Real Estate Investor Magazine South Africa June 2015 | Page 19

E

ven the most optimistic among us will agree that the current
state of affairs in South Africa is concerning. As such, investors
are facing a burning question in respect of their local property
investments: is it time to sell, should they hold, or could it
be time to buy? There are pros and cons associated with each
course of action, and the determining the right option requires
rational, measured and well-informed decision-making.
The uncertainty regarding the future of South Africa and the current
volatility of our investment environment present a pressing opportunity
to reassess long-term financial goals and investment strategies, and vividly
underscores the crucial importance of diversifying investment portfolios to
hedge against the risks that exist in all markets.
Property remains the asset class of choice for the world’s wealthiest and
despite the massive challenges faced, South Africa remains one of the better
performing property markets globally. There is no definitive answer to the
question of whether to buy, hold or sell local buy-to-let property investments.
The right course of action depends on investors’ risk profile, their level of
optimism regarding the future of the country and the quality of their intended
and/or existing property investments.
When you assess the current investment landscape in South Africa, be
careful not to simply react to the bad news flow, but consider a range of
opinions and draw your own conclusions. Similarly, when deciding to buy,
hold or sell your property investments in South Africa, ensure your decision
supports your long-term focused financial plan.
Is it time to buy?
This quote embodies the essence of contrarian investing: the strongly-held
belief that the worse things seem in the market, the better the opportunities
are for profit. Could the current state of affairs in South Africa, and the lack
of investor confidence it has created, signal the time to buy for contrarian
investors?
While the property market in South Africa is no longer at the bottom of
the property cycle, the recovery phase in which the market has languished for
some years has been slow and protracted. The recovery phase of the property
cycle is always followed by the boom phase, but when the market will move
into a boom phase is unknown. For certain, the buyer’s market that persisted
for some years has passed, but property price growth