The impact of expat buyers on the property sector
An increase in enquiries about local property rates indicates that the South African property and real estate sector is still attractive to expats, celebrities and the wealthy. The market has responded positively with many property owners reporting favourable returns on their investments.
You have probably heard about Lord Laidlaw’s acquisition of a prime Noordhoek property for R106m a few years ago. Before purchasing the property, the Scottish businessman and House of Lords member had sold his conferences business -The Institute of International Research (IIR) – to T&F Informa. The company sold for $1.4bn, a huge amount of money. This makes the Conservative peer one of the richest people in the world to own property in our country. He is one of many wealthy people who have shown serious interest in purchasing property here.
The government recently dispelled the uncertainty about foreign investors being allowed to own property in South Africa. It clarified that the ban would only apply to agricultural land, not residential properties, sending a positive message to prospective foreign property investors.
So why are expats and celebrities alike drawn to this country?
A range of factors has contributed to the increasing attractiveness of South African properties. One of these is the depreciation of the rand over the last few years. The weakness of the rand against the pound, euro and dollar has prompted many expats who have been earning in those currencies to acquire property here. They take advantage of this because now they can buy more with their money compared to a few years ago.
The economic meltdown in western countries has also driven expats to seek opportunities elsewhere. Although the country’s economy is sluggish, it doesn’t have the major turbulence and debt crises seen in western economies. Numerous employment opportunities are gradually opening up in the country for people with engineering, scientific or technical skills and more corporate companies are moving their staff here for contractual work. This fuels the need for expats to rent or purchase accommodation. Furthermore, the comparative cost of living here is much lower than in many major cities abroad.
Tourism has also played a part in exposing the country’s real estate potential to the world. South Africa remains a top tourist destination with Cape Town being a particular favourite. Many of the millions of tourists you hear visiting the country every year end up buying properties when they see the opportunities available here.
It turns out that foreign buyers looking for property in the country seek some of the same things you do. These include the type and size of the property, the environment, the security of the location as well as the potential growth in property values.
Others, especially celebrities and the wealthy, are more influenced by their lifestyles. These ones are likely to consider the climate, scenery and the cultural attraction or diversity of the property’s location before making a decision.
There is no doubt that expats and other foreign buyers have boosted the South African property sector and will continue to do so as long as the country and the economy remain stable.