Real Estate Investor Magazine South Africa Real Estate Investor Magazine - November 2017 | Page 5

EDITORIAL VIEW
How to
invest in an
uncertain
world
T
here is heightened economic
uncertainty, mainly due to po-
litical volatility. Added to that is
the Western Cape’s current severe water
crisis. Thought leader, Anton Turton, has
been trying to get South Africans to take
water shortages seriously. A shutdown
of water infrastructure will impact neg-
atively on property markets. Shopping
centres, hotels, banks and schools cannot
operate without flushing toilets and run-
ning water.
VINCE
LOMBARDI
“
The difference between a
successful person and others
is not a lack of strength, not
a lack of knowledge but
rather a lack of will.
According to property economist and
valuer, Erwin Rode of Rode & Associ-
ates, publishers of the quarterly Rode’s
Report on the South African Property
Market, the market is lacking vigour.

Rode uses the phrase to describe the
current state of the industrial prop-
erty market. He says contractions in
spending on durables are impacting the
demand for locally manufactured goods
and, in turn, manufacturing production
lines. The second quarter marked the
ninth consecutive quarter in which
the consumption of durable goods had
contracted, with a 2% contraction seen
over the previous year. The Western
Cape nominal market rentals for prime
industrial space could only muster
growth of 9%.

Office rental growth is also very weak
and the only two geographical areas that
could show yearly growth in market
rentals were Durban decentralised (5%),
followed by Cape Town decentralised
(3%). Johannesburg decentralised office
rentals remained at roughly their previ-
ous-year level.

Low sub-inflation growth in house
prices is expected to continue for a
few years (besides Cape Town) which
is seeing prices growing at double the
rate of the rest of the country at 15%.
Rode adds, “nobody can tell whether
this outperformance is sustainable,
considering the affordability ceiling”.
Meanwhile, nominal flat rentals across
the country showed year-on-year growth
of just 5%, with the strongest being
shown in Durban (7%), followed by
Pretoria, Johannesburg (both at 6%), and
Cape Town (4%). Cape Town received a
massive development injection with one
of the biggest mixed-use developments
is coming to Cape Town CBD with a
market value of around R10 billion.
Real estate investment is an even playing
field for all and works in any area, in
up, down or sideways markets. Unlike
winning the lotto, real estate investing
is not a mug’s game based on potluck.
Real estate investing is an art form that
requires that you understand the market
cycles, get creative, conduct proper
research, do proper due dil igence, run
the numbers to see if it makes sense, and
take calculated risks to succeed.
For anyone who invests their time,
energy and enthusiasm in getting
started, real estate doesn’t play favourites
by gender, age, race or when it comes to
energy, enthusiasm and the desire for
success. If you’re investing for cash flow,
the market’s direction is no longer im-
portant, nor do you need to worry about
liquidity. Your goal is to collect monthly
rent for profit and any gain in value of
the property itself is a bonus. 
Successful investing
NEALE PETERSEN
FOUNDER/PUBLISHER
SA Real Estate Investor Magazine NOVEMBER 2017
3
“