Investment Property in South Africa

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Investment Property South Africa - Guide to Buying New Developments & Off Plan Property

Investing in South Africa

In 1998 the South African lost a quarter of its value and since then it has lost a total of half its value, mostly due to high interest rates and a decreasing inflation. But this could be good news for property investors in South Africa now because many analysts believe the South African Rand is under-rated by between 15% and 20%

According to new figures given out on the 24th April 2008, state that an estimated 6-7% of foreign tourists to South Africa were in fact business travellers - some 550,000 - in 2007 with approximately 40% of business visitors returning within five years. The Tourism Minister Marthinus van Schalkwyk also says that these figures are expected to continue growing as the 2010 FIFA World Cup draws closer, with the industry hoping to treble these figures over the next three years.

Investors in South African property have fared well in recent years, with a growing appeal to international tourists, a growing political and economical stability, plus a weak rand. South Africa has become a serious option for Europeans looking to retire abroad, with a low cost of living, low property prices and much improved security.

The increasing demand for long haul holiday destinations coupled with regular flights has pushed South Africa to the top of the list for many tourists, with areas around Cape Town prospering from the increase in vacation traffic and the subsequent spending power.

Private, gated communities are in high demand by the British and German investors, who appreciate the stunning locations, coupled with safe environments, low prices, great service and world class amenities. Investors are buying with a long term goal, to keep the property for several years, taking advantage of the growing number of tourists, increasing rental revenues and the belief that the South African Rand will strengthen against primary currencies and therefore deliver an even higher capital gain upon repatriation of funds.

Land speculation is not prohibited in South Africa and it has become quite popular in areas around Cape Town and along the western Cape. Investors are buying land, applying for and in many cases being granted planning permissions which increase the value of the land which is then sold on

Currently there are a number of government incentives aimed at developers in South Africa. Examples include tax reductions of 20% based on derived incomes from completed projects for up to 5 years, plus excellent depreciation options which can further reduce taxes.

By far the most popular section of the property market is the investment in off plan developments which offer either quality villas with swimming pools in secure communities or high end apartments close to the beaches and coves that line the South African coast line in the Cape Town areas. These off plan properties have proved to be good investments in recent years, with increasing rental revenues generated by the influx of international travellers who prefer the independence of not staying in hotels. Properties in resort communities have shown the highest yields and are also the easiest type of property to resell in South Africa, as they are not normally affected by the residential market. See also: buying off plan South Africa - Buyers' Guide

Positive Economic Reasons for Investing in South Africa

• An under valued currency that is expected to rebound in the near future
• South Africa is ranked 18th on the FDI - Foreign Direct Investment - as an attractive destination for foreign investment
• Massive investment into airport improvements as well as other infrastructure networks
• Close to fifty international flights to South Africa each week from major European cities
• South Africa is an award winning tourist destination and one of the top countries in which to retire outside of Europe for Europeans
• South Africa is one of the top Business destinations in the world with around 40% of business visitors returning within five years
• Low property prices in key tourist related areas
• Low cost of living
• A now stable economic and political environment

Recommended areas for off plan investment within resort communities include Cape Town, the Western Cape and the Garden Route. For longer term investors who do not mind speculating, the Eastern Cape could be a lucrative option for the very near future.