Million Dollar World Cup Rental - On Sale For Half a Decade

When I heard about the $1 000 000 World Cup rental I knew immediately it could only be one property: this 5 bed Clifton mansion on the market for R80 000 000 (check the umbrellas).

Now this property I've been aware of for a while. Every few months Pam Golding includes it as part of their pull out property feature. It's been on sale for YEARS. Hell I remember at least 4 years back when it was on the market for R40 000 000.

And a final thought: What's the point of renting a beach side mansion in the middle of winter?

The World Cup Will Do Sweet FA For The Property Market

If you're one of the suckers out there who bought an 'investment flat' in the past 2 or 3 years to cash in on the World Cup then I really feel sorry for you. The World Cup is doing absolutely nothing for the property market. Let's take a look at this example. Here we have a 2 bedroomed flat in Green Point literally across the road from the Green Point World Cup soccer stadium. It's on the market for R795 000 and attains a rental to the princely sum of R3000/month. Take off the monthly rates and levies of R312 and R598, which comes to a comes to R910/month, meaning that the net rental income is R2090/month. On a 100% bond your monthly bank payment is R9985/month and the difference between that and your rental income is R7795/month, a whopping 3.7 times the net rental itself! Let's take a look a the dismal yield graphs.



Ugh.. so paying in cash you can expect a maximum return on investment of 3.5%, about 7%-8% below just leaving your money in the bank. To break even on cashflow requires a 75% downpayment, over R590 000, and with a 50% downpayment you need 4.31% capital appreciation to not lose any money at all.

When 'investments' literally across the road from the World Cup stadium are doing as dismal as this then you have to laugh at the idiots advertising properties in Parklands and (I swear I'm not making this up) Gordons Bay as places to invest to cash in on 2010.