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Investing in South Africa's Inner Cities: A Risk Worth Taking

Investing in inner-city properties in South Africa can be a highly profitable opportunity for ordinary South Africans while also having a positive impact on the community. With an average growth rate of 8.5% annually and high rental yields, inner-city properties offer a range of benefits for investors.

Location, Location, Location: Advantages of Inner-city Properties

One of the main advantages of investing in inner-city properties is their location. Inner-city areas are often close to amenities such as public transport, shops, and restaurants, making them highly desirable to renters and buyers. Additionally, inner-city areas tend to have a higher population density, which can lead to a higher demand for rental properties.

Higher Cash Flow and Return on Investment

Inner-city properties offer higher cash flow and return on investment (ROI) compared to properties in other areas. The occupancy rate for inner-city rental properties is around 95%, which is considered to be a healthy rate. According to data from TPN, the average rental yield for inner-city properties in South Africa is around 7%. This is significantly higher than the rental yields for properties in other areas.

Faster to Sell

Inner-city properties are also faster to sell since they are cheaper and therefore more accessible to buyers. Additionally, some of the distressed inner-city properties, compared to new developments, offer a great opportunity for investors to renovate and improve the properties for resale or rental purposes.

Opportunity to subdivide

Another benefit of inner-city properties is the opportunity to subdivide them due to their enormous size. This can increase the number of rental units and generate more income for the investor. Also, the balcony of some inner-city properties can be rented out as a bedroom, as was the case with one of the properties an investor bought on the investRand marketplace. This property's balcony was turned into two bedrooms, which drastically increased its rental income.

Government and Private Investment in Inner-city Revitalisation

Investing in inner-city revitalization not only creates jobs and drives more investment, but also helps reduce the housing shortage. Informal settlements can now be seen next to highways and national roads across South Africa because of a severe housing shortage. The government and private sectors are investing in revitalizing inner cities across South Africa. UK development finance institution, CDC Group, has announced a R500 million commitment to Divercity Urban Property Fund—an affordable housing platform focused on the regeneration of cities in South Africa. Divercity is the main driver behind the Jewel City—the R2 billion-plus redevelopment of Johannesburg’s inner-city district. This is good news for investors because it could lead to an increase in property values, rental income, and demand for properties. It could also help solve the problem of a lack of housing.

In conclusion, investing in inner-city properties in South Africa is a highly profitable opportunity for ordinary South Africans. Inner-city properties have a lot to offer investors because of their location, affordability, high occupancy rate, potential for capital appreciation, and government and private investment. They also help the community grow by addressing the housing shortage.

If you're interested in learning more about the potential of inner-city properties as an investment opportunity in South Africa, we invite you to speak with one of our consultants over a call. Our team of experts can provide you with valuable insights and help you navigate the market to find the perfect investment opportunity. Don't miss out on this chance to maximise your returns and secure your financial future. Contact us today to schedule your consultation call and take the first step towards successful property investment.

Disclaimer : None of the information contained here constitutes an offer (or solicitation of an offer) to make any investment, or to participate in any particular investment strategy. investRand does not take into account of your personal investment objectives, specific investment goals, specific needs or financial situation and makes no representation and assumes no liability to the accuracy or completeness of the information provided here.

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