Investment Property South Africa - Investors Guide

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Investment Property in South Africa

Investors Guide to purchasing investment property, holiday homes and buy to let property in South Africa

Real Estate South Africa

South Africa; land of sunshine, wondrous safaris, spectacular mountains, rivers and dreamy horizons, the country captivates all those who seek adventure and the idyllic outdoor lifestyle.For investors, this creates the perfect tourist environment to fuel their strategies, while a fiercely growing economy makes real estate development in South Africa an exciting prospect.

The country’s political past has left behind it a shortage of housing, helping to explain South Africa’s buoyant property market today.As a relatively stable, democratic country and the second strongest African economy, South Africa is ambitiously encouraging all types of investment, while today its commercial property market is even outperforming markets in many Western countries.

Why South Africa?

• A Growing Economy

Since the abolition of Apartheid in 1994, South Africa has undoubtedly gone through times of change.Today it’s the largest growing economy in sub-Saharan Africa, with a GDP growth of 4.5% in 2006.According to the Economist, South Africa is set to continue on a steady path of growth for the foreseeable future.

Black economic empowerment is narrowing the gap between rich and poor bringing with it a new professional middle-class, seeking homes in a market where demand still far outstrips supply.

The Economist continues, “The consolidation of democratic processes, which dominated the first five years of ANC rule, has given way to a sharper focus on economic issues - specifically, promoting growth and job creation within the broader context of political and economic transformation and the Africanisation of society.” (April 13^th 2007).

• Capital growth. Despite the boom period of 2004/5 when extremely high rates were achieved, property purchasers can expect steady capital growth rates of around 12 to 15% per annum.
• Meanwhile, some off-plan investors in hotspot locations are achieving even higher returns of some 20 to 50% per annum.
• Interest rates have rocketed in 2007, bringing with it a temporary slow-down in the property market but, in turn, investors now regard this as the perfect time to buy into the South Africa, while prices remain low.High interest rates are also driving the rental market upwards, boosting the buy-to-let market; according to experts, rental prices in 2007 are predicted to rise by 12 to 15%.

Booming Tourism

A vast country of sunshine and a wealth of natural wonders, South Africa attracts tourists from all over the globe.In 2006 tourist numbers shot up by one million to 8.4 million and the government expects to reach its target of 10 million by the time South Africa hosts soccer's World Cup in 2010.

All this translates to increased demand for property in the form of second homes, holiday lets, commercial and investment real estate.Favourite tourist hotspots are generally to be found on the Western and Eastern Capes while inland, the beautiful Garden Route is regarded as an emerging property market.

Most European airports connect regularly to South Africa’s three international airports at Cape Town, Durban and Johannesburg while the recent entry of budget airlines such as Kulula and 1time are keeping prices competitive and adding attraction to South Africa as a truly affordable destination.

Tempting Tax Breaks

Property purchasers can expect tax breaks of up to 20% over the first five years of ownership.The complete absence of inheritance tax and stamp duty are further incentives, encouraging more foreign investors to buy into residential and commercial developments, particularly in major cities, such as Cape Town’s Waterfront area.

Buy More for your Money

The South African Rand (ZAR) exchange rates are favourable with the major world currencies, making money go further in South Africa than nearer home (in August 2007, 1 GBP = 14.42 ZAR and 1 EUR = 9.71 ZAR).

They Speak our Language!

All transactions and legal documents are written in English and a strongly regulated, transparent property purchase system creates further investor confidence in South African real estate.