Real Estate Investor Magazine South Africa November 2015 | Page 4

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Real Estate

is the safest haven above the ground

I

am blown away by the number of people who ask
me if real estate is still a good place to invest and if
it is still too risky to invest today given the current
tough economic times. The answer is a quick and easy
one; as long as we are talking investing and not just
buying a home to live in, the chances of success by
investing in property are massive compared to share
investing. For example, banks will always back real
estate as collateral and won’t leverage financing shares
to the same extent as they do for bricks and mortar. The
chances of failing in property investment are far less
likely when utilising basic investment fundamentals
and is extremely forgiving when compared to investing
in shares on the stock exchange.
Buying shares on the stock exchange can be a
minefield if you don’t know what you are doing. With
shares you have to continuously keep your eye on the
ball, watch as to what share to buy, then keep track as to
which direction the trade is moving almost daily while
knowing when to buy and when to sell the stocks due
to rapid market fluctuations. As Mark Twain famously
said, “October: this is one of the peculiarly dangerous
months to speculate in stocks. The others are July,
January, September, April, November, May, March,
June, December, August and February.”
Although investing in stocks sounds like a similar
process to investing in real estate, you still need to know
what share to buy. As with real estate you also need to
be able to evaluate the property investment. However,
with real estate you don’t need to know which direction
the market is going on a daily, weekly or monthly basis,
or when to buy and when to sell. In fact you should
always invest in real estate for the long term, manage it
properly and never ever sell your property investments
if you can.
Having said that share investing is a minefield;
property-related investments as a sector has performed
extremely well for the last 10 years and propped up

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NOVEMBER 2015 SA Real Estate Investor

the JSE very nicely. This augurs well and confirms the
confidence in real estate as an investment category. Real
Estate Investment Trusts (REITS) such as Fortress
Income Fund, which is now SA’s third largest fund
after Growth point, and Redefine Properties has had a
compound annual growth rate of 72,70% over the last
five years. Property companies like Fortress have been
rapidly rising up the ranks of the top 100 performers
of the JSE.
The Property REITS sector today easily outperforms
sectors like mining, retail and healthcare according to
the Business Times. In fact listed REITS now accounts
for almost 6% of the JSE’s total market capitalization.
Five of the top 10 performers on the JSE’s top 10 list
for 2015 were from the listed property sector, compared
to none last year. This includes Fortress Income Fund
on top, followed by Trustco Group Holdings (mainly
property developm