South Africa's property market has seen a notable uptick in demand from foreign buyers, especially in coastal hotspots such as the Atlantic Seaboard, the Garden Route and all the way up the KZN North and South Coast. Industry experts share what's driving the foreign buyers market right now.
From March 2020 until January 2021, RE/MAX Living has made just shy of 40 sales to foreigners. These sales include buyers from the United States, UK, UAE, Switzerland, Netherlands, Ireland, Germany, France, Canada, Austria, Belgium, and Qatar.
"These range from houses and convenient, lock-up-and-go homes such as apartments in secure complexes - including convenient central city apartments and frontline beachfront units, to homes within secure estates, game farms and game lodges. Foreign buyers range from professionals and business people to families and retirees. Buyers from the rest of Africa continue to show an appetite for residential property in South Africa and comprise an increasing proportion of our foreign buyers," says Dr Golding.
"Sales over the years to foreigners have been to buyers from virtually every country around the world but historically those from the UK, Europe, the rest of Africa, Germany, The Netherlands, France and Belgium have been the most prevalent. More recently, we have begun to see interest from Chinese, UAE and US buyers."
"Buyers recognise the highly desirable lifestyle offering on the Atlantic Seaboard, and a comparable seaside lifestyle in most European and North American states would cost multiples of the cost here in Cape Town," says Dr Golding.
International buyers remain price savvy
He says it is also a misconception that international buyers have an impact on sales prices stating," international buyers are savvy and research the market thoroughly and will only pay market-related prices."
According to Pam Golding Properties Residential Property Index, South African house price inflation continues to recover, rising from a low of 2.4% in April 2019 to 3.1% in December 2020 and encouragingly, the rebound gathered momentum during the second half of 2020.
Ross Levin, managing director for Seeff Atlantic Seaboard and City Bowl adds that the notable uptick has definitely included European countries, which have experienced hard lockdowns and are in their winter months.
He says for Seeff, the luxury residential property market, which spans from approximately R5 million up to R100 million and beyond in rare instances, remains predominantly a local market, with foreign buyers comprising only around 1% of total sales in any given time period.
Atlantic Seaboard appeal
Among most recent sales to foreign buyers by Pam Golding Properties is a sought-after Clifton bungalow sold in December 2020 for R37 million to an Emirati buyer from Dubai.
Other Pam Golding Properties sales to foreign buyers include a home in Clifton on the Cape’s Atlantic Seaboard which was purchased ‘sight unseen’ by an American for R30 million just after the hard lockdown was lifted in 2020, and a penthouse in the V&A Marina which fetched R41 million, was also acquired by a US buyer.
"While the Atlantic Seaboard remains a highly sought-after destination for overseas buyers, due to its world-class appeal and scenic beauty, other areas which see foreign buyers include the Cape Winelands areas in the Boland as well as the Overberg region, and coastal areas on the Garden Route, Eastern Cape and KwaZulu-Natal, among others. While we would not describe it as a ‘spike’, we are noting renewed interest among overseas buyers," says Dr Golding.
Seeff has clinched over R178 million in sales to foreign buyers across the Atlantic Seaboard and City Bowl alone over the last four months alone including a luxury villa in Fresnaye sold in December for R36 million to a buyer from Dubai. The property will be their holiday home.
Other high-value transactions include three sales in Camps Bay, being R17.7 million to a buyer from the USA, R19.5 million to a buyer from Malaysia and R21.5 million to a buyer from the USA, says Levin.
The Western Cape's Garden Route is well-known for its spectacular scenery, with mountain biking, hiking, cycling, water sports, medical facilities and good schools all acting as drawcards for those wanting to make a lifestyle decision to relocate from major metropoles.
In addition to local buyers already happily entrenched in the George area, home purchasers are drawn from Gauteng, elsewhere in the Western Cape - including Cape Town, followed by Mpumalanga and the Eastern Cape, while overseas buyers include those from the USA, Germany and UK.
SEE | Garden Route well-primed for buyers | What you can expect to pay in George, Knysna and Plett
“In fact, over the past year or two we’ve seen approximately 50% of our buyers emanating from outside the Garden Route region," says Stephen Murray, Pam Golding Properties area manager in George.
"The allure of the water’s edge, whether it be the beachfront or clifftops, or the 8km of beaches and inland lakes of Wilderness, this region’s surroundings and lifestyle offering are factors attracting permanent residential buyers from elsewhere.”
This immaculate 12-bedroom home in Seaside Longships, Plettenberg Bay is on sale for R13.850m. Click here to view more details.
Keen interest in Nelson Mandela Bay
While KZN was the top performing major regional housing market during the past five months, the Western Cape remains the top performing major region across all price bands during the year 2020 as a whole. In the major metros, Nelson Mandela Bay remains the top performing metro housing market by a significant margin, at 6%, followed by Cape Town at 2.8%, eThekwini at 2.7% - which is also the national average, Gauteng East at 1.9%, Tshwane 1.8% and Johannesburg 0.7%.
Investor confidence, travel restriction challenges
For the industry, selling property to foreigner buyers has not been an easy thing to achieve under the current travel restrictions, underpinning South Africa's critical need for an effective covid-19 vaccine campaign and economic redevelopment to restore some sort of investor confidence.
READ: SONA 2021 | Key factors for SA's real estate sector
Under normal circumstances, Marius Jordaan of RE/MAX Living explains that many top Directors from American Companies with offices in South Africa would make regular visits to the country – particularly those where the FDA and regulatory bodies would visit South Africa for inspections and audits on a regular basis. This could no longer happen since the restrictions were implemented in March 2020.
“While these directors were visiting South Africa, they would often hunt for possible holiday homes or part-time homes to stay in while they’re down here – none of this could happen under the travel restrictions,” says Jordaan
“The team at RE/MAX Living have done an exceptional job at leveraging the RE/MAX marketing and technology at their disposal to build and maintain their relationships with their foreign clients,” says Adrian Goslett, Regional Director and CEO.
"We are proud of their success in overcoming the many obstacles in this regard. The overall hope is that the distribution of the vaccine will soon minimise the threat of infection so that international borders can reopen, which should help stimulate foreign investment within the South African real estate market."
"The luxury market - and the residential property market in general - in South Africa is currently at its most competitive pricing in over a decade, so this is an excellent time to secure a well-priced property in international terms. I anticipate that the luxury property market is going to see a lot more buyers considering these types of homes as quality of life and affordability take precedent when they are considering their next residential purchase," says Dr Golding.
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