Author: Carin Smith
7 February 2021
This is where foreigners are still buying prime property in SA, and why
South Africa has an accessible real estate market and favorable exchange rate – and this bodes well for foreigners looking for a long-term investment.
This is accoring to Grahame Diedericks, manager principal at Lew Geffen Sotheby’s International Realty in Midland, who believes the SA market is a “value purchase” for offshore investors.
“Coastal areas such as Plettenberg Bay, Durban North Coast and the ever popular Cape Town offer the lifestyles many foreigners are seeking , but at a fraction of the cost of international locations,” says Diedericks.
Plettenberg Bay has long been popular with international buyers because of the climate, natural beauty and beaches. Most foreign buyers are from the UK, followed by Germany.
Other areas along the Garden Route are gaining in popularity with foreign buyers, notably the Knysna area. For example, Peter Mare of the Knysna/Sedgefield office of Lew Geffen Sotheby’s International Realty has reported a spike in enquiries, especially from German buyers. He thinks this is due to increasing concerns in Europe about the viability of the European Union and the financial burden that will be placed on productive countries within it.
There has also been an uptic in foreign interest in Johannesburg’s affluent neighbourhoods, with buyers looking for a base in the central business hub of South Africa, accoring to Lew Geffen Southeby’s International Realty. It is currently experiencing and international referral intake at its highest levels since 2019.
Chris Cilliers, CEO and co-principal of Lew Geffen Sotheby’s International Realty in Cape Wineland, says they are still seeing an international interest in commercial wine farms, guesthouses and some residential property. The Winelands has always been popular with investors from Germany and the Netherlands.
“While the interest is still there, it’s notably slower. We are still seeing some interest from Swiss and Belgian buyers. Many people in Europe are unhappy with their governments’ response to the pandemic and are looking to settle elsewhere,” comments Cilliers.
Among the most recent sales to foreign buyers by Pam Golding Property (PGP) is a Clifton bungalow sold in December 2020 for R37 million to an Emirati buyer from Dubai; another home in Clifton purchased “sight unseen” by an American for R30 million; and a penthouse in the V&A Marina for R41 million, also acquired by an US buyer.
According to Dr. Andrew Golding, Chief Executive of the Pam Golding Property Group, such buyers recognise the highly desirable lifestyle offering on the Atlantic Seaboard.
“A comparable seaside lifestyle in most European and North American states would cost multiples of the Cape Town cost” says Golding.
PGP 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, PGP has begun to see interest from buyers in China, the UAE and the US.
“Contrary to some misconceptions in the market, international buyers, including SA expats – tend to purchase property across all price sectors, consisting of different types of property in regions and locations around the country.” says Golding.
“Foreign buyers range from professionals and businesspeople to families and retirees. Also, buyers from the rest of Africa continue to show an appetite for residential property in SA and comprise an increasing proportion of foreign buyers.” Furthermore, Golding says it is a misconception that international buyers have an impact on sales prices.
“International buyers are savvy and research the market thoroughly and will only pay market-related prices. So 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,” he explains.
“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 onsidering these types of homes as quality of life and affordability take precedent when they are considering their next residential purchase.”
Uptick in demand
Ross Levin, Managing Director of Seeff Atlantic Seaboard and City Bowl, says there has seen a notable uptick in demand from foreign buyers, especially from European counties that have experienced hard lockdowns and are in their winter months.
“We have also seen a massive influx from Afrian clientele, especially high net-worth Nigerians. This has mainly impacted the short-term rental market of luxry properties,” he adds.
Seeff has seen a notable sales boost in houses in the price category of between R10 million and R20 million and sectional titles below R5 million. Sales to foreign buyers included the UK, Switzerland, China, Malaysia, Italy, the US, the UAE, Nigeria and Greece, but enquiries are also coming from northern European countries such as Germany and the Netherlands.
Seeff has clinched over R178 million in sales to foreign buyers over the past four months alone, including a luxury villa in Fresnaye, Cape Town, sold in December for R36 million to a buyer from Dubai as a holiday home.
Other high-value sales include three in Camps Bay, namely one of R17.7 million to a US buyer; one of R19.5 million to a buyer from Malaysia; and one of R21.5 million to a US buyer.
According to broker/manager of RE/MAX Living, Susan Watts, overall, they have experienced an uptick in sales to foreigners. In her view, this can be attributed to the attractive exchange rate; a drop in prices; and the cost of living having increased internationally.
From March 2020 to January 2021, RE / MAX Living has made just shy of 40 sales to foreigners. These sales include buyers from the US, UK, UAE, Switzerland, the Netherlands, Ireland, Germany, France, Canada, Austria, Belgium and Qatar.
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