During the 2020 State Of The Nation Address (SONA), President Ramaphosa had much to say about our economic woes, dilapidated public finances and struggling SOE’s, but it is not all doom and gloom.

His ambitious plans to transform our economy and investment landscape provide light at the end of the tunnel, especially for property investors.

These are the 5 key talking points that should interest property investors.

1. Investing in (quality) education

There was a clear emphasis placed on young people and providing them with better educational opportunities. This is key for South Africa’s future employment and thus future tenant pool. Qualified people tend to earn more and have better resources to pay rent on a timely basis.

A more educated and thus employable future generation will have a positive knock-on effect for the housing market in the long-term. The expanding middle-class is vital for a healthy rental property market.

2. Renewable energy projects to ease pressure at Eskom

Eskom has left us in the dark too many times. President Ramaphosa has understood the devastation caused by blackouts and is ready to act. His plan includes increasing grid capacity through renewable energy sources as well as using Independent Power Producers (IPPs) to ease the pressure at Eskom.

The rising popularity of eco-friendly homes indicates that property owners are also taking steps to go green while reducing their reliance on government energy sources. Just think about how common it has become to see solar panels on roofs across the country. No more relying on eskom Homeowners can embrace saving the planet while adding practical, noticeable value to their properties at the same time. South Africa is finally going green.

3. Reducing unemployment

Job creation is a word often uttered at SONA’s, but with an almost 30% unemployment rate, this has become a MUST-HAVE conversation. Job growth is key to maintaining and growing market momentum. With sufficient job creation, more employable people will move to the suburbs and require accommodation. Good economic growth improves the rental and the buying market, providing investors with an opportunity to invest in buy to hold and buy to sell investment opportunities.

The President has recognised the employment issue and through programmes like the Presidential Youth Employment Intervention, President Ramaphosa could substantially boost investor confidence.

4. Addressing the students accommodation shortage

The government has planned R64 billion investment in student housing which will address the growing need for affordable student accommodation across South Africa. This massive investment will also hopefully revitalize the construction industry.

Student accommodation is one of the most lucrative strategies and with an estimated 300 000 beds shortage in South Africa, a definite strategy for property investors to exploit.

Watch: how to analyse a student accommodation deal in under 30 minutes

5. Social housing

President Ramaphosa announced a social housing programme that could leverage as much as R9 billion in private investment to construct 37 000 low-income rental apartments. The low-end market has increased in demand and it’s great to see the government tending to the needs of their more under resourced citizens.

These citizens probably won’t have the resources to join the first time buyers’ market, but it will definitely stimulate the rental market and increase the demand and returns. It will have a very positive affect especially on the multi-let market, which is one of the most lucrative strategies for professional investors today.

 

In summary

  • A more educated and thus employable future generation will earn more and have better resources to pay rent on a timely basis.
  • Eco-friendly properties are becoming more popular and add tangible value to properties. The less reliance your properties have on government energy sources, the more attractive they will be to buyers and renters.
  • Good economic growth improves the rental and the buying market, providing investors with an opportunity to invest in buy to hold and buy to sell investment opportunities.
  • The massive planned investment in affordable student accommodation will hopefully resurge the construction industry.
  • The social housing programme wants to build 37 000 low income rental apartments. This shows the increased demand at the low-income housing market, which will likely stimulate the low-income rental market and increase the demand and returns, especially on the multi-let market.

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