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

Where to Buy Stocks in South Africa?

Where to Buy Stocks in South Africa?

Major trading in South Africa's stock is handled through the Johannesburg Stock Exchange, but various other avenues exist for capitalists to participate in the market.

What is Investment Portfolio Diversification?

What is Investment Portfolio Diversification?

Parsing into going for a diversified portfolio helps in gaining stable and consistent returns; thus, it is one of the critical practices to be exercised

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.

Top 5 Investment Firms in South Africa

Top 5 Investment Firms in South Africa

This article reviews the top five investment companies in South Africa. It describes some key offerings that help them stand out in the increasingly competitive landscape of investments.

How To Grow Money From Mutual Funds?

How To Grow Money From Mutual Funds?

Learning to invest in mutual funds will substantially enhance both the complete novice and seasoned investor's portfolio.

What to Do With R100,000 in South Africa?

What to Do With R100,000 in South Africa?

Investments that Pay Monthly Income in South Africa

Investments that Pay Monthly Income in South Africa

Understanding the various options available in investments will help you make a decision that will secure a stable and continuous income stream.

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.

What Are Multi-Asset Funds?

What Are Multi-Asset Funds?

They are the best for spreading risk and earning moderate to high returns depending on the risk profile of the specific fund.

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.

What are ETF [Exchange-Traded Funds]?

What are ETF [Exchange-Traded Funds]?

ETF have become popular investment vehicles worldwide and are so prevalent in South Africa due to their flexibility and accessibility.

5 Best Investments For Beginners In South Africa

5 Best Investments For Beginners In South Africa

By understanding these opportunities and leveraging each chance, a beginner will ultimately set up a good base for his or her finances and achieve long-term monetary goals.

How to Make Tax-Free Investment in South Africa?

How to Make Tax-Free Investment in South Africa?

This article will guide you on how to make tax-free investments. We'll cover what a tax-free venture is, how it works, and possibly the best option to go with.

How To Buy Stocks In South Africa

How To Buy Stocks In South Africa

With the digital age making investments more accessible, it's now possible for anyone to make their way into the stock market with as little as a few hundred rands.

How to Invest in South Africa

How to Invest in South Africa

Following these guidelines will increase your possibilities of a better investment strategy and be well on your way toward real financial growth.