Foreigners Snap Up Homes in Cape Town

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03 Apr 2012

Foreign property buyers remain a relatively small group of buyers of South African residential property, according to FNB.

This property in Camps Bay was sold by Pam Golding Properties to a buyer from Tanzania for R5 million.

The bank notes that there are signs that their contribution to overall buying is increasing with the effects of the global economic recession gradually passing on.

FNB Home Loans property strategist, John Loos says there is a significant increase in the African continent’s contribution to foreign property buying.

“The net foreign effect on the South African residential property market thus appears to be improving mildly,” says Loos.

The FNB Estate Agent Survey report reveals that the estimated percentage of South African property owners selling in order to emigrate remains unchanged at 4 percent of total sellers.

This is the fifth consecutive quarter that the agents have estimated a percentage near to 4 percent from 20 percent in the third quarter of 2008.

Loos says the estimated slow rate of emigration selling is believed to be the combination of South Africa being in a relatively calm space regarding its own policies and political events, along with a mediocre economic and employment situation in many parts of the western world (notably Europe), which are often popular South African emigration destinations.

The estimated number of South African expatriates buying property in South Africa has risen slightly as a percentage of total home buyers in the past two quarters, from 2 percent to 3 percent.

Loos says the first quarter survey in 2012 shows that an estimated 4 percent of home buyers were foreign citizens, an increase from 3 percent in the previous quarter.

This does not suggest that foreign buyers are buying in nearly the numbers believed to have been the case back prior to 2008, a time when their percentage was higher and total market transaction volumes were higher.

However, the improvement since 2010 is becoming significant, he explains.

From a low estimate of 8.5 percent of total foreign buyers back in 2010, the African foreign buyer contingent is estimated at 20 percent of total foreign buyers as at the first quarter of 2012.

Estate agents report that African foreign property buyers have become a very significant part of the foreign buyer contingent in the South African residential market.

Lew Geffen, chairman of Sotheby’s International Realty in SA, says home sellers can now expect to see more foreign buyers in the market - this time around most will probably be looking for permanent residences close to business centres rather than holiday homes.

View from an apartment on the V&A Waterfront in Cape Town sold by Pam Golding Properties for R5 million to a buyer from Italy.

Geffen says most foreign property buyers will probably not hail from the countries traditionally associated with foreign buyers, such as England and Germany, but rather from South America, Eastern Europe, other African countries, India and China.

He notes that as a member of BRICS, South Africa is already acknowledged as one of the most important developing countries in the world, which are expected to exhibit twice as much economic growth as developed countries over the next 15 years.

South Africa is not only increasingly seen by overseas investors as the gateway to the African market, but is also benefiting from stronger ties with other Africa countries and the interest of the growing number of newly-wealthy African entrepreneurs, he explains.

Geffen says they believe the percentage of foreign buyers in South Africa will increase substantially as the new world economic order takes shape, driven not so much as it was before by the weakness of the rand against major currencies such as a the pound and the euro, but by the exciting business and trade opportunities opening up in South Africa and the rest of the African continent.

He says foreign buyers are likely to look for upmarket cluster homes in small complexes and homes in gated estates, from luxury lock-up-and-go apartments right through to grand mansions, as long as the estate has excellent security and preferably a good school, shops and an office park close by.

Proximity to an international airport and a major business or export centre will also be key, which points to an expansion of foreign investment beyond Cape Town and into Johannesburg, Durban, Port Elizabeth, East London and even smaller centres such as Richards Bay, Nelspruit and Polokwane, he says.

Lanice Steward, managing director of Anne Porter Knight Frank, says the FNB figures indicate that foreign buyers have confidence in the South African market.

“They recognise good value and appreciate the fact that compared to many African countries the regulations and taxes governing South African property ownership by foreigners are equitable and not too onerous or complicated,” she says.

Laurie Wener, managing director of Pam Golding Properties (PGP) in the Western Cape region, says overseas buyers are currently looking at homes in holiday areas, seeking mainly to acquire small apartments for seasonal use or investment purposes.

Wener notes that foreign buyers are looking for small apartments priced below R3 million.

Seeff Properties sold this five bedroom home in Fresnaye to a German couple for R42 million - the highest previous sale in the area was R30 million.

Recently, PGP sold a small apartment in Clifton for seasonal use by a Scottish buyer for R1.5 million, another apartment at the V&A Waterfront was bought by an Italian buyer for R5 million and a family home in Camps Bay by a Tanzanian couple also for R5 million.

PGP reports that renewed interest from foreign buyers in the Boland and Overberg over the past year.

Buyers have been purchasing from plots in Swellendam for R200 000 to just over R13 million for a property in the Bel-Aire security estate in Somerset West.

PGP says in Somerset West, of over 20 percent of buyers moving into the town 13 were from Stellenbosch and eight from the UK, Germany and Switzerland.

One foreign buyer purchased a home priced over R13 million for a lock-up-and-go home.

Seeff Properties also notes interest from foreign buyers and those who have been looking around for good homes are starting to commit on paper and are actually buying the homes on offer.

Atlantic Seaboard estate agent, Lance Cohen recently sold a R42 million property measuring 1 000 square metres in Fresnaye to a German couple

Seeff says the highest previous sale in the area was R30 million. – Denise Mhlanga

About the Author
Denise Mhlanga

Denise Mhlanga

Property journalist at

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