Property increasingly part of middle class investors' retirement portfolio
While some investors are holding back on property, many increasingly accept that two, three or more properties should form part of their retirement investment portfolio and that now is a good time to buy, says Bill Rawson, Chairman of Rawson Properties.

“Previously, investment of this kind was confined largely to people in the industry – estate agents, developers and builders – but now we find people from all walks of life investing steadily in property.”

Ideally, Rawson believes, any property portfolio should be evenly balanced between commercial and residential stock, but right now the latter is the better bet because low and middle bracket homes are snapped up fast by tenants and rentals still rise annually, whereas retail, industrial and commercial properties are experiencing lengthy vacancies and having to accept reduced rents.

“Small shop landlords are finding it difficult to compete with the big centres and malls and they, in turn, find that the anchor tenants’ rentals can no longer be subsidised by the smaller tenants whose turnovers are on average 30% down.”

Recent municipal workers’ salary increases, although quite probably deserved, were not good news for the property sector, added Rawson, they will lead to higher rates on all properties and this will make property less profitable and less attractive.

Rawson has, however, also pointed out in a discussion with his staff that the dire lack of new residential stock and the high cost of building today will inevitably push up the value of existing stock fast as soon as the recession shows signs of ending.

Looking ten years ahead, Rawson cited a recent economic analysis which indicates that the countries best placed to prosper will be those with minerals and/or low-cost energy such as Australia, Canada, India, the UK (where nuclear and North Sea gas now provides 70% of their energy requirements) – and South Africa (with its abundant coal and iron ore), Europe, by contrast, is not tipped for further fast growth.

“Ten years is s long time to look ahead but it is encouraging to see Southern Africa set for growth and intensive ongoing development when old world countries are seen as likely to stagnate,” said Rawson.

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