House to house: Euphonik beats to the rhythm of property investment

2020-02-10 18:00

Award-winning DJ, radio and TV host Themba Nkosi has built a reputable name for himself in the South African entertainment industry. But that is not the only thing that he’s built.

Popularly known as Euphonik behind the decks, Nkosi has branched into the world of property investment and has a growing portfolio.

“Humans need a place to live, work and play. Property rarely loses value and it [is] hands down the best wealth creation tool,” he said.

It all began with Nkosi staying in accommodation he did not like as a student.

“The rooms were not well put together at all. They didn’t have things that a student would like and need. I provide uncapped wi-fi, [there are] TVs in the rooms, electricity [is] included in the rate and daily cleaning [is provided],” he said.

Since 2009, Nkosi had invested in property around various parts of Johannesburg.

“I like residential property, so I look for opportunities in that field first. After that, it is the best deal, the right location and what the potential future growth of that area is,” he said.

But is the South African property market investment friendly?

“I think it’s great and there’s lots of opportunity, especially when there’s a lot of negative talk, it means there’s more opportunity for the brave. On the African continent which other market is as stable as ours? That’s why this is an amazing market,” he said.

Humans need a place to live, work and play. Property rarely loses value and it hands down the best wealth creation tool

Property economist and associate professor at the University of Cape Town, Francois Viruly, said that there are certain factors to be taken into consideration before this can be determined.

“It is profitable, but it is important to assess particular sectors of the market and the opportunities that arise in them.

“At the moment the lower end of the residential property sector is doing well – namely properties below R1 million. Opportunities also exist in the commercial property sector and particularly in the logistics sector of the market.”

Despite his growing success, Nkosi admits that he made some mistakes along the way.

“Gathering all the necessary knowledge was an uphill experience. You don’t realise how intimidating the property-buying process is until you start looking. And it gets even more complex when the paperwork hits your table.

“The first few student apartments I bought were completely wrong. They had no capital gain after five years of me owning them and so the cost associated with owning them made no sense. The most challenging aspect of entering the property market was knowledge,” he said.

Financial analyst Dr Wilbert Chagwiza, said that while property investment may be profitable, those interested need to “start with low-cost properties”.

Good property decisions are based on a deep understanding of the market. A careful balance should also be found between available cash flow and the cost of borrowing
Financial analyst Dr Wilbert Chagwiza

“Property investors are risk averse and do not want to invest when the economy is not performing well. Investors do not understand the risks they are exposed to. In addition, some investors do not carry out adequate research such as which areas to build properties, affordability, and consumer life stages,” he said.

Location is not the only factor that plays a crucial role in determining which property to buy.

“The second-biggest determining factor of a successful property sector is timing. The investor must keep a clear focus on the property cycle – it is also worth remembering that macro-economic parameters such as the decline in interest rates can have a considerable impact on prospects for the property market.

“Good property decisions are based on a deep understanding of the market. A careful balance should also be found between available cash flow and the cost of borrowing,” he added.

The degradation of the country’s economic status to negative in the 2019 financial year, high unemployment rates, load shedding and the embattlement of state-owned entities such as the South African Airways and Eskom have put a dent in the pockets of many South Africans, leaving them uncertain about their financial future.

“Currently it is not 100% conducive for investment due to several reasons including power cuts, corruption and service delivery problems,” said Chagwiza.

However, he said that there are good news for those who want to invest in property.

“Property investment is a good business especially in South Africa. Properties appreciate every year; the population is always growing.

“From an investment point of view, this is the time to invest when the economy is not performing 100%. In later years, the economy will pick up,” added Chagwiza.

Nkosi has bought a piece of land where he plans to build his dream home in the next five years. He regards this as his favourite property purchase.

“Property is great because you can get detailed information on it before you even view it. If I could own property anywhere it would be in South Africa. We are still growing as a country and I still have a lot of hope,” he said.

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February 23 2020