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Tuesday Apr 21, 2009

It makes no sense to confine your investments to SA.

With relaxation of exchange controls, more foreign travel and greater availability of low-cost offshore mortgage finance more South Africans are looking at foreign property ownership, particularly in the UK.

LONDON, UNITED KINGDOM (April 2009) – As South Africa cements its place in the global economy many property investors are questioning the wisdom of having all their real estate investments in one country. Smuts & Taylor, a South African investment firm based in London, have seen an overwhelming increase in new enquiries from SA investors since the start of the year.

South African investor’s appetite for buying property offshore is driven by rising levels of affluence and a growing desire to plan for the future – either for investment or retirement purposes. Many also cite the uncertain political environment and the potential devaluation of the ZAR as reasons for diversification. 
  
But says Mike Smuts, the managing director of Smuts & Taylor, the decision to invest offshore should not be wholly driven by fear of the rand’s fall in value, but should rather be influenced by solid financial planning that includes diversification of asset classes and markets, as well as cash flow orientated investments. 

“Focused diversification is the first principal of sound investing; it reduces your political, currency and interest rate risks. It makes no sense to confine your investments to just South Africa or any one country for that matter” says Smuts.  

But Mike warns against buying into other emerging economies marketed locally as the next big investment destination. “The chances are that as a South African investor you have already heavily invested in the SA economy, which itself is an emerging economy. By investing in other emerging world economies you will significantly increase your risk profile. This is obviously not desirable.”

In the light of mounting disenchantment with stock market and pension fund performance there has been the growing perception that buying cash flow generating property offshore is a viable investment option. 

Many have been scared off however by the global market turmoil of the last 18 months but recently there are strong signs in the UK that the market has bottomed out with both house prices and mortgage lending up in the last few months. This fact has not escaped SA investors’ who are now taking advantage of lower property prices, the favourable exchange rate and British interest rates of just half a percent to spread their assets geographically.


For more information on Smuts & Taylor, please visit www.smutsandtaylor.com.

About Smuts & Taylor, Ltd.:

Smuts & Taylor, Ltd. is a South African investment firm based in London. Since its inception in 2008, the firm’s mission has been to assist South African investors to enter the United Kingdom property market though Complete Profile Management (CMP), a system that provides clients with a step-by-step investment plan targeted at long-term success. Smuts & Taylor helps their clients every step of the way, from finding the right property and securing lending through to securing the first tenant. 

For more information, please visit www.smutsandtaylor.com. 

 
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