Apr 28 2008
Investor, Speculator, or House Buyer?
Investors are not the typical domestic buyer. Speculators, despite being a different type of buyer, are generally thought to be in the same group as investors. Speculators and buyers are very similar in their requirements and in their search and acquisition of property.
Investors are still finding good opportunities for investment both here and abroad.
Unlike Investors, speculators will generally only do well in a good market, such as we have been through over the past few years. In a weak market a speculator may just as well put his money on the table at the nearest casino (and have more fun spending it.) A speculator will look at returns, consider rental and resale options, and make a decision – a speculative decision usually based on very little fact.
As South Africa continued to improve as good investment opportunity for the international property investor we (SA) did everything we could to dissuade investors (e.g. the rumored moratorium on foreign land ownership). Online, The Economist’s house-price indicators show that values grew by 395% between 1997 & 2007 and we were ranked at the top of the list. Today we are slipping down the list and the countries that then had negative growth are getting stronger. So where would the international investor take his money?
An investor, unlike the average buyer, has very specific requirements and eliminates as much guess work as possible. Each investor will have a predetermined profile; and in the process of acquisition – defines a profile, finds properties to fit the profile, checks the numbers against the profile, confirm finance, executes strategy. They are also looking for (and getting) 100%, 400%, 800%, and better rates of return.
Buyers in the global second-home market , while less particular with the numbers, are too still very discerning.
(Graph from mymortage.co.za)