Diplomats posted to South Africa and executives working here on three to five-year contracts have a golden opportunity to acquire high-yielding luxury properties at a fraction of the cost elsewhere in the world.
“In SA, foreign nationals with work permits can mortgage up to 50% of the value of a home, and in most cases their housing allowances will cover the repayments on the bond. This means that they need to import far less of their own currency to finalise a purchase,” says Rory O’Hagan, CEO of the Luxury Portfolio® division at Chas Everitt International.
“And the Rand exchange rate against major currencies like Dollars, Euros and Pounds makes this an even more worthwhile proposition. For example, a R10m SA home in a lifestyle estate, heritage suburb or luxury apartment building that is 50% bonded would only require an investment of about US$325 000 (equivalent to €300 000 or £250 000).
“What is more, the value for money on offer in SA’s luxury property market is exceptional. The cost of prime property in SA’s top cities ranges from around US$2500/sqm to around US$5000/sqm according to New World Wealth, compared to around US$8900/sqm in Washington, for example, and much more in cities like Tokyo (US$17 000/sqm); Paris (US$18 000/sqm); Zurich (US$20 000/sqm), Sydney (US$25 000/sqm); Hong Kong (US$28 000/sqm); and London (US$33 000/sqm).”
For many people on assignment in SA, buying a property also means having the pleasure of living in their own home, wherever they choose in relation to the schools, shops, sports and health facilities they want, instead of being restricted to rented accommodation selected by their embassy or company for the next three to five years, he says.
“Ownership of course also gives people access to any increase in the property’s value over the next three to five years, which they can repatriate along with their initial investment should they choose to sell at the end of their assignment. Alternatively, they can opt to keep the property and rent it out at a rate that continues to cover their bond repayments.”
O’Hagan says that if they follow this course of action, the property should be fully paid for in eight to 10 years, leaving them with a luxury asset that generates a very competitive annual yield on their initial investment. According to the Global Property Guide, the current average yield on rental property in SA is 3,88% pa, compared to 2,76% pa in the UK; 2,91% pa in the US; 2,52% pa in Australia and 2,35% pa in Hong Kong. Yields in Europe can be as high as 5% pa but are mostly around 3% pa and the acquisition costs are also much higher.
The caveat, of course, is that foreign nationals seeking to buy homes in SA should always engage a qualified and competent estate agent to help them find the most suitable properties and guide them through the legalities of the local property purchase process, he says.
“And as the South African representative of Leading Real Estate Companies of the World® and Luxury Portfolio International®, the Chas Everitt International property group is the obvious choice. We combine world-class, bespoke service with expert local knowledge to offer a total solution to the property and relocation needs of luxury buyers and sellers in SA.”
*For more information, please contact Rob and Wendy Hoffman at Chas Everitt Pretoria (+27 83 266 3799) or our international relocation specialist Leana Nel (+27 83 777 9104).