Foreigners buy R6.5bn of SA property

2014-07-05 16:48

Foreign buyers bought almost R6.5 billion worth of properties in South Africa last year, and not all of it in Cape Town or Joburg, property company Sotheby’s International Realty SA has said.

“The depreciation in the value of the rand over the past two years has definitely made SA property more attractive to those buyers with pounds, euros or dollars to spend,” chairperson Lew Geffen said today.

Sotheby’s figures for the past six months showed this.

Another factor increasingly playing a role in foreign buying was the growth in the number of high net worth individuals (HNWI) around the world.

“These individuals generally hold about 25% to 30% of their wealth in real estate,” said Geffen.

“Although most of this is in First World countries, an increasing number of them are looking to buy investment properties in developing parts of the world like SA, that they view as likely to remain peaceful and offer good growth prospects.”

The fact that the May 7 general elections went off without a major hitch, as well as the consistency of economic policy over the past few years, counted in South Africa’s favour.

Geffen said according to the recently released World Wealth Report 2014, the number of HNWIs around the world rose 15% last year to 13.7 million.

“What is more, Africa is expected to show the most rapid growth in the creation of millionaires over the next 10 years,” Geffen said.

“These individuals are currently growing their real estate portfolios quite aggressively, and this accounts for the growing number of buyers in SA from other African countries.”

He said First National Bank recently reported that the percentage of foreign home buyers from countries such as Cameroon, Nigeria, Zimbabwe, Angola and Mozambique had risen from 16% in the third quarter of 2013 to 19.5% in the first quarter of this year.

The latest available statistics from property data company Lightstone show that, although foreign purchases of multimillion rand second homes in Cape Town grabbed the headlines, most sales made to foreigners took place in Joburg.

“There were 1 497 sales (worth R2.3bn) to foreigners in Cape Town, and 2 565 sales (worth R2.8bn) to foreign buyers in Joburg,” Geffen said.

What was even more encouraging was foreign buyers were looking at areas beyond these two cities.

“For example, foreign buyers purchased about 670 properties worth about R800m in KwaZulu-Natal last year, and about 260 properties worth about R230m in the Eastern Cape,” he said.

“In addition, we are seeing a growing trend among foreign buyers to purchase properties in SA as investments rather than for their own use, and that is a healthy vote of confidence in our real estate market.”

Foreign buying accounted for only about 3.6% of the total value of residential sales.

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