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Sugar's sweet investment policy

Posted On Monday, 06 February 2012 02:00 Published by
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There are lessons to consider from Allan Sugar and other property billionaires

Jason Lee, national head of Rawson Commercial, maintains that it is revealing how many of the world’s wealthiest people have a high percentage of their assets in property.

Lee has just read the autobiography of the Englishman, Lord Alan Sugar, the founder of Amstrad, today one of the world’s leading electronic companies.  In his earlier years Sugar gave £250 000 to a “financial expert” for placing in a Japanese equity fund – and lost it all in a remarkably short space of time.

Thereafter he made it a policy to invest either in his own company or in property – and for a start wherever possible he bought the factories and offices in which Amstrad operated.

“His policy,” said Lee, “was to invest in attractive premises in good locations and with leases of ten years or more.  Knowing that there would almost always be a capital gain benefit, he was usually content if the initial return matched what the same investment could achieve at the banks on a fixed deposit – and he has testified that this simple philosophy has paid off handsomely.  It has, he says, been one of the prime reasons why he is today one of the wealthiest people in Britain.”

Lee said that Rawson Commercial has many clients following the same investment strategy and, he added, right now they are in a particularly active buying phase.

The reasons for this, he says, will be clear to anyone who has kept an eye on property trends over the last ten years. 

“Commercial property in SA today has on average held its value better than its residential counterparts.  Commercial property owners who have invested over medium to long periods typically enjoy double digit yields on their investments as a result of fixed rental escalations.  Despite the current economic global problems, the majority of South African commercial rentals are still rising annually by 8 to 10%.  By way of contrast, on the money market the average return is seldom more than 6% - if that.

Rawson Commercial has since its foundation in August last year had a very fast growth rate.  Today it has 16 franchises in three provinces and employs 27 brokers.

Lee said that their declared aim is by the end of this year to have the largest commercial footprint in South Africa.

“It is,” said Lee, “impressive the way some of these new franchises have already grown.  This is testament to the strength of our franchise system as well as the training and support structures on offer.”

Publisher: eProp
Source: RPG
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