By Paul Reid
In many minds, including mine, property is still the safest investment. It's the most forgiving too in that not many investments go wrong. If you are in for the long haul, or at least 7-10 years, and buy freehold, it's very unlikely that you will suffer any capital loss.
Real estate is tangible. You can see it and you can leverage it and to a large extent, you can control it. You can choose to add value to it or not, develop it or not and you can choose how to structure the debt associated with it. There's a ready amount of finance available.
Right now, a $100,000 investment can buy a $500,000 apartment as long as the tenants pay enough rent to cover the debt plus maintenance. If the capital value goes up 10%, the net return to you is much higher than the value of shares. There's a ready supply of tenants as long as you stick to residential property in the main centres. Historically the returns are phenomenal.
Real estate also has the added advantage over other forms of investment in that there is no capital gains tax in New Zealand.
The value of good quality apartment stock is holding its own compared to other housing stock in that it is increasing at the same or a similar rate, but it is important to do your homework and buy right. Good quality, well presented and appropriately priced apartments are snapped up quickly by both buyers and tenants in today's market.
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