Stranger investments entice South Africans
The investment menu typically consists of only bonds and stocks, but South Africans are increasingly realising there are alternatives to these traditional favourites – a special menu for those who dare.
What’s more, the majority of high-net-worth individuals have been ordering from this menu for years. According to a 2003 study, they entrusted 10% of their investments towards alternative avenues.
But this doesn’t mean unusual investments are only for the unusually wealthy and, like other countries, South Africa offers a range of alternative investments. Moneybags journalist, Isabelle Coetzee, has a look at these.
In the Great North you can find a thriving avocado landscape along the vast wilderness, typically known as Limpopo. With the growing popularity of this fruit, investors quickly realised its potential as an alternative investment.
AvoOwner coined the market with their investment farm, where potential shareholders can invest in rows, orchards, or blocks of avocado trees in over 30 hectares of cultivated land.
Investors put money forward and become the owners of the trees. Farmers take care of the crops, for a cost of 35% of the profits, and investors can annually choose what to do with their earnings.
According to a report by the South African Department of Agriculture, avocados have become more popular with the country’s growing middle class, and this signals continued growth for adventurous investors.
In recent years, South African livestock has also become a popular niche investment.
BusinessTech pointed out that the average price of a buffalo and sable antelope grew by 540% and 479% respectively, between 2007 and 2012.
“The way it works is quite simple. You download an app, buy your cow for around R10 500 and pay a monthly fee of R225 for a farmer to look after your cow,” explains Aiden Sookdin, contributing editor of Real Wealth.
“This fee also gives you insurance against illness or death. All the cows sold are already in calf or pregnant. Once a year, your cow will give birth. When your calf is sold, you are paid a dividend from the proceeds of the sale,” he adds.
Many well-known South Africans have participated in livestock investments, including Cyril Ramaphosa and Johann Rupert, with the latter spending R40 million on a single Cape Buffalo named Mystery.
According to the Macallan, which is a scotch distillery, consumers are now opting to arouse not only their taste buds with whiskey, but their portfolios too.
Julie Brownlee, from FSP Invest, explained in an article that the whisky collectors’ market gained momentum in the early 1990s.
“This growth in the collectors’ market of whisky has seen some drinks giants moving into the arena, such as Pernod Ricard and Diageo,” says Brownlee.
“They’ve acquired some of the best distilleries and created “distiller’s edition” bottles. They release these in small numbers at a premium, which invariably rises in value,” she adds.
Macallan advises those who are interested in whiskey investments find their preferred bottle through auctions, online purcahses, or directly from a distillery.
Besides hard liquor, the 2017 Wealth Report by Knight Frank points out that fine wine was listed as the second most popular luxury investment, with 24% growth in 2016.