While property as a tangible asset has long been regarded as a reliable way to build wealth and diversify your financial portfolio like any investment, it also comes with its own set of risks.
This is according to Arnold Maritz, Co-Principal for Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs and False Bay.
Although property is generally more stable than many other investment options, factors such as market fluctuations, economic uncertainties and location-specific challenges can affect returns and even undermine the best-laid plans.
Managing these risks effectively is important to safeguard assets and achieving long-term success.
Maritz said: “There is a reason the key mantra for property, location, location, location has endured as the success of a real estate investment is very often determined by its location.
“The most resilient locations are those that can weather economic downturns and maintain strong demand over time.”
Here’s how you can identify these locations:
Focus on high-demand areas
Invest in properties in areas that have growing populations, strong job markets and diverse industries.
Cities like Cape Town, Johannesburg as well as smaller towns like George and Plettenberg Bay attract both residents and businesses while ensuring steady demand for residential and commercial properties.
Assess infrastructure and accessibility
Areas that tend to retain value better during economic slowdowns have:
- well-developed infrastructure
- public transport options
- proximity to amenities like schools, hospitals, and shopping centres
Emerging neighbourhoods that have planned infrastructure developments can also offer high-growth potential.
Evaluate market trends
Property investors should analyse local market trends including rental yields, property appreciation rates, and vacancy rates in various areas before investing in property.
Properties in areas that have consistent growth in rental demand are more likely to provide stable returns.
Consider tourist-friendly areas
In South Africa, popular tourist destinations like the Winelands or towns along the Garden Route can offer opportunities for short-term rental income.
However, it is a good idea to diversify within these areas to offset the risks that are tied to seasonal demand or economic shifts that impact tourism.
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