How To Invest In REITs In South Africa

By Tked August •  Updated: 10/16/24 •  5 min read

REITs stand for Real Estate Investment Trusts, typically referred to as outstanding investment vehicles, which, over the years, have gained momentum in both physical and financial property markets. REITs allow a person to invest in significant income-producing commercial real estate portfolios like shopping centers, office buildings, and industrial properties. In South Africa, REITs are listed publicly on the Johannesburg Stock Exchange; hence, this avenue gives investors an opportunity to realize income from both rental yields and capital uplifts.

- ADVERTISEMENT -

How To Invest In REITs In South Africa

An investment in REITs follows a relatively open policy and is thus quite accessible to most, even beginning investors. Opening a brokerage account is the first step in this respect, which one can easily avail of with the assistance of a traditional stock broker or even through an online trading platform. Some of the famous and highly used online platforms include EasyEquities, FNB Share Investing, and Standard Bank Online Share Trading, amongst others. These are some of the online platforms that have made it very easy to invest in the JSE-listed REITs.

You then deposit some cash in it and start looking for the REITs listed on the JSE; they usually carry a specific stock ticker symbol. You can buy shares in a REIT like you would any other stock. They sell their ownership in shares, which themselves rise and fall in price depending on the underlying market value of the properties in the portfolio and other general conditions in the market. You then can hold the REITs in your portfolio and enjoy dividend income generated from the rental income of the properties the REIT holds. Also, with time passing, the values of the REITs are likely to rise, and if you intend to do so, you can sell such shares for a pretty good profit after some time.

How Much Does One Need to Invest in REITs?

One of the major plus sides of investing in REITs is that they are affordable compared to buying the real estate itself. How much someone can invest in South African REITs depends on the specific REIT that one wants to invest in and the trading platform that one may use.

You can start investing in something like EasyEquities from as low as R 50 to R 100 because they allow fractional purchases of shares, opening up opportunities even for small-scale investors. If you invest via a regular broker, however, the minimum investment could be more significant, generally in the region of R500 to R1,000 or more, depending on the REIT and brokerage fees that may come in.

In addition to the amount required for an initial purchase, keep in mind that you’ll also have to pay the cost of a transaction, which includes brokerage costs, among other administrative expenses. Despite these fees, REITs remain among the most affordable means of entering into real estate

- ADVERTISEMENT -
, particularly for individuals incapable of buying physical property.

What Are The Best REITs In South Africa?

Several REITs have enjoyed stellar status in South Africa due to their sterling performance and diversified portfolio. A selection of the best amongst these top-performing REITs listed on the Johannesburg Stock Exchange includes:

How Much Are REIT Fees?

Of course, there are associated fees with investing in REITs, which are considerably more affordable than trying to buy and manage physical real estate. The main expenses one accrues investing in REITs are brokerage fees charged at the time of buying or selling shares via trading platforms. These also change from broker to broker or platform to platform. For instance, one of the cheapest will be EasyEquities, charging a flat brokerage of about 0.25% of the transaction value.

In addition to brokerage, there could also be management fees for the REITs. These go toward addressing operation costs for managing the portfolio, including property maintenance, letting, and administration. These are usually inculcated into the performance of a REIT, and hence, investors do not have to bear these as extra costs. The management fees are between 0.5% to 1.5% of the total assets of a REIT. Although these might impact the overall return, REITs are still one of the low-priced investments in real estate when compared outright against an investment in real estate.

- ADVERTISEMENT -

Keep Reading

How to Buy Gold Shares in South Africa

How to Buy Gold Shares in South Africa

Owning gold shares allows a capitalist to partly own gold mining firms, thereby offering returns on the performance of the gold sector.

How to be a Stock Broker in South Africa

How to be a Stock Broker in South Africa

To become a stockbroker in South Africa, one has to have money sense, market knowledge, and compliance.

How to Choose the Best Retirement Annuity

How to Choose the Best Retirement Annuity

So, let's look deeper into how getting the right RA could secure you a comfortable and financially stable retirement.

Should South Africans be Investing Offshore?

Should South Africans be Investing Offshore?

Offshore investments create exposure to global markets whereby South Africans can take advantage of different economic conditions

What Can Be Traded with Futures in South Africa

What Can Be Traded with Futures in South Africa

Futures trading has the potential to generate profit on price differences and serve as a hedging instrument for businesses to reduce risk.

How to Buy Oil Shares in South Africa

How to Buy Oil Shares in South Africa

It is also crucial for South Africans to learn how to trade oil stocks in local and international markets.

Mutual Funds vs. Stocks – Benefits, Risks, and Gains

Mutual Funds vs. Stocks – Benefits, Risks, and Gains

Your choice between mutual fund and stock investments, as related to the subject under discussion, will be guided by factors, including your risk tolerance, financial goals, and investment knowledge.

How to Invest in a Mutual Fund and Save Tax

How to Invest in a Mutual Fund and Save Tax

Also, different kinds of mutual funds, such as equity, bond, and balanced funds, are available for investors based on what they can handle.

Best Investments in South Africa

Best Investments in South Africa

In South Africa, you can choose various venturing options to help you meet your monetary objectives. Below are some of the top-rated opportunities:

What to Do With R100,000 in South Africa?

What to Do With R100,000 in South Africa?

How to Start Real Estate Business in South Africa?

How to Start Real Estate Business in South Africa?

The discussion herein will explore profitability, the steps involved in creating, and critical considerations for starting a South African real estate business.

Benefits of Living Annuity in South Africa

Benefits of Living Annuity in South Africa

This article considers whether a living annuity is a good idea, its benefits, probable disadvantages, and other essential considerations specific to South Africa.

A Beginner’s Detailed Guide to Investing in South Africa

A Beginner’s Detailed Guide to Investing in South Africa

The guide is meant to offer insight fundamental to a beginner's investment in South Africa effectively. A Beginner's Detailed Guide to Investing in South Africa

How to Invest in Amazon Shares in South Africa

How to Invest in Amazon Shares in South Africa

The following guide discusses how one goes about investing in Amazon shares from South Africa.

Fixed Income Investment Risks in South Africa

Fixed Income Investment Risks in South Africa

Fixed-income investment is always considered a safer alternative to equities because it is secure and promises returns.