Investors return to the property market

Investors are beginning to re-appear on the property scene, suggesting that the “smart money” is seeing real opportunities at this stage of the market cycle.

Gerhard Kotzé, CEO of the ERA South Africa property group, says recent months have seen an identifiable increase in interest from this category of buyer, boding well for the expected market turnaround during the course of 2010.

“Admittedly ‘one swallow does not make a summer’ and I do not expect a huge number of investor/speculators to flood the market overnight,” he says.

“On the other hand, having done their homework and no doubt based on the view that a turnaround is in the offing, individuals and syndicates are definitely active once more and some are acquiring large portfolios of property in key parts of the country.”

The syndicates are made up variously of common interest groups, professionals and individuals, so there’s no way of classifying them definitively, Kotzé says.

However their common denominator is that they are acquiring property with a view to making a profit on resale, as opposed to conventional buyers who are driven by personal or business reasons.

“In addition, they appear to be far more astute than in previous years and decidedly less reckless in both their choice of properties and their ability to finance them, due only partly to the lending restrictions imposed by the National Credit Act (NCA).

“The market therefore appears to have entered a new phase of gradual cyclical recovery which could lay the foundations for a more balanced picture of supply and demand and a healthy, moderate return to growth.”

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