Foreign buyers have moved on from South Africa
2016 saw the most expensive sale of a house in South Africa to a foreigner in the country’s history. This house overlooks the beautiful Bantry Bay in Cape Town and went for US$19 million to a German billionaire, smashing the previous record by approximately US$6.5 million. Estate agents in South Africa had been worrying that the influx of foreign money flowing into their property market was at an end and this huge purchase wen some way to allaying their fears, but does one swallow make a summer?
Many in South Africa are not happy with the level of foreign investment which has been seen in recent years. Foreign interest in South Africa began to seriously rise in 2012 with a peak coming in 2014 according to the First National Bank. Consequently, property prices in the country began to rise at a pace which was uncomfortable for the actual residents of South Africa, sparking understandable complaints. The current parliamentary opposition party has called for stronger restrictions on foreign investment in response.
However, it seems that 2016 will see a large number of foreign investors leaving South Africa of their own accord. Fluctuations in the Rand’s exchange rate have artificially raised prices for foreign investors and both capital gains and rental yields are starting to decrease in response, causing investors to look warily at the future. At the same time, the UK voted to leave the European Union, leading to a devaluation of Sterling. This effectively offers foreign investors a steep discount on a very strong market and this has had an effect in other countries suffering their own economic issues, such as South Africa.