Retire in Style

Private Property South Africa
Lea Jacobs

Unlike many countries, South Africa values the arrival of retiring immigrants. The retired population has much to offer, including the influx of capital and disposable income. There are no age restrictions and both temporary and permanent residency can be applied for.

This is great news for those from abroad who wish to retire in style as they can cash in on the relatively cheap property available here. To add to the attraction, the cost of living is generally lower than in other countries. While this may prove to be a bonus for foreigners, are the conditions as attractive for those who have lived and worked in South Africa all their lives and need to prepare for retirement?

There is a misconception that retirees tend to enjoy reduced expenditure. Fortunately - or unfortunately, depending on their level of financial security - retirees tend to have more time available to spend on activities that cost money such as golf, bowls, travel and eating out.

As retirement approaches, so people's mindset begins to change and reality begins to set in. The invincibility of youth turns to the more pragmatic: 'do I have enough money to be able to retire?' A number of articles have been written on the benefits of investing in property as opposed to taking the traditional route of investing hard-earned cash in retirement annuities. A number of experts - and not necessarily those involved in real estate - are of the opinion that it is definitely more advisable to invest in bricks and mortar.

This holds some water as it is pretty difficult to gauge how much to salt away in an annuity. Trying to figure out how much you need to have in the bank when you are in your mid-60s is virtually impossible when you are 45. South Africans have long been branded poor savers. Generally speaking, they are not disciplined enough to set aside regular sums for their twilight years, until it is too late. There, evidence suggests that a vast number of people reach retirement age and find that they simply have not invested enough using what has long been considered a tried and tested method.

When one takes into account the ever-increasing cost of living and the unpredictability of the stock market, a solid property portfolio becomes even more attractive. Ask anyone who has retired with an adequate portfolio how they did it and the answer will undoubtedly include property investment as a valuable source of income. That said, suggesting that a portfolio should not include other investment products would probably be naïve. The fact that there are many successful investment brokers indicates there are certainly good investment products available.

One of the undoubted perks of investing in property is that once the capital has been invested, that outlay can be recouped through rental income. Of course, getting onto the property ladder will require effort on the part of investors. Apart from the obvious initial financial implications, investing in the right property in the right area is vital. Those who wish to capitalise on their investment need to study housing markets as intensely they would the stock markets.

Very little is guaranteed in life. However, surprisingly enough, history has shown that property investment has always been the secret to wealth. Written in 1086, the Doomsday Book recorded land values across ancient Britain. From that base, experts have calculated that property values in that country have, over the last 900 years, increased by 10% per annum.

Although this figure may not seem that impressive, it is the compound effect of property ownership that makes all the difference. A property bought for R500 000 will, according to these calculations, be worth R550 000 within twelve months and will rise exponentially year-on-year.

As with any investment, the earlier you bite the bullet, the better. Those who invest when property is more affordable will be the winners in the long term and will one day be able to truly retire in style.

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