The recent recession has shown that in tough times residential investors are often in a far better position than owners of commercial or industrial property, says Bill Rawson, chairman of Rawson Properties.

“This was brought home to me forcibly in a meeting with a national property landlord who reported that he has nearly 20 industrial complexes vacant, many of which have been empty for two years or more.”

He says the main objections to residential property are that it gives only a 5% to 6% return. However, this is similar to what investors receive on thoroughly reputable fixed deposit accounts at their banks. Also, on average, over any 10 year period residential property will appreciate by about 10% a year, which is more than can be said for many JSE stocks.

More important, however, says Rawson, residential property is seldom without a tenant for more than two or three months because demand continues to be very strong.

Rawson says in view of the relative security of this type of property investment it is possible that major landlords, including some of those listed on the JSE, will reweight their portfolios in favour of bigger residential components. This, in turn, could help residential developers to get out of their current low activity phase.

“Residential developers urgently need a boost not just for their sake but because construction is the major employer of manpower in the country,” says Rawson.