The COVID-19 pandemic has shaken investors the world over, as they question the long-term validity of their investments within the traditional markets in which they have long placed their trust.
Knowing they’re not alone in this doesn’t necessarily make South African investors feel any better, however. With the added burden of further recent downgrades in March and April respectively by Moody’s and Fitch, exacerbated by the economic stresses of COVID-19 along with a poorly performing economy even prior to the pandemic, it’s no surprise that local investors are looking beyond the country’s borders to hedge their South African exposure.
The big question is where best to invest in a COVID-19 world to continue building life-changing wealth?
On the one hand, bold decision making seems essential in the current economic climate. Indeed, the speculation surrounding a post COVID-19 future demands it. But there is also little question that the world will reopen, so now may well be the right time to take advantage of what could be a small window of opportunity created by the crisis.
The reality for South African investors specifically, is that with the Rand having lost significant value over the past few months, traditional global options for investing offshore have narrowed quite significantly.
Consequently, this calls for a realignment of investment strategies, along with an active search for offshore options that still represent good value against the Rand.
This is becoming increasingly evident as many other asset classes linked to the markets, such as equity markets, are being significantly impacted by the slide in company earnings, exacerbated by growing labour market uncertainty.
Even in the face of significant stimulus packages in a number of leading countries, and a brief rallying of the markets in April, the downward slide is back in evidence across the globe.
One of the most stable options emerging out of the current scenario is capital investment in property, ranging from retirement options and long-term property investments, to the opportunity to expand a business investment portfolio.
For South Africans keen to stay close to what they know in the property market, looking towards the rest of sub-Saharan Africa may be of value, taking not specifically of countries that showed strong growth potential before COVID-19.
As lockdown conditions ease in South Africa and cross-border travel begins to open for business purposes, neighbouring Mozambique emerges as one such example. Pre-COVID19, according to promotion agency Mozvest, the country offered significant investment opportunities across the oil, gas, mining, energy, agriculture, logistics and tourism sectors.
To mitigate the impact of the pandemic and preserve macroeconomic stability, the Mozambican government has taken several steps to increase health spending, strengthen social protection to the most vulnerable and support micro-businesses and small and medium-sized enterprises. The Bank of Mozambique has also reduced the policy rate and provided additional liquidity in both local and foreign currencies to the financial market.
Entrepreneur Ettiene Erasmus placed his own bets on the country twenty-eight years ago, engaging contractually in the field of development, construction and logistics across a number of industrial sectors. However, with his background in residential property (he was once an estate agent in South Africa), he searched for the ideal location for a mixed-used residential development, under his own Mozprop brand, that could service both the tourism and business markets. The concept of Bazaruto Island View Estate was born in Vilanculos, with its magnificent views over the national heritage site that is the Bazaruto Archipelago.
“I’ve done business in a number of sub-Saharan Africa countries over the years, but there were many things that attracted me to Mozambique specifically,” says Erasmus. “And, narrowing it down, Vilanculos is one of the best all-round destinations I have seen in this country.”
It’s a prime development area with an international airport, making it ideal for business or leisure travellers. It’s close to Sasol’s gas and oil fields – an industry targeted for growth in Mozambique, and boasts world-class medical facilities. Plus, its beaches, marine life, local flora and fauna and the culture of the locals make it a wonderful destination for tourism.
Once complete, the 42-ha beachfront marina estate will offer a combined hotel, business and residential resort, making it a good investment for those expanding their own business interests into Mozambique, looking for a holiday investment or even considering a lifestyle or retirement option outside of South Africa.
“COVID-19 will teach us important lessons about investment. It will make us question the world as we’ve known it, and there will be a great deal of lateral thinking needed to drive us forward,” Erasmus says.
“The good thing is that it will also expand our future investment options, and broaden our horizons in terms of the opportunities that will now exist. I have no doubt that the value that lies in Mozambique is one of those horizons.”
Source: Propertywheel.co.za | https://propertywheel.co.za/2020/06/mozambique-a-possible-life-changing-wealth-investment-post-covid-19/