Real Estate Investor Magazine South Africa October 2013 | Page 16

COVER STORY
property investment system are not confined to a
particular country. It works as well in the US as it
does in South Africa, and it works as well in Sydney
as it does in London. Thus, property investment
transcends borders and investors who are looking to
diversify their portfolios offshore literally have the
world at their feet.
The system is certainly also not restricted to the
residential sector. The same system is effective
whether the investor acquires a small retail centre or
even a single shop. It works as well with a warehouse
as it does with an office building.
This ensures that property investors have extensive
scope to diversify their portfolios into other property
sectors, including office, retail, industrial or
hospitality.

Playing with the big boys
In fact, the property investment system detailed
above, used by individual property investors, is
the exact same system used by large institutional
investors and listed and unlisted property companies.
As P3 Investment Group explains: “Essentially,
listed property companies are large-scale buy-tolet specialists. They acquire a quality portfolio of
commercial properties and rent these properties
out to tenants. The acquisition of the properties
are financed through corporate property finance
provided by financial institutions; by issuing shares
or units and listing these on a stock exchange;
or a combination of these strategies. Investors in
these shares or units then receive a portion of the
monthly rental income generated by the properties
in the portfolio and, as the value of the properties
appreciates over time, the value of the shares or units
also increases.”
Investors who do not want to build and manage
their own property portfolios can therefore tap into
the simplicity, efficiency and power of property
investment by investing in companies who are
already implementing the system, for example,
property portfolios listed on the JSE. Investors can
buy shares in specific listed property companies
and share in the rental income produced by prime
South African properties, as well as the capital
growth these properties produce. For a more
diversified approach, investors can invest in an
exchange traded fund (EFT) which simply tracks
the performance of South Africa’s listed property
sector, such as PropTrax. There are also property
collective investment schemes classified under the
South African – Real Estate – General category.
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October 2013 SA Real Estate Investor

These funds offer investors exposure to 80% or more
of listed companies in the FTSE/JSE Real Estate
Industry category.
Investors can also invest in unlisted property
companies and funds, or in property syndications.
The latter allows a number of investors pool their
relatively small investment contributions to invest
in extensive property portfolios and share in the
lucrative returns that are otherwise reserved for the
institutional investors.
These investment options further allow
investors to diversify their investments into more
complex property sectors, such as mega-regional
retail shopping centres and industrial property
developments, as well as to diversify their property
investments into various property sectors offshore.
The bottom line, however, is that from direct
investments in student accommodation or entry-level
bachelor pads to luxury or holiday properties, and
from local properties to exotic offshore destinations,
and from investments in listed companies and funds
to unlisted companies and funds and syndications,
investors truly have a world of opportunities to tap
into the simplicity, efficiency and power of property
as a wealth creation tool.
The next question then, is where do you start, given
the staggering number of opportunities to choose
from?

Keep your eye on the big picture
It is important for investors in any market to
understand the bigger picture in terms of the
macroeconomic, political and social environment in
which their property investments are located.
At the Real Estate Investor Magazine Wealth
MasterClass events, world scenario strategist, Clem
Sunter, enlightened delegates with an entertaining,
yet sobering, overview of current macro trends,
highlighting the reality that the game has changed
drastically in the wake of the Global Financial
Crisis and the social revolution that is being driven
by the growing dominance of social media. His
insightful potential global scenarios are must-have
information for investors and can be accessed via
www.mindofafox.com.
Dolf de Roos, in answering delegates’ questions
at the Wealth MasterClass events, said that his
number one consideration when assessing a new
market is population growth. In response to the
question of which countries investors should be

looking at, he noted that investors can invest just
about anywhere in