One of my favourite pieces of investment advice is: “It’s not about timing the market but about time in the market!”
I don’t know who said this first but in my opinion this is probably the greatest piece of investment advice out there. I know that in this day and age it’s all about “instant gratification”, so everyone is looking for the “get rich quick option”.
Having said that it is not about timing the market, successful investors like Warren Buffet have always bought low and sold high and thereby maximize returns. “The time to buy is when there is blood on the streets.” Yet again, I can’t recall who said this first but maybe you (the Reader) can help me attribute these quotes. 😉
Notwithstanding anything that I have mentioned above, I truly believe that South Africa is about to enter a sustained growth period based on the internal circumstances within South Africa (unless global events intervene). Why do I say this? Here are some reasons:
POLITICS
For those who don’t know, the African National Congress (ANC) has ruled South Africa since the first free Election in 1994. As a liberation movement, the philosophy has always leaned towards a socialist way of thinking. This has unfortunately included attacks on security of tenure in Real Estate (property rights vs land redistribution) and a failure of infrastructure (partially linked to corruption). This decline was accelerated during the “Zuma Years” with the result that the Property Sector has basically stagnated since the financial crisis of 2008.
In the recent Election, for the first time the ANC failed to achieve an outright majority and it has been forced into coalition government. Everyone wondered whether the ANC would join with the far left (extremist) parties or create a more centrist coalition. The ANC has gone for the latter, in the form of a Government of National Unity (GNU).
The GNU includes Parties that are seen as “business friendly” and the markets have reacted positively to this in both the Rand/Dollar Exchange Rate and the Stock Exchange.
For more (and better) insights, take a look at these:
(1) How will polls affect the commercial property sector? | LinkedIn
Foreign investors pumping billions into South Africa – Daily Investor
New GNU cabinet boosts business and investor confidence (bizcommunity.com)
How SA’s new GNU will impact investor sentiment (dailymaverick.co.za)
New GNU Cabinet as a whole is good for business, investor confidence – Raymond Parsons (iol.co.za)
SHOOT YOURSELF IN THE FOOT – Also known as “scoring spectacular own goals”.
South Africa’s Rugby Team, the Springboks, have won the last two World Cups and have now won more World Cups than any other country. The SA Cricket Team just lost in the Final of the World Cup and the Football Team finished third at AFCON. How is it that despite sporting success, SA continues to score own goals in the economy?
South Africa knew that Grey Listing by the FATF was coming, yet it failed to prevent it. South Africa knew that electricity infrastructure was deteriorating, yet failed to maintain and expand it, resulting in more than a decade of rolling blackouts (also known as Load Shedding). South Africa has failed to make any progress in the prevention of crime and corruption. South Africa is ranked 84th in global education and many schools are in an extremely poor state. Verbal attacks from some within SA upon Western capitalist countries (its partners) has placed certain subsidies in peril (e.g. AGOA) and jeopardized access to the markets of its biggest trading partners. Similarly, certain policies have seen several downgrades by the international Rating Agencies. Lastly, unemployment remains a massive issue.
Yet there is significant hope.
It is expected that SA will be removed from the Grey List in 2025. There have been over 100 days of uninterrupted power supply. SA retained its AGOA status by the skin of its teeth. The only cure for unemployment is growth and hopefully a more business friendly government will create such growth.
The game is there to be won – just avoid the own goals.
GLOBAL SENTIMENT
We see much global uncertainty with the elections in the USA, the UK and France but sentiment toward South Africa is positive (see above articles) and there is perhaps a new willingness to seek opportunities further afield than the traditional US and European “safe havens”.
❤ I love this: “Emerging markets are becoming increasingly attractive for real estate investments in 2024. Countries like Mexico, Thailand, South Africa, India, Brazil, and regions such as Eastern Europe and Southeast Asia are witnessing a real estate boom.”
International Real Estate Investing in 2024: Crash, Bloom and Emerging Markets | LinkedIn
REBOUND OF THE OFFICE
We know that the pandemic drastically changed the way that people work, remote and hybrid work suddenly became “a thing”. This had a dramatic effect on commercial real estate, in general, and the Office Sector, in particular. At the same time, Online Shopping seemed to pose a significant threat to the Retail Sector.
Despite the concern that there would never be a return to the office, there has been somewhat of a rebound in the Office Sector in South Africa and this may once again present an investment opportunity.
Here is an Article by John Jack, CEO of Galetti Corporate Real Estate:
The Four Factors Driving the Surprise Comeback of SA’s Office Sector | LinkedIn
CAPE TOWN – THE ANOMALY IN RESIDENTIAL REAL ESTATE
I mentioned a general stagnation in Real Estate Investments (in respect of capital appreciation) but Cape Town can certainly not be lumped-in with the remainder of the country. Cape Town has been the darling of international Buyers for a long time. Due to demand and the depreciation of the Rand, real estate prices in Cape Town (particularly the luxury market) have performed excellently.
“While Gauteng has the highest number of foreign buyers, the Western Cape dominates big-ticket sales, constituting 64% of luxury foreign sales this year.” HNWIs looking for multicontinental property investments have Cape Town high on their list | Everything Property
When it comes to Nigerians, Cape Town is also the real estate investment destination of choice. Cape Town destination of choice for Nigerian property investors – BusinessDay NG, TV, and Podcast
I have had numerous real estate discussions since I arrived in Nigeria ten months ago. These discussions have almost exclusively revolved around luxury residential properties (whether as holiday homes or investments) but there are so many divergent opportunities for Nigerians in South Africa. If you would like to know more, book a FREE consultation on the SHEPPERSON CONSULTING Website. A FREE Guide to South African Real Estate is also available on the Website.
SO … IS TODAY THE PERFECT TIME FOR NIGERIAN REAL ESTATE INVESTMENT IN SOUTH AFRICA?
Absolutely – YES.
The opinions contained in this Article are the personal opinions of Gareth Shepperson. These opinions are not expert opinions but contain Gareth’s own observations and do NOT constitute Legal or Financial Advice. See some of the real estate opportunities under Resources on our website or ask us about SA Real Estate Investment Opportunities for You.
