Foreign buyers bought almost R6.5 billion worth of properties in South Africa last year, and not all of it in Cape Town or Johannesburg, property company Sotheby’s International Realty SA said on Saturday.
“The depreciation in the value of the rand over the past two years has definitely made SA property more attractive to those buyers with pounds, euros or dollars to spend,” chairman Lew Geffen said in a statement.
Their figures for the last six months showed such.
Another factor increasingly playing a role in foreign buying was the growth in the number of high net worth individuals (HNWI) around the world.
“These individuals generally hold about 25 to 30 percent of their wealth in real estate,” said Geffen.
“Although most of this is in first world countries, an increasing number of them are looking to buy investment properties in developing parts of the world like SA, that they view as likely to remain peaceful and offer good growth prospects.”
The fact that the May 7 general elections went off without a major hitch as well as the consistency of economic policy over the past few years, counted in South Africa’s favour.
Geffen said according to the recently-released World Wealth Report 2014, the number of HNWIs around the world rose 15 percent last year to 13.7 million.
“What is more, Africa is expected to show the most rapid growth in the creation of millionaires over the next 10 years,” Geffen said.
“These individuals are currently growing their real estate portfolios quite aggressively, which accounts for the growing number of buyers in SA from other African countries.”
He said First National Bank recently reported the percentage of foreign home buyers from countries such as Cameroon, Nigeria, Zimbabwe, Angola and Mozambique had risen from 16 percent in the third quarter of 2013 to 19.5 percent in the first quarter of this year.
Judging from the latest available statistics from property data company Lightstone, although foreign purchases of multi-million rand second homes in Cape Town grabbed the headlines, most sales made to foreigners took place in Johannesburg.
“There were 1497 sales (worth R2.3bn) to foreigners in Cape Town, and 2565 sale (worth R2.8bn) to foreign buyers in Johannesburg,” Geffen said.
What was even more encouraging was foreign buyers were looking at areas beyond these two cities.
“For example, foreign buyers purchased about 670 properties worth about R800m in KwaZulu-Natal last year, and about 260 properties worth about R230m in the Eastern Cape,” he said.
“In addition, we are seeing a growing trend among foreign buyers to purchase properties in SA as investments rather than for their own use, and that is a healthy vote of confidence in our real estate market.”
This was even though foreign buying still only accounted for around 3.6 percent of the total value of residential sales.