Foreign property buyers take advantage of weak South African Rand
Overseas buyers are showing strong interest in South African property, particularly as its weak currency can result in big savings, say investment experts
Foreign investors are showing strong interest in the South African property market – especially as the currency is weak against others, say property investment specialists.
Investors from the UK, Germany and France lead foreign demand, Director Margie MacKenzie, of Cape Waterfront Estates, tells OPP Connect.
“Our property is really good value considering the sterling rate is eighteen to one now, which provides quite a big discount for anyone buying in Cape Town and the Atlantic Seaboard.
In fact, there has never been a better time for investing in property, she says. “Historically, buying property along the Atlantic Seaboard in Cape Town has provided returns that in many cases have outperformed the stock markets.”
Fellow Director, Clare Putsman adds, “Not only is there the opportunity of capital growth but it becomes a fixed asset that provides a holiday home in the summer months or a permanent residence all year round. The money that would be spent on renting accommodation would not be wasted but rather offset against a bond.
“The weak currency presents a fantastic opportunity for an investor to save a lot of money on the purchase of a property at this time. We have a stable economy and the election ran without any major turmoil so I expect economic growth and stability to follow on accordingly.”
Sterling is currently at 18.25100, close to the annual18.75250 high against the South African Rand, while the euro is at 14.59710 against a 12-month high of15.46400.
Cape Waterfront Estates, which has offices in Hout Bay and Camps Bay, Cape Town, specialises in exclusive properties to buyers, including international investors and High Net Worth Individuals, throughout the Western Cape.
Among current properties listed is a luxury four-bed villa with a pool and sea views, at Hout Bay, Cape Town, which costs R10.5million (?719,178).
“Property on the Atlantic Seaboard sells very well, if priced correctly, and with Cape Town’s recognized beauty, the World Design capital of 2014 and only a short flight from Europe it’s a fabulous place to have a holiday home.
“As a developing country with valuable mineral resources, I believe the opportunity for capital growth is excellent,” says Ms MacKenzie.
In May, average house price growth reached between 8% and 9% in the previous nine months, says the latest figures from the Absa Bank property commentary, but growth is constrained by inflation levels that are expected to remain around 6%.
“The property market is sensitive to inflation, so if inflation remains relatively the same then the confidence of buyers and sellers to transact will remain unchallenged,” explains Ms Putsman.
The average nominal value of small homes in May is R837 200, medium-sized homes, R1 146 800 and large homes, R1 780 200, the bank data shows.
South Africa’s housing market will continue to be driven by developments on the economic front, trends in household finances and consumer confidence.
“South Africa’s current economic climate provides property investors with a great opportunity to invest in this market. The weak currency presents a prospect for an investor to save a lot of money on the purchase of a property at this time,” says Ms MacKenzie.