Investors show confidence in SA property

Much has been said recently about investors getting out of SA stocks and bonds - but what hasn't been talked about is just how much money they are putting into the SA residential property sector. This is much more positive news that we would like to share to balance the generally gloomy view of the country's prospects.

An increasing number of foreign investors, especially, are buying homes in Gauteng and rental properties in the Western Cape, while droves of SA homeowners continue to semigrate away from the big cities and buy homes in country and coastal areas as they search for a better quality of life.

Semigration from Gauteng to the Western Cape is of course the movement most talked about, and all our offices in Cape Town and along the Whale Coast, especially, can attest to the current strength of the property demand being driven by this trend.

But in most cases, a home bought in the Western Cape also means a home sold in Gauteng or elsewhere - and our offices in Sandton, Midrand and Pretoria, particularly, have noticed a steady increase since last year in those sales being made to foreign buyers from many different countries. 

There are very good reasons for this, including the rand exchange rate against major currencies like the dollar, euro and pound, which enables foreign buyers to acquire beautiful homes in SA for much less than they would pay for similar properties in their own countries.

Then of course there's SA's famous weather, scenery and lifestyle. However, even more influential at this stage are the major political, economic and climatic problems elsewhere in the world, which are prompting affluent individuals in those regions to create a "Plan B" for themselves by migrating some of their wealth to second homes and business interests elsewhere. This has been a growing trend in the wake of the Covid-19 pandemic, and developing countries like SA have been major beneficiaries.

These individuals are astute buyers who are usually well-aware of SAs current problems, but tend to see them as solvable, or at least manageable - unlike the uncertain effects on Europe of the ongoing war in the Ukraine, for example. In this regard, SA also has the advantage of having a large number of the gated residential estates that are favoured by such buyers.

At the same time, the country offers entrepreneurial investors a plethora of business opportunities thanks to the IMF and corporate funds that have been made available to upgrade the country's infrastructure. These will increase, too, with the implementation of the African Continent Free Trade Agreement (AfCFTA), which is the real key to the US$3-trillion African market.       

Meanwhile, all regions of SA are also seeing an increase now in the demand for buy-to-let properties. Investors are keenly aware that rising interest rates limit the ability of existing tenants to convert to home ownership, and that rentals are already on the rise as a result. What is more, as the latest report from TPN shows, there is a considerable shortfall in the availability of rental properties thanks to the lack of new development in the past few years.

This is another attractive prospect for foreign investors who are able to borrow the funds to purchase such properties at relatively low-interest rates in their own countries and reap excellent rental returns.

In short, many billions of Rand continue to be invested in SA real estate, which shows that perspective is at least as important as perception when it comes to making predictions.