Real Estate Investor Magazine South Africa October 2016 | Page 5

EDITORIAL VIEW

How to Use Volatility to Your Advantage

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ost active investors
struggle with volatility in the market. Despite that it seems
that volatility is something
that all investors have to deal
with in uncertain markets.
This was the crux of the main
discussions of our annual
2016 REIM/Rode Property Conference. Households
are clearly taking strain with
bond mortgage, car payments
and retail sales, according to Nicky Weimar, Senior
Economist at Nedbank. This coupled with high debt,
rising interest rate environment and the fact that all major institutions have cut back on capex expenditure and
businesses are cutting costs and shedding jobs to stay
af loat. Weimar says that there is global recovery in the
markets but at an ever-slowing increasing fragile pace.
Conventional wisdom suggests that ‘traditional’
passive real estate investors aim to be in the market for the
long haul. Most buy and hold for years, without selling
their properties while benef itting from inf lation, annual
rental increases and capital growth. 
This strategy can
work very effectively. We are seeing markets misbehave,

and when volatility hits, many buy-and-hold investors
see it as the enemy. Most simply wait out the storm and
hope for the best.
South Africa has specif ic risks at the moment which
remain unresolved says Weimar. From an investor
perspective when volatility abounds it presents new
opportunities. Volatility can cause investors to change
strategy. A number of listed property funds increased
their investment portfolios offshore and grew their
exposure to over 39% offshore according to latest Avior
Research. First world countries such as UK, Europe,
Australia and the US are the main markets targeted. For
the private investor there are more than enough reasons
to follow suit. Rentals and house prices are moving
faster in many areas in the US and UK than in SA. The
key is that you must prepare yourself for new markets
such as currency f luctuations, having good partners for
management and getting the right information.
Studies show that most investors panic when there is
volatility which cause them to sell. It is always a good
time to revaluate your strategy but always stick to a
systematic strategy that proves itself over time despite
volatility whether it includes offshore or local properties.
Successful investing

NEALE PETERSEN

FOUNDER & PUBLISHER

T

The Changing Face of Local Retail

he advent of e-commerce has changed the
way consumers shop.
In a post-