability has been felt predominately by the business sector, much hesitation has been experienced in the property sector too. 

According to entrepreneur and property investor, Grant Smee, recent indications as per media reports show that South Africans (in particular) are cautious to invest because of the lack of necessary infrastructure for their investment/s to thrive.

Grant believes that it’s not all bad news and says that 2020 is the ideal year for investment in the property sector. “President Ramaphosa places great emphasis on the country’s infrastructure which is set to begin its slow journey to improvement this year. Based on this, we will see improved stability in both the commercial and residential property sectors”.

Grant outlines the top seven reasons to invest in the South African property market in 2020:

1. The property market is one of the most stable areas of investment in South Africa:

While some investors may choose to play the stock market rather than invest in property, the latter option is far more attractive for the risk averse. “Despite what some may say, our property market has continued to maintain a balanced global position with steady returns,” says Grant.

2. Upwardly mobile young professionals seeking accommodation:

As many young South Africans continue to enter the skilled labour market and seek to move out of the family home, they are met with a demographic-specific property shortage. “Young professionals are driving the affordable housing market nationwide,” says Grant, “and due to their preference for ‘lock-up-and-go’ units, they are the property developers dream.”

3. High rental rates deliver profits:

On a similar note to the previous point, cash-strapped millennials are increasingly choosing to rent rather than buy in the South African property market. “This is good news for property investors! Buying-to-let helps you to pay off the bond while the value of the property continues to increase over time - particularly in desirable locations” Grant explains.

4. Infrastructure in SA is still better than every other developing country on the continent:

“Despite what the naysayers may say, our roads, transport hubs and other infrastructure are superior to some of our neighbouring countries like Mozambique or Botswana. South Africa has direct access to the world’s major economies, and most of the world’s biggest companies have branches here.” Grant notes that this economic positioning has led to an increase in foreign workers seeking accommodation in the country.

5. Position as the tourism capital of the world:

South Africa is consistently included in the top holiday destinations in the world, and this combined with a good exchange rate has led to some tourists wishing to make their connection more permanent. “The influx of tourists has led to an increase in short-term rental opportunities for property investors, often at more attractive rates than those offered by local renters,” explains Grant.

6. South African asset prices, particularly property, are the most attractive they’ve ever been:

Government is taking the necessary steps towards ensuring that South Africa is as attractive as possible to foreign investors. “These steps directly benefit local property investors too. It’s definitely a buyer’s market at the moment,” says Grant. “A lull in the housing market means that many homes are on the market for far less than initially purchased for, which is great news for first-time investors.”

7. Banks adopting a more lenient home loan lending criteria:

Finally, one of the most compelling reasons to invest in the South African property market in 2020 is that mortgage lending experts have observed a recent uptick in banks adopting more lenient lending criteria for potential buyers. “From an increase in conversion and approval rates to requiring smaller deposits, this trend is really benefiting first-time buyers,” concludes Grant.

About Grant Smee

Grant has worked as an accountant at several large international financial institutions in London, including JP Morgan, Schroders and UBS, and as operational lead at a closed $ 400 million private fund.  Grant ventured from financial services into property investment and property services in London before returning to South Africa in 2010.

Today Grant is the Managing Director of Only Realty, the founder of EPiC Networking South Africa, OUST Eviction Management Solutions, and a variety of other innovative property solutions start-ups.