What does the rest of 2022 hold for property investment?

Apr 7, 2022 11:21:32 PM

Rising interest rates, lowered COVID restrictions and increasing expenses, are but a few of the factors influencing the property market. What does that mean for the real estate in 2022. Over the past two years of the pandemic the real estate industry experienced interesting trends, that for the most part had a positive impact on the market. Record interest rate lows coupled with a major rise in demand by first time buyers translated in real estate companies reaching never before seen highs.

The recent change to COVID restrictions has us tasting a little bit of normality, rugby stadiums will start filling up, events will be back on the cards and hopefully economic growth will be reignited. From a property perspective a return to normality will see heightened activity in regions that have been greatly impacted by COVID. We will see heightened interest to join the industry, developments will gain momentum and interest in diversifying portfolios will come back to light.

There are negative effects too, the interest rate will rise back to its pre-COVID range in the next two years and ever rising fuel costs impacting an increase in all household expenses will play a major part with regards to affordability. It is hard to ignore that consumers are tightening their belts and many are in a price pinch, impacting consumer confidence. Buyers might be a little more cautious but that doesn’t mean they aren’t going to buy.

What we need to understand is that in an emerging market like South Africa with huge economic growth potential real estate will always be a fantastic investment avenue. Capital growth in high demand regions remains steady and with the guidance of your estate agent the world of property investment for both primary and secondary use presents an abundance of opportunities. You just need to know what it is you are looking for and how to get it. Open your eyes to alternative options, explore an array of regions and speak to as many people as possible. Knowledge is your strongest ally.

Leafy green suburbs back on the radar

The past few years estates, developments and complexes have been popping up everywhere, and rightly so. Anything from first time buyer apartments overlooking the ocean to luxurious eco estates in the Bosveld. Families have gravitated toward estate living due to the multiple advantages of investing in these properties.

A sense of community they offer, often there is high level security and for most South Africans that is a major factor, well maintained grounds, fun family orientated amenities like pools, squash courts and running trails are many times part of the package. The most important factor for a lot of buyers and investors is that in a new development all costs are usually included, like transfer and bond costs. Making it a very attractive option.

However, the day of the suburban home in leafy green suburbs is far from over. Areas like Durbanville in the Western Cape, Garsfontein in Pretoria East and Durban North has seen that families looking for more space, a bit of individuality and freedom as well as increased privacy are showing a lot of interest in these areas.

There are multiple factors influencing people’s desire to live in a family home in a region surrounded by schools, shopping centres, community halls, amenities and sports grounds. One of the leading influencers has been the rise of private security in these areas. A joint effort by community watch groups and private security companies have made major strides in making these suburbs safe again.

In Pretoria East suburbs like Faerie Glen, Garsfontein and Moreleta Park are surrounded by nature reserves, fantastic schools, cute roads lined with Jacaranda trees and kids riding their bicycles. This translates into increased demand and increased value. Which is fantastic for people who have lived in these areas for decades. This trend to re-invest in the communities that establish the very essence of family living in South Africa will do wonders for the property market.

Commercial real estate in a post COVID world

We know how hard commercial real estate, not only locally, but globally, has been hit by the pandemic. Store fronts covered in paper, staff working from home, office buildings to let. The commercial market faced tough times, however real estate companies using innovative methods to attract buyers were not only able to survive, but thrived.

It is these very measures of advancement that will ensure the commercial property environment sustains growth in the future. What is so important to take note of is that when one portion of an industry takes strain another part is almost simultaneously born. Like a Phoenix rising from the ashes. For example, auctions of commercial buildings widens up the demographic greatly and appeals to sections of the market previously ignored by traditional marketing routes

The concept of commercial auctions has long been a thing in South Africa, but with residential real estate companies like Harcourts venturing into auctions and including this offering to our commercial agents the sky is the limit. Marketing a property through auctions with a strong digital strategy reaps an abundance of rewards.

The amount of marketing that goes into presenting an auction property to market is huge. Our auction service hits hard and we’ve got it down to a fine art. The beauty of this is if your commercial property is reaching wider and further than ever before then your conversions are bound to be more.

It is not only the marketing aspect of commercial auctions but also the timeframe and the forced increased in demand because buyers are bidding against each other. Within a few short weeks the market determines the true value of the property and that not only provides the seller with amazing insight but at the same time decreases time on market greatly.

In short, what I am trying to say is this, to be a prophet of doom about an entire sector is very risky. What one man might see as an office building with a litany of faults and high expenditure another man might see his dream project. The commercial real estate market doesn’t need resurrection, it needs innovation.


Topics: Property Investment, Market Value, Buying and Selling