The dramatic fall in the value of the rand against currencies such as the US dollar, pound and euro in the past few months has rekindled overseas interest in SA property - and raised the possibility of a significant boost to the local housing market.
 
“Since May, the value of the rand has shown a sharp decline that was bound to catch the attention of overseas investors, especially in the light of the economic distress in Europe,” says Berry Everitt, MD of the Chas Everitt International property group.
 
“People all over the world are searching for safe havens for investing and SA with its stable banking system and growing economy is increasingly perceived as a good option in this regard, as is clearly reflected in the fact that at least 30% of the enquiries we’re receiving via our marketing websites now are from outside SA.
 
“Most of these are coming from the UK, the US, China and Germany, but we are also seeing interest among investors from many other European and Asian countries, as well as Russia and the Middle East.”
 
Overseas investors, he notes, generally don’t intend to live in SA full-time, “and certainly at the moment they are most interested in buy-to-let properties and second or holiday homes that they can acquire at good prices now and resell at a profit in the medium-term.
 
“And if SA handles their growing interest correctly, it has the potential to significantly improve the housing market countrywide, and boost the economy, by helping to mop up the extra supply of homes that is keeping the lid on prices.”
 
Indeed, one need only look to the US market to clearly see the potential positive effect, says Everitt. “Foreign investment in US property has jumped 24% in the past year to US$82bn, and now accounts for 8% of all home sales, according to the US National Association of Realtors (NAR).
 
“However in holiday destinations such as South Florida, international buyers account for 25% of the market and their interest has also been a real tonic for the local construction industry, with new home building showing a 20% rise in the three months to end-September.”
 
And similar effects are now being observed in other markets popular with foreign investors, including some like California and Arizona, which were particularly hard hit when the housing bubble burst, and in New York, where an estimated 15% of sales are now being made to international buyers, he says.
 
“In fact, so noticeable is the positive influence of international buyers that two senators are now even sponsoring new legislation that, if passed, would mean that foreigners who spent US$500 000 on residential real estate would automatically qualify for a coveted US visa.
 
“Now SA might not need to go that far, but we should certainly not be looking askance at overseas investment, or trying to discourage it in any way.”
Publisher: eProp
Source: CEI