Real Estate Investor Magazine South Africa April 2014 | Page 28

SMART MOVES

GAYE DE VILLIERS

Getting good returns
Insights for making a sound property investment

W

ithout detracting from the need for a
balanced portfolio by geography and
asset class, long-term investors in quality
real estate have been well rewarded.
Returns on residential property have two elements,
a capital growth portion which over the years has
comfortably outstripped inf lation and, for investors
rather than owner occupiers, a rental component which
is also normally inflation proof. More recently, capital
growth nationally has been around 7% per annum
while rental yields vary from 5% to 9% per annum - a
combined return of 12% to 16%. In prime areas such
as the golden triangles of Cape Town, North Durban
and Sandton in Johannesburg, these numbers have been
appreciably better.
But what really contributes to the intrinsic value of
a property, assu