Adulting: Careful with your property investments

If you’re a property investor, take note. With the economy still recovering from the pandemic, landlords have been forced to accept significant cuts to their rental fees – particularly in retail and office space. Meanwhile, the residential property boom has meant losing tenants as they become first-time home owners. 

This week, the Sunday Times reported that Liberty Two Degrees (L2D), which lists retail properties such as Sandton City, saw rental decreases averaging 21% and 26.6% for offices and retail, respectively. In terms of residential, growth was negative in November 2020, according to PayProp’s latest rental index. That’s a first since the index was launched in 2012. 

Experts say it is far better to keep tenants even if they pay far less than you’d like, rather than having vacant space. No one knows when demand for retail and office space will pick up again. Some properties could still be vacant for six months, or possibly even longer. But property owners are optimistic that with eased lockdown restrictions the second half of the year will see smaller cuts to rental fees. 😬

This article appeared as part of The Wrap, 05 August 2021. Sign up to receive our weekly updates.