Residential returns and capital growth are by no means uniform in South Africa

Those whose job it is to encourage investors to take the plunge and move into buy-to-let property inevitably have to rely heavily on property analyst statements covering the property sector’s achieved and anticipated returns, particularly from those compiled by South Africa’s major banks. However, these can be misleading, says Bill Rawson, Chairman of the Rawson Property Group.

“Most of us propagating the advantages of this type of investment,” says Rawson, “are selling units in the high demand, central metropolitan areas, for example, Cape Town’s central Southern Suburbs, Durban’s Umhlanga and Berea and most of Sandton in Johannesburg. Buy-to-let investors will often get a 7 to 8% return from day one in these areas and in select markets can look forward to a 9 to 12% annual appreciation. At Rawson Developers’ recently completed multi-unit project “The Rondebosch”, certain investors have sold out at a 30% profit within three months of the scheme’s completion.”

“Those who consult statistics will, however, shoot down such figures as these, quoting national figures of 5 to 6% returns on rented property and a capital appreciation of 7 to 8%. It has, however, to be realised that these figures do not apply to the central metropolitan precincts, where, as I have indicated, the returns are excellent today and high demand and an increasing shortage of space is making them better month-by-month.”

“I remain convinced and I continue to say that this is one of the soundest and best forms of investment in South Africa today and the waters should not be muddied by quoting figures which relate to South Africa as a whole rather than the areas in which the major developments and the major renting action are taking place,” says Rawson.

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