The trillion rand property collapse 2.0 – Magnus Heystek’s R500k+ Hartbeespoort mistake

Brenthurst Wealth Administration founder Magnus Heystek tells the unhappy memoir that is the South African property collapse. The funding strategist – who has successfully referred to as thematic tendencies within the global capital markets for the greater segment of the final decade – tells a sombre story of his salvage property funding mistake. Heystek outlines the risks inherent in non-public property funding, which possess increased over the years owing to increased taxes, levies, friction and selling charges. Bar the glaring risks, opportunity cost and liquidity are also two main contributing components to his thesis. The R900,000 he invested in 2008 may possibly possibly well be rate around R10m if he had invested within the tech-centered Nasdaq at the time. He realised a mere R360,000 despite all the pieces selling charges had been deducted, when he just now not too lengthy ago managed to search out a purchaser for the property. Property funding has lengthy been seen as a right haven funding, however Magnus believes that till things fundamentally alternate in South Africa, this is now now not the case. – Justin Rowe-Roberts

Fair now not too lengthy ago supplied my stand at Harties which I supplied within the center of the property enhance in 2008 for R400 000. I paid R900 000 for it. Had I invested that within the Nasdaq or S&P500 that will now be rate nicely over R10m currently! Pass the vomit salvage please….

— Magnus Heystek (@MagnusHeystek) February 10, 2022

Magnus Heystek on his R500okay+ Hartbeespoort funding mistake

Love many folks 10, 12 and 15 years ago, I received sucked up into the property enhance. I’m speaking in regards to the residential property enhance. There used to be a enhance from about 2002 to 2008, driven by low ardour charges, high financial enlighten and of us had been making give up fist within the property market, residential as nicely as listed. One of many ways to web into the property market used to be to circulation and protect an empty stand; you may possibly possibly well possibly create and then both hire it out or sell it. Many folks possess built decent non-public portfolios within the direction of that period. I did it myself within the ‘80s and the ‘90s.

Then under a heck of quite lots of strain from someone, I went and supplied a stand at the Hartbeespoort Dam. The full dam used to be being developed and it used to be [touted] because the Riviera of South Africa. The promoting and marketing hype made it very advanced to face up to. I supplied the stand for R900,000 and in actuality soon after, the property market and the financial system took a dive. I within the slay made up our minds now to now not create on the stand. I believed I would sell it very fleet. I’ve in actuality been attempting to sell the stand for roughly 10 years and managed to a pair of month ago.

I was correct taking part in around with some numbers. I don’t even judge I’m 100% at the side of all my charges and opportunity charges because there are charges and taxes, levies and a full lot of friction charges you want to pay. I supplied for R900,000 and 13 years later, supplied for R400,000. I had to pay a commission on the sale of 10%. I successfully received R360,000. How would I in actuality possess done had I invested within the inventory market? In South Africa (JSE), I would’ve made between R3m to R4m. If I had chosen the finest performing market on the planet, the Nasdaq – and I’m now not announcing I would possess done it – the number came in at around R10m to R11m in my pocket currently.

That correct introduced on a colossal response from many folks and then, unnecessary to claim, the tweets started flowing. The property market has been in a hideous, hideous poke and has been confirmed by of us all everywhere in the country. I’m now not only speaking about listed property. I’m speaking about residential. Very few of us possess commented or tweeted that they’ve made cash within the property market. It’s a center-class thing, many folks are stuck with non-profits-producing properties or very low-profits-producing properties. The rate of conserving a property in South Africa has correct long past up astronomically. Taxes, levies, friction charges and charges to sell. In the period in-between, you’ve received the plump duty of paying your charges and taxes. That is the number 1 culprit. Secondly, your levies and, in some circumstances, double or triple levies. And thirdly, you know your cost of money. It hasn’t been a colossal period for the residential and listed property market over the final 10 to 12 years.

Read also: 

• Finest of 2021: Magnus Heystek on the JSE and why you’ve suffered financial wipe-out
• ‘Optimism is now not an funding plot’ – Magnus Heystek on SA financial catastrophe
• Finest of 2021: The trillion rand property collapse – Magnus Heystek

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