Peter Gilmour, Chairman of RE/MAX of Southern Africa, considers the findings of global real estate indices and shares the great news – world wide, South Africa remains the best place in which to invest.
If you’re a prospective buyer wondering where to invest, Peter Gilmour, Chairman of RE/MAX of Southern Africa has the answer: South Africa. “And this is not a patriotic sentiment or an optimistic prediction based on the realisation of long-term benefits that may, or may not result from the hosting of the Soccer World Cup. It is a factual deduction based on the actual performance of our property market relative to other global property markets, as assessed by some of the leading independent real estate analysts in the world,” says Gilmour. According to the latest house price index by the UK’s authoritative The Economist magazine, over the last 13 years, South Africa’s residential property markets has outperformed every other market covered by the index by a truly spectacular margin, notching up 456% growth in house prices. The next best performance recorded was in Australia, at 211% over the same period, followed by 187% in Ireland. “While some of these markets are currently showing more robust growth than the South African market, there is no doubt that over the long term, South Africa’s property market has produced a remarkable return on investment,” notes Gilmour. And it is not only residential property in South Africa that has outperformed other global markets. The latest SAPOA/IPD South African Property Index showed that the South African commercial real estate market delivered a total return of 8,7% in 2009 - the highest nominal return of the 11 countries the IPD had surveyed. Many commercial real estate markets measured by IPD fell into negative territory, including the USA (-17,5%), Ireland (-23,3%), Canada (-0,3%), Australia (-2,2%) and New Zealand (-4,1%). While some positive growth was recorded in some commercial markets, such as the UK (3,5%), Denmark (3,9%), Finland (3,8%) and Sweden (1,4%), the performance significantly lagged that of the South African market. “Our property market certainly did not escape the ravages of the global recession and the credit crunch, but there is no doubt that it has emerged from the financial crisis in much better shape than most other markets. In fact, South African property owners can rest assured that, regional variations aside, they have made a generally wise investment by buying South African property. Prospective buyers can take comfort in the knowledge that historical performance confirms that our property market is the best performer on the global stage,” says Gilmour. Will this performance be repeated in the future? “Many investment experts and analysts will argue that historical performance is not a predicator of future performance. Nevertheless, what these indices do reveal is that the fundamentals underpinning our local property market is strong enough to produce a spectacular result over more than a decade and, despite the worst recession in living memory, continues to lead global performance benchmarks,” notes Gilmour. He adds that investors should take note of information not reflected in these indices such as the positive economic growth expected for this year – 3% according to conservative Reserve Bank estimates with 4.6% recorded in Q1 and 3.2% in Q2, even before the soccer world cup. “As such, one can broadly expect that our property market’s performance will continue to yield good long-term results,” says Gilmour. Property buyers in South Africa have an opportunity to invest in one of the best performing property markets world-wide in one of the best buyers’ markets in decades. “And this, is an opportunity that should not to be missed,” concludes Gilmour.