INVESTMENTS
Money Still To Be Made in 2017
But Not For The Traditional Thinker
BY GARY PALMER
While 2016 was a year many would sooner erase from their memories, 2017 may hold still more disappointment unless investors adopt a less traditional approach and are prepared to find the right partners. The following are some of the property investment trends I foresee for 2017.
Uncertainty takes its toll Both local and global politics increased investor caution as the winds of change continued to stir up uncertainty. Macro economic data painted a gloomy picture for South African investors and consumers alike. Inflation passed the Reserve Bank’ s six percent benchmark; unemployment hit a 13-year high and GDP growth slid to a negligible 0.1 percent according to IMF figures.
South African banks managed to deliver fair results for the year, despite the chaos rained on them by our politicians. However, the ever increasing regulatory burden and growing loan defaults saw them retreat further into their conservative lending shell, which is likely to continue well into the New Year.
The wealth management sector certainly had a torrid time of it in 2016. Not only was it far more difficult to acquire new clients, established clients were redeeming investments to offset the rapidly rising cost of living. This, too, is likely to remain the trend for 2017, as inflationary pressure continues its vice-like grip on consumers.
The alternate lending space, meanwhile, saw a marked increase in interest from entrepreneurs and even established investors looking to access finance for the opportunities that presented themselves. Finding
suitable investment partners, accessing short- and mid-term finance and securing bridging finance for business owners taking advantage of the economic downturn, has resulted in one of the busiest years the sector has had.
Moving into 2017, we can see the following trends emerge:
Location is still king, but beware the bubble With a few pockets of exception, the Gauteng property market will continue its stall. Rosebank office space and some residential areas in Tshwane are still showing some steady growth, but property is taking longer and longer to move in Gauteng and this is likely to continue well into the New Year.
Banks in Cape Town, meanwhile, had one of their best years yet, but even they are cautioning a property bubble that is set to burst. Property in the Mother City remains a firm favourite for investors who are looking to capitalise on the wave of up-country families moving to the coast. This is largely driven by Cape Town’ s reputation of being Africa’ s tech hub, with digitally orientated families and youngsters alike leaping at the work-life balance the city offers.
However, we have heard of upwards of 3000 units becoming available in Woodstock and Green Point in the first few months of the 2017 alone, and an oversupply will surely take its toll on the market.
Hotels are attracting attention The IDC and other public lenders have, thanks to government directives, been keenly focused on
56 MARCH 2017 SA Real Estate Investor www. reimag. co. za