Alternative way of property investment

THERE is another way of investing in property, other than buying a flat or house, that does not have the burden of collecting rent and maintenance and that is investing in listed property.

Keillen Ndlovu, manager at Stanlib Property Income Fund, said: "People can invest in a listed property through a property fund offered by wealth management companies like Stanlib.

"Investing in listed property involves buying a stake in property companies listed on the JSE."

He said most people only got exposure to property through residential market.

"Listed property gives an average person access to the commercial property market for as little as R500 a month or a R5000 lump sum."

Ndlovu said through paying this amount the investor gets to own a portion or unit of the listed company that owns buildings across retail, office, industrial, hospital and hotel sectors.

This means investors are indirect owners of the various properties.

"Listed property is a good alternative to owning physical property. It takes away the stress of doing rental collections, negotiating leases and maintenance work such as fixing air-conditioners, lifts, gardens and gates," Ndlovu said.

But Ndlovu said the disadvantage of listed property is that the unit price is volatile. This means that investors' unit value can go up or down in the short-term led by changes in the local and global equity markets.

However, Ndlovu said, listed property outperformed physical property in the long-term. "Over the last 15 years, listed property has been the best performing asset class ahead of equities, cash and bonds in South Africa," Ndlovu said.

In listed property, money is made through rental income from tenants such as banks, retailers, government and industrial companies. Like all property, there are expenses such as asset management fees, leasing fees, electricity, cleaning, rates and taxes. "Whatever is left after these expenses (have been paid) is passed to the investor who is called a unit holder."

Listed property offers income of nine percent in the first year and the investor gets the income quarterly. That nine percent is expected to grow by six to seven percent in the next year.