In Focus

Making the move

The landscape, climate and people all make South Africa a great place to buy a home

  • By Matt Mercer | Gulf News Report
  • Published: 00:00 April 27, 2010
  • In Focus

A property on the Atlantic Seaboard
  • Image Credit: Shutterstock
  • A property on the Atlantic Seaboard comes at a price, but what a view.

South Africa has always been a popular holiday destination, and property investors have never been far behind the tourists. This year the country is expecting to see record visitor numbers thanks to the FIFA World Cup, and who knows how many may be tempted to invest in property — especially if they see their nation claim the cup on South African soil.

The government has been spending money on upgrading infrastructure, not just around the new stadiums but also in areas such as the transport network and telecommunications services. There has also been substantial international property investment withsix new hotels opening in the Cape Towncity centre alone.

Busy summers

Apart from the scenic beauty and the lifestyle on offer, the moderate climate is probably the biggest draw to the country. The busiest tourist season is during the summer months from December to March, but warm balmy days are not uncommon even during winter months.

South Africa has a sophisticated deeds registry and property rights are enshrined in the constitution. While foreign ownership �still remains quite low nationally, coastal areas in cities such as Cape Town and Durban have proved popular, particularly with British and other European visitors.

Some areas, such as the Atlantic Seaboard, come at a premium with the entry level properties starting at R3 million but other areas such as Hout Bay and the Southern Suburbs offer very good value with an entry level apartment costing about R850k (about Dh418,000). Durban also has a large expatriate community and property prices are a little cheaper than in Cape Town.

Almost all of the properties sold are through estate agents. Buyers' agents do exist, but they are not vital as estate agents are knowledgeable about the areas and can help with all aspects of relocation including advice about schools. Buyers' agents tend to charge fees and receive a commission from estate agents as well. There are many websites and property portals that make it simple for an expatriate buyer to research areas and estate agents.

The seller pays the commission, which is usually around 5 per cent plus 14 per cent VAT. The buyer pays the stamp duty and transfer costs, which are on a sliding scale, usually around 7.5 per cent of the purchase price. There is usually about 5 per cent of the purchase price built in for negotiation purposes although this is not always the case. Non-residents can qualify for 50 per cent mortgage financing and, provided they have brought their money into the country through the correct channels, can take it and any profit made back out.

Correcting property prices

Lanice Steward the CEO of Anne Porter Properties (exclusive South African associates of Knight Frank) says the South African property market has emerged relatively unscathed from the recession. This was largely due to strict government control on credit. The market peaked around 2007 and since then property prices have corrected by about 15 per cent. The market is now in the recovery phase and the interest rate has had seven consecutive cuts down to the current rate of 9.5 per cent. As the market recovers, there are still some good investments available from distressed sellers.

Many expatriate property owners enter the country on a three-month visa and, should they want to renew for another three months they take a holiday in one of the neighbouring countries such as Namibia, Zimbabwe and Mauritius. For those looking for a more permanent stay there are various residencyand retirement visa options. Using the services of an immigration lawyer to apply for the correct type of visa will make the process smoother,and is highly recommended.

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