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Monday Jul 07, 2014

Property sales to foreigners top R6.5bn

Foreign buyers bought almost R6.5 billion worth of property in South Africa last year - and not all of it was in Cape Town or Johannesburg, property company Lew Geffen Sotheby's International Realty said on Saturday.

'The depreciation in the value of the rand over the past two years has definitely made South African property more attractive to those buyers with pounds, euros or dollars to spend,' company chairman Lew Geffen said.

Its figures for the past six months showed this trend.

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

'These individuals generally hold about 25 to 30 percent of their wealth in real estate,' Geffen said.

'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 South Africa, that they view as likely to remain peaceful and offer good growth prospects.'

The consistency of economic policy in recent years and the fact that the May 7 general election went off without a major hitch counted in South Africa's favour, he noted.

Geffen said that according to the recently released World Wealth Report 2014, the number of high-net-worth individuals worldwide rose 15 percent 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, which accounts for the growing number of buyers in South Africa from other African countries.'

He said FNB had reported recently that the proportion of buyers from countries such as Cameroon, Nigeria, Zimbabwe, Angola and Mozambique had risen from 16 percent of foreign home buyers in South Africa in the third quarter of last year to 19.5 percent in the first quarter of this year.

Judging by the latest available statistics from property data company Lightstone, although foreign purchases of multimillion-rand second homes in Cape Town grabbed the headlines, most sales made to foreigners took place in Johannesburg.

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

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

'For example, foreign buyers purchased about 670 properties worth about R800 million 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 South Africa as investments rather than for their own use, and that is a healthy vote of confidence in our real estate market,' Geffen added.

This was even though foreign buying accounted for only about 3.6 percent of the total value of residential sales countrywide last year.

Business Report


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