How young South Africans are building portfolios earlier

Ask most South Africans over 50 how they got into property, and the story tends to follow the same shape: years at a job, a slog to save the deposit, and finally, in your thirties or forties, a bond on a second place. That is still how a lot of people do it. But talk to younger entrepreneurs buying property right now, and the timeline looks different. This is not because anyone found a shortcut, but because the ways of getting money into a deal have multiplied.

It is a real shift, and it is worth picking apart honestly, without the sales gloss that usually gets layered on top of it.

They are not buying it to forget about it

The old model of property investing was largely hands-off: buy a flat, find a tenant, collect rent, check in once a year. Younger investors tend not to treat it that way. Many of them are already running businesses, so they bring the same habits to property: watching cash flow closely, using software to manage tenants and maintenance, and thinking about yield the way they would think about margin in their own company. That mindset only holds up, though, if the building itself is actually being run well day to day,  levies collected, maintenance handled, compliance up to date.

This is where a specialist manager like ASI Property tends to come in behind the scenes: their focus on sectional title, body corporate, and HOA management is exactly the layer that active, yield-focused investors rely on so they can watch the numbers without also becoming the person who chases the plumber.

You can see the shift in what they are buying. Instead of the standard one-bedroom rental unit, three types of property keep coming up in conversation:

• Student housing: there still are not enough beds near most university towns, and it shows.
• Co-living setups and small apartments, built for people who would rather have a good location and shared space than a big floor plan.
• Old commercial buildings turned into something smaller and more flexible: studios, workshops, fulfilment space for online sellers.

None of these are new ideas; they have been around in other markets for years. What is new is how quickly younger South African buyers have picked them up, partly because lifestyles have changed and partly because plain buy-to-let yields have not kept up. Almost all of them, though, share one practical feature: they are run as sectional title or community schemes, with shared spaces, shared costs, and a body corporate to keep it functioning. That is precisely the kind of scheme ASI Property was built to manage, and it is a big part of why these asset classes can work as an active investment rather than a maintenance headache.

The deposit problem, and how people are working around it

Ask any young entrepreneur what is actually stopping them from buying property, and it is rarely enthusiasm. It is the bank. Traditional lending is built for people with a salary slip and a few years of consistent PAYE income, and many founders simply do not have that on paper, even when the business itself is doing well.

The numbers back this up. Lightstone Property Data shows purchases by 26-to-35-year-olds fell from 31% of all property transfers in 2018 to 27% in 2023. This decline is proportionately sharper than the overall drop in the market over the same period. Younger buyers are not disappearing from the market by choice; the traditional route in is narrowing under them.

This structural squeeze is precisely why alternative routes have picked up:

• Pooling money with others. A group of friends, or strangers matched through a platform, buys a property together, so no single person needs the full deposit.
• Setting up a company just to hold the property, known as a Special Purpose Vehicle (SPV). This is done so that if the deal goes badly, it does not drag down the founder’s actual business.
• Buying off-plan, straight from a developer, before the building exists. It is usually cheaper, and the payments are spread out, but you are trusting that the building will actually be finished on time.

It is worth saying plainly: none of this is risk-free. Syndicates fall apart when people do not put the agreement in writing early. SPVs mean more paperwork and compliance than most first-time buyers expect. Crucially, financial institutions in South Africa almost always demand personal surety from directors before granting credit to a new SPV, meaning your personal credit profile remains tied to the deal. Off-plan deals can and do get delayed, sometimes by years. These are options, not guarantees, and they reward whoever does the legal homework upfront.

It is also worth saying that a syndicate or SPV solves the ownership problem, not the running problem. A group of co-owners still needs someone neutral collecting levies, keeping records, and enforcing rules once the keys are handed over,  otherwise the same disputes that break up informal syndicates just resurface a year later as arguments over maintenance and money. Bringing in a professional manager such as ASI Property at that stage is less about polish and more about giving a multi-owner structure a fighting chance of surviving contact with reality.

A local twist on a global pattern

South Africa is not alone in this. Younger buyers priced out of a straightforward first-home purchase have shown up in property markets from London to Sydney. In those regions, high interest rates and stricter mortgage lending have pushed many toward “rentvesting”: buying an investment property wherever the numbers work, while renting where they actually live. The pivot toward co-living and micro-apartments follows a similar path, echoing what is already common in dense European cities.

What looks different here is the reason behind it. In those markets, the shift is often framed as a lifestyle choice or a portfolio optimisation. In South Africa, it looks more like necessity. A much higher bar to conventional credit is pushing young buyers toward workarounds that, elsewhere, are treated as sophisticated options rather than the only door left open.

What nobody wants to talk about: what happens after you die

Buying the property is the easy part, in hindsight. Keeping it in one piece for the next generation is where many South African families have actually come unstuck. It is a familiar story: someone builds up a decent portfolio, dies without the right structure in place, and the family spends the next two years watching it get chewed up by executor’s fees, a capital gains tax bill triggered by the death itself, or a straightforward fight between siblings over who gets what.

• Putting property into a trust. Done properly, it lets the asset pass to the beneficiaries you intend without going through deceased estate administration. This sidesteps many fees and delays, preventing the portfolio from being sold off piecemeal just to cover tax. However, be mindful that trusts face the highest tax brackets in South Africa, including a flat 45% income tax rate and strict anti-avoidance rules regarding interest-free loans.
• Writing things down properly: shareholder agreements, a clear sense of who runs what. It sounds bureaucratic, but it is what makes a portfolio survivable when the founder is no longer holding it all together.

None of this is a substitute for a proper conversation with a lawyer or tax advisor: everyone’s situation is different enough that generic advice only goes so far. But there is a simpler, more immediate layer underneath the tax and trust question: a portfolio is far easier to hand over  to heirs, a trustee, or a buyer when the buildings in it have been managed properly all along, with clean records and no informal arrangements nobody else understands.

Keeping perspective

It is still early days for this shift, and it is worth keeping some perspective. The financing tools are genuinely useful, but they do not remove the basic risks of owning property with borrowed money: it can be hard to sell quickly if you need to, rates can change, and a trust or SPV is only as solid as the paperwork behind it.’

Younger South African investors are bypassing traditional homeownership routes by utilising alternative financing, co-living models, and commercial property conversions, treating property as an active, high-yield business rather than a passive investment. While providing necessary entry points to the market, these strategies, including syndication and specialised corporate structures  demand rigorous legal and tax diligence, and just as much rigour in day-to-day management, to manage inherent risks and ensure long-term, intergenerational viability. That is where professional partners like ASI Property earn their place in the story: not as the reason people get into these deals, but as the reason some of them are still standing in one piece a decade later.

By Gerard Abrahamse, General Manager at ASI Property