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Our usual way of investing in property is changing – Editor’s Letter

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Prior to Covid hitting our shores, the buy-to-let market was a thriving one. Airbnb was the flavour of the month and house swapping was a growing enterprise for holidays abroad.

When lockdowns became a global phenomenon as a way to deal with the pandemic, investors who had put their money into these types of properties were hard hit. Foreigners were not coming to our shores – because they could not – and many Airbnb properties sat languishing.

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Those who were earning big bucks BC (before covid) had to turn to offering their properties as long-term lets at a fraction of the income they had been making in the Airbnb market. And those who had already been letting out their properties long term were faced with tenants who could not – by no fault of their own – meet rental agreements. It was a hot mess.

And investment properties became a noose around the necks of many of those who had hoped to make money by being landlords. So, why are we asking whether it is time to invest in the buy-to-let market again? Partly because the low-interest rates mean that those who can buy property probably are right now and those with some spare cash might be looking for worthy investments that can grow faster than the low-interest rate on fixed deposits in a bank.

However, we are warned by the experts that the time is not ideal for such investments. And, if you are going to take the plunge, do so more in the lower end of the market than in the luxury market. In other words, buy a cheaper investment property as it will have more legs.

While we are all still grappling with what a new normal might look like – will Airbnb once again thrive and will renters again be able to meet rental agreements – we are also seeing the rise of other ways of acquiring property.

This, for me, is the most exciting development. FNB, for instance, has launched an industry-first property lending solution that allows up to eight members to buy property for residential purposes as a collective. And, I know I carry on about tokenisation – the division of a property into tradable shares or digital assets on a blockchain network – but it too is a reality.

Many countries and regulatory bodies are in fact making legislative changes to create a friendly business environment for the tokenisation of real estate assets. In effect, our usual way of investing in property is changing, and I believe there are great new opportunities available.

Warm regards

Vivian Warby

vivian.warby@inl.co.za

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