Real Estate Investor Magazine South Africa February 2015 | Page 20

cover story BENEFITS OF RESIDENCY/CITIZENSHIP BY INVESTMENT PROGRAMMES • • • • • • • • Overseas property ownership. A foreign currency income-earning asset. Diversification of investment portfolios. Dual citizenship for you and your family. Visa-free travel throughout Europe. A ‘Plan B’ in terms of safety, security, education and lifestyle. Reduce or avoid tax implications of investment portfolios. Opportunity to invest in a carefully selected, thriving economy to grow wealth. • Financially hedge against future uncertainty and the volatile rand. INVESTING IN RESIDENCY/ CITIZENSHIP BY INVESTMENT PROGRAMMES • It is crucial to undertake the necessary research to ensure you know exactly what they are buying into. • Ensure that the investment is appropriate for your financial objectives and your acceptable level of risk. • Ensure your investment will be protected from fraud or abuse and check if there is a government agency that will address your queries or assist in case of a problem. • Carefully research the market you plan to invest in, investigating the regulation policies and rules of a particular market. • Make sure you work through professional investment facilitators, estate agents and developers. One way to determine this is by checking their membership status with the relevant professional industry bodies, such as the Association of International Property Professionals (AIPP). • Ask questions about the company and its track record. Do some research online where both the company and its directors or founders can be researched. • Ask for client testimonials. • Some facilitators provide a more comprehensive service offering than others, so find out in detail about the services the company offers and what exactly it entails - get details on the company’s service offering and terms of business in writing. Source: Monarch&Co/ Henley & Partners 20 February 2015 SA Real Estate Investor Indirect investment in property If you prefer a hands-off approach to your investments; share in the income and capital appreciation of properties by investing in Real Estate Investment Trusts (REITs) or Property Exhange Traded Funds (ETFs). REITS According to the SA REIT Association, REITs combine the accessibility of investing in the stock market with the stability of owning property. Local REITs, all of which own income-producing property, have delivered a decade of higher total returns and lower risk than other traditional asset classes. As most local REITs own several kinds of commercial properties, these investments offer great investment portfolio diversification. REITs are most suitable to investors who want liquidity and exposure to diverse property investments, without the initial capital outlay or any hands-on management requirements. Investor risk is mitigated because listed REITs are regulated by laws which requires excellent governance and reporting. The total return REITs create for investors comes from both the capital growth of its properties and regular dividends which REITs pay out from their profits. Both keep pace with inflation. A REIT’s growth in dividends comes from rental growth from property assets, thanks to escalating leases. These leases make it easy to predict future earnings for investors and provide a stable income stream, which adjusts upwards annually thanks to built-in escalations. ETFs A popular option is to invest in listed property companies on the JSE, through unit trusts or ETFs. top tips • As with any other investment, do a thorough due diligence before making an investment in a specific REIT • Take your investments offshore by investing in global REITS. • Explore some interesting alternatives with REITs focussed on non-traditional commercial property, such as parking garages, self-storage or cellphone towers. www.reimag.co.za