A Guide to Property Investment South Africa
Renowned for its diamond, platinum and gold mines, South Africa is a land of wonder that appeals to many. With its incredibly diverse culture, world-famous archaeological sites and sparkling Indian and Atlantic Ocean coastlines, South Africa has plenty going for it. The once strife-ridden country has changed its atmosphere greatly in recent years and is now drawings millions of tourists to its shores on an annual basis.
South Africa’s stable governmental climate, growing economy and booming real estate market are combining to inspire confidence among foreign investors. We at Nubricks.com cite the following 10 reasons as prime factors driving investor confidence in South African property investment: -
1) South Africa’s Recent and Growing Political Stability Boosts Investor Confidence in the Country
South Africa is leaving its apartheid past behind and forging a rather stable future. The country enjoys a democratic system and was officially readmitted into the Commonwealth in 1994. It has since worked very hard to improve its standing in the international community. The overall stability and wound healing that is ongoing in South Africa is very encouraging for investors and it is working well to increase this country’s rankings as an international tourism destination.
2) South Africa’s Strong Ties to the UK Make Property Investors Feel Comfortable Putting Their Money into South African Real Estate
South Africa and the UK are on a very good footing with each other. The two countries are considered strong allies, and the British even describe relations as “strong.” This is very encouraging for investors seeking environments that are stable and hospitable for their property purchases. The two countries have been intertwined historically since the 1800s and British influence here remains quite strong.
3) South Africa’s Strong British Influence Helps Make Holidaymakers, Expats, Retirees and Investors Feel Comfortable
The British influence in South African culture is strong and historically rooted. The use of English as one of the country’s 11 official languages and its large British expatriate community help make investors, holidaymakers, expats and retirees feel at home and what’s more, the growing expat community provides investors with an exit strategy.
4) The Strong South African Economy Inspires Property Investor Confidence
South Africa’s economy is strong and growing. Its USD 239.5 billion GDP is growing by about 5% per annum. With an economy that is driven by precious metals mining, manufacturing and tourism, South Africa is considered quite stable fiscally speaking. This is very good news for investors who desire a strong and growing environment. Major trading partners include the UK, US, Germany and Japan.
5) South Africa’s Growing Tourism Industry is Very Appealing to Investors
South Africa’s post-apartheid climate is lending itself to making this country a major holidaymaking destination. The British government estimates nearly a half-million Brits travel here each year. The World Travel & Tourism Council anticipates a growth rate of about 4.4% per annum through to the year 2017. The growing interest in South African tourism inspires investor confidence and presents great potential for buy-to-let and resale strategies. Some of the major draws include South Africa’s beautiful coastlines, its wildlife and the many ancient archaeological sites. From Johannesburg to Cape Town and beyond, there are many destinations that holidaymakers simply adore taking in and this gives investors a broad range of the nation to explore for profitable property investment purchases.
6) South Africa’s Climate and Geography Make it a Favourite for Holidaymakers, Expats, Retirees and Investors
South Africa’s geography and climate are perfect for creating a holidaymaking paradise. With its Atlantic and Indian ocean coastlines and its beautiful interiors that include desert landscapes, mountains and plains, this country offers something for everyone. Its warm, temperate climate also appeals to many. From the big cities of Johannesburg to Cape Town to many coastal resorts, South Africa is really attracting holidaymakers’ attention as of late. This bodes very well for investors who want to cater to this market. The country is also a favourite for expats and retirees. In fact, more than 200,000 British citizens already call South Africa home according to the BBC.
7) Reasonable Buy-In Prices Make South Africa Quite Attractive to Investors, Expats and Retirees
The prices in South Africa do vary quite greatly, but many find them incredibly low by international standards. In Cape Town for example, prices are quite high. One-bedroom flats run in the GBP 100,000 range or more. In many other locations, however, the prices drop incredibly. A three-bedroom home in Boknes Strand, an up-and-coming holiday town, costs less than GBP 55,000. Depending on where one looks, the prices here can be incredibly low or quite steep. The diversity of pricing and the number of under-development resort areas make investment here feasible for almost any budget. This appeals to buyers with a variety of investment strategies in mind.
8) Favourable Exchanges Rates and Fairly Low Cost of Living Make South Africa Shine for Many
The exchange rates between the British pound and the South African rand tend to favour British investors greatly. With a present exchange rate of about one pound to 13.5 rands, British money goes very far in South Africa . Whilst the cost of living isn’t as low as it is in some other investment hotspots, overall it is less than many large European cities. Many expats report being able to get by quite nicely on about GBP 1,400 a month even taking a family into the mix. The exchange rates and cost of living combine to draw more people to South Africa, which bolsters investor confidence in the country’s potential.
9) Reasonable Tax Structure Appeals to Investors in South Africa
Taxes in South Africa are considered very reasonable in comparison to some other property investment hotspots. Buyers face a capital gains tax only after the first ZAR 1.5 million in profits made on the sale of their primary residences. An inheritance tax is not in place here and the value added tax does not apply unless a property is part of a new development. If it is, the VAT is 14%, and is put into the purchase price in many cases. Overall, the taxes on property in South Africa are quite low and work well to inspire investor confidence and draw commitment for the long term.
10) Good Rental Yields and Potential for Value Growth Inspires Investor Confidence in South Africa
With property prices on the upswing and rental yields in the very favourable 8% range in some areas, South Africa is described by many experts as being in a boom at present. Currently 2007 price increases have reached double digits. With its currently low buy-in prices and reasonable tax structure, the country appeals to investors with a variety of different strategies under consideration. The potential for growth in South Africa’s property market is high and investors are realising and acting upon this.
From its spectacular coastlines to its beautiful interiors, the landscape of South Africa appeals to holidaymakers, expats, retirees and investors alike. This country’s real estate market is capturing much attention as of late. As the country re-establishes itself on the international scene, confidence for its future is greatly increasing.
