Real Estate Investor Magazine South Africa December/ January 2018/2019 | Page 46

INVESTOR INTELLIGENCE
Making sense of Investment options
Listed versus direct investment
BY EDITORIAL
L
isted property in South Africa has had a tough 2018
this after most of the sector has traditionally brought
double digit returns for investors. As a listed investor
having direct control over your listed investments performance
is not one its strengths. It has been a year of volatility and chal-
lenges in particular for listed companies Resilient and Nepi
Rockastle which has had an negative overall effect on the over-
all listed property sector losing in some cases in excess of 20%.
We weigh up the pros and cons on investing in each category.
Better to buy to rent or invest in property
stocks?
You may spend your holidays thinking about owning buy-to-
let, commercial, coastal property, or maybe you are considering
increasing your property portfolio with a number of offshore
investments. We consider whether it is easier and more
lucrative to buy into Real Estate Investment Trusts (REITs).
REITs are a security that trade like a stock on the major
exchanges and invest in real estate directly, either through
ADVANTAGES LISTED VS DIRECT
1. The cost differential

Buying costs
REITs Property
Trade fees:
Estimated at
+/- 0.50% per trade Transfer fees:

R0 – R900 000: 0%
R900 001 - R1 250 000: 3% of the value above R750 000, but not exceeding
R1 250 000
R1 250 001 – R1 750 000: R15 000 + 6% on the value above R1 250 000, but
not exceeding R1  750 000
R1 750 001 – R2 250 000: R45 000 plus 8% on the value above R1 750 000, but
not exceeding R2 250 000
R2 250 001 and above:  R85 000 plus 11% of the value  above R2 250 000
Bank initiation and inspection fees: +/-R5 700
Electronic document generation charge: +/-R912
Post petties: R600
Deeds office search fees: R500 - R2 500
Ongoing
costs

Selling costs

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Bond costs
Conveyancer fees
Custodian fee estimated: 
Insurance
+/- R750 p.a.

Trade fees: 
+/-0.50% per trade
Rates and taxes
Levies
Estate agent commission: +/-7.5% plus VAT
Cost of electrical compliance certificates

Cancellation fee in respect of the cancellation of any outstanding portion of
the bond
DECEMBER 2018/JANUARY 2019 SA Real Estate Investor Magazine