If you’re the owner of a luxury property in South Africa and are hoping to sell to a foreign buyer, you must be sure to market it to wealthy individuals in Africa as well as in the UK or Europe.
Johannesburg and Cape Town are the only African cities among those currently rated by UHNWIs as their 40 top investment destinations worldwide.This is according to Berry Everitt, MD of the Chas Everitt International property group, who says although it’s true that most foreigners buying property in South Africa are still from these traditional markets, African economies are growing much faster and creating more millionaires and billionaires than those in European countries, many of which are still suffering the after-effects of the 2008/09 recession.
And thus the number of potential buyers for your upmarket property is increasing faster in Africa than in Europe and the UK, he says.
What is more, Everitt says super-wealthy individuals in Africa seem to have more liking for luxury properties in South Africa than the millionaires of Europe, the Middle East or Asia, who currently favour London, New York, Hong Kong and Australia when it comes to second home purchases.
According to the World Wealth Report 2014, which was compiled by Capgemini and RBC Wealth Management, there are currently more than 13.7 million multi-millionaires around the world, and the number is increasing faster in Africa than in most other areas, says Everitt.
“And according to Knight Frank’s 2015 Wealth Report, the number of ultra-high-net- worth individuals (UHNWIs) who own at least US$30 million in assets are expected to increase by 59% in Africa over the next few years, compared with 34% globally.”
Everitt says there is no guarantee that these über-wealthy people will choose to invest in additional properties, or that if they did, those properties would be in South Africa. But, he says, as First National Bank recently noted, property is now much more popular as an asset class than it was a few years ago, especially among UHNWIs, and the level of foreign buying in South Africa has already risen as a result.
In addition, he says FNB estimates that from a low point of 2% of total buying in 2010, foreign buyers now account for some 5.5% of all South African home purchases, and buyers from Cameroon, Nigeria, Ghana, Zimbabwe, Angola, Mozambique and other African countries now account for some 24.5% of foreign buying in South Africa, compared to 12.5% a year ago.
Knight Frank Wealth Report editor, Andrew Shirley, says UHNWIs are widely expected to allocate more of their capital to additional properties outside of their own countries over the next few years, and that luxury properties in Africa as a whole are currently attractive from an investment point of view because they have shown an average value growth of 6.5% over the past year, compared with an average value growth of 2% globally.
Turning to South Africa specifically, he says Johannesburg and Cape Town are the only African cities among those currently rated by UHNWIs as their 40 top investment destinations worldwide. Johannesburg especially is recognised as the wealth hub of Africa and can be expected to attract increasing interest from UHNWIs in other African countries over the next 10 years, he says.
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