The six key challenges facing property Investors in the current South African market?

Property investing in the South African property market is a complicated affair, with Investors facing an ever-increasing range of challenges. Here are a few which seem be to be the main topic of conversation with Clients recently:

1.??????The Political environment is a quagmire of low service delivery, lack of skills, and high levels of corruption. This creates opportunities as in Gauteng our 'old' industrial areas are decaying at a rapid rate and business owners are looking to get into more secure estates or parks. This is a double edged sword for smaller Developers, entrepreneurs and any property owner looking to maintain tenants in a fixed asset. It is frustrating knowing you own something good, but the streets around you are dirty, potholed and unsafe.

2.??????Low Rental Income: The South African GDP, economic outlook and amount businesses are prepared to spend on rental makes ROI difficult. Tenants, have many options to choose from. This competition puts downward pressure on rental prices and makes it difficult for Investors to turn a profit.

3.??????High Interest Rates: South African interest rates are at an all-time high, making it expensive to finance investments, some banks are not prepared to fund some sectors such as Agriculture. Perhaps they haven’t asked themselves who puts food on their tables? The high interest rate environment increases base costs so makes it difficult for Investors to make existing and future deals work.

4.??????Taxation Rules: The South African taxation system is complex and constantly changing, making the environment more violate and hence risky for Investors in addition to keeping up with the annual regulatory changes. This makes it difficult for existing and new Investors to calculate and forecast revenues, profits, and losses accurately.

5.??????Property Maintenance and skills shortages: Owning property comes with several associated costs, such as maintenance, repairs, insurance, and property taxes. These costs and the time wasted finding good service providers can add up quickly and make it difficult for Investors to resolve issues, secure tenants and turn a profit.

6.??????Legal Issues: Investing in property in South Africa comes with a range of legal and political issues relating to the way in which the current Govt. makes decision making at the various levels of govt. never mind the commercial agreements, contracts and local council and zoning regulations. These are difficult to navigate and can present a significant challenge for Investors.

Overall, property investing in South Africa is a complicated affair, and Investors must consider a range of challenges if they hope to turn a profit. Investors must be aware of the above and by taking these and other challenges into account, as well as working with a Professional Broker within a reputable organisation Investors can make more informed decisions and increase their chances of success.

If you are heavily invested in the commercial property space, what are the topics being discussed around your boardroom table? Put your thoughts in the comments, I would love to hear about what keeps you up at night.