Lower Rand Boosts Overseas Interest in SA Property
Category News
The dramatic fall in the value of the rand against currencies such as the US dollar, pound and euro recently has rekindled overseas interest in SA property – and raised the possibility of a significant boost to the local housing market."Since May, the value of the rand has shown a sharp decline that was bound to catch the attention of overseas investors, especially in the light of the economic distress in Europe," says Berry Everitt, MD of the Chas Everitt International property group.
"People all over the world are searching for safe havens for investing and South Africa, with its stable banking system and growing economy, is increasingly perceived as a good option in this regard, as is clearly reflected in the fact that at least 30 percent of the inquiries we are receiving via our marketing websites are from outside the country.
"Most of these are coming from the UK, the US, China and Germany, but we are also seeing interest among investors from many other European and Asian countries, as well as Russia and the Middle East."
Overseas investors generally don’t intend to live in the country full-time, "and certainly are most interested in buy-to-let properties and second or holiday homes they can acquire at good prices and resell at a profit in the medium-term.
"And if South Africa handles their growing interest correctly, it has the potential to significantly improve the housing market countrywide, and boost the economy, by helping to mop up the extra supply of homes that is keeping the lid on prices." Indeed, you only need to look to the US market to see the potential positive effect, says Everitt. "Foreign investment in US property has jumped 24 percent in the past year to $82 billion (R650bn), and now accounts for 8 percent of all home sales, according to the US National Association of Realtors.
"However in holiday destinations such as South Florida, international buyers account for 25 percent of the market and their interest has also been a real tonic for the local construction industry there."
And similar effects are now being observed in other markets popular with foreign investors, including some like California and Arizona, which were particularly hard hit when the housing bubble burst, and in New York, where an estimated 15 percent of sales are now being made to international buyers, he says.
"In fact, so noticeable is the positive influence of international buyers that US two senators are even sponsoring new legislation that, if passed, would mean that foreigners who spent $500 000 on residential real estate would automatically qualify for a coveted US visa.
"Now South Africa might not need to go that far, but we should certainly not be looking askance at overseas investment, or trying to discourage it in any way."
Author: Barry Davies