South African investors continue to demonstrate appetite for global property acquisitions

For South African investors, international property has never looked so appealing, says Pam Golding Properties. This is particularly in light of the recent announcement that from 1 April 2015, South African residents’ foreign capital allowance is to increase from R4 million to R10 million a year per person (or R20 million per family unit).

“Opportunities to acquire residency in prime destinations such as Portugal, Mauritius and Seychelles, coupled with the high appeal of frequent leisure usage on tropical island getaways and sound investment opportunities in London, Miami and now also Berlin, are prompting South African buyers to broaden their property portfolio horizons around the globe,” says Dr Andrew Golding, chief executive of the Pam Golding Property group.

“While each country offers attractive investment opportunities, each with its own unique credentials, Mauritius, Seychelles and Portugal offer residency opportunities when acquiring property. The threshold to qualify for residency in Mauritius is US$500 000 and €500 000 in Portugal, while the residency component in Seychelles is limited to the highly successful Eden Island marina development, where prices start at US$450 000. In London property available for purchase is priced from £320 000 for apartments in Wimbledon – a location popular among South African purchasers. Other opportunities in London, Miami and Berlin start from just €200 000.”

In catering for this demand, PGP is showcasing a range of international properties at Hyde Park Shopping Centre in Sandton from 10-13 March 2015, with property specialists on hand to advise on properties available for purchase, as well as representatives from the Sable Group, which specialises in assisting international citizens with family, property and financial interests around the world with their accounting, wealth, currency and nationality needs.

Chris Immelman, MD of Pam Golding Properties International Division explains further: “Local demand for global property is further prompted by the value of the exchange rate, in other words as a sound rand hedge investment, while Portugal’s Golden Visa Programme is attracting South African buyers who seek residency options for themselves and/or their children – particularly the latter as a younger generation looks to capitalise on global career opportunities.

“There seem to be several avenues of uptake among South African buyers of overseas property. Firstly, idyllic tropical island getaways such as Mauritius and Eden Island in Seychelles are always popular. Traditionally Mauritius is a sought after, easily accessible tourist destination, and since 2004 when foreign property ownership opened up, the South African market has grabbed this opportunity with both hands, with a diversity of different offerings bringing ownership of a leisure home on the island with the reach of many.

“Over the past year alone (2014) we have sold 50 properties in Mauritius at an average price of US$800 000 to a mix of buyers – some 25 percent South African, 50 percent French, 10 percent British and the balance from Europe and other African countries. The majority of South African buyers purchase in Mauritius both as an investment to hedge their portfolios as well as to keep their options open to reside on the island,” says Immelman.

Mauritian properties on show at the PGP exhibition include homes in the sought after Grand Baie region in the north of the island, in Le Parc de Mont Choisy Golf and Beach Estate, where PGP has already sold 105 units ranging in price from US$680 000. In Royal Park Resort, just outside Grand Baie, units are selling from US$500 000, while in the west of Mauritius in Tamarin, La Tourelle Ocean View Villas are priced from €1 million - or the equivalent of approximately US$1.14 million, and Marguery Exclusive Villas are selling from €500 000, or the equivalent of approximately US$570 000.

Says Immelman: “An exciting new investment, also in the north and close to Grand Baie, is the Koki Bay Invest Hotel Scheme (IHS). Koki Bay IHS Resort is a unique investment opportunity in a high standard, beachfront boutique hotel, managed by a renowned international management company, The Mantis Collection – well-known locally for Shamwari Game Reserve in the Eastern Cape, which they own and manage. Koki Bay Resort offers a guaranteed four percent return on investment for the first three years, with 30-45 complimentary nights included, and units fully-furnished to the hotel’s high standard.”

On Eden Island in Seychelles, PGP reports steady sales over the past year with 40 units sold averaging at prices averaging at US$850 000. To date, PGP has sold 479 homes on Eden Island at a total value of over R5 billion or US$440 million. Immelman says South African buyers comprise some 39 percent of purchasers to date, with the balance being from France, UK, Russia and the Czech Republic.

“These are a mix of leisure and investment buyers, with a growing emphasis on acquiring global property for pure investment with a strong rand hedge component. Currently homes are being constructed and sold in the final two basins 5 and 6 on Eden Island, while seafront apartments, maisons and villas for sale range in price from US$450 000 to US$4.2 million.”

Progress on Eden Island continues apace with Eden Bleu Hotel having opened in October 2014, with 74 deluxe rooms, 12 luxury suites and a presidential suite with views of the marina and the island. A business centre and four meeting rooms – able to accommodate eight to 18 people, completes the meeting and conference facilities.

Immelman says the Portuguese Golden Visa Programme has certainly caught the imagination of South Africans who are looking for alternative options for their children to further their careers abroad.

“This is the flavour of the moment for local buyers. Becoming a resident of Portugal - and by implication of Europe, offers significant options for those who wish to seek employment opportunities in Europe, and ultimately, the United Kingdom. The programme currently provides for the ability to apply for citizenship of Portugal, and therefore the European Union, after six years of starting the programme, and thereby entitling South Africans to work and/or study in the UK. Residency of Portugal is virtually immediate and provides all the benefits of a Schengen Visa for a period of five years, following which the applicant can apply for permanent residency in year six and citizenship in year seven.”

Recent sales by PGP in Portugal include 15 units sold to the value of €8 million (approximately R110 million), with a further 12 units currently under negotiation, at a total value of €6.5 million (or approximately R78 million). Properties marketed at the property exhibition range from €500 000 and mostly comprise apartments in the Cascais, Estoril and Lisbon areas.

Says Immelman: “Cascais is still the most popular area for South African buyers, although Lisbon itself is becoming increasingly in demand thanks to several new developments coming on stream as part of the regeneration of suburbs in Lisbon like Chiado, Baixa, Lapa and Estrella. While the overwhelming reason for purchase is to acquire residency, the rental returns achieved form part of the equation, with net yields between two and three percent anticipated. While the bulk of our buyers in Portugal are South African, we have also sold property to a Tunisian purchaser and are currently dealing with another from Kenya.”

In London, Miami and Berlin, PGP is showcasing properties, comprising residential apartments ranging from €200 000. “Again,” says Immelman, “these are attractive investment products for the purpose of rand diversification. London is a proven, long term destination with sound returns and long term capital appreciation; Berlin offers a very good entry level price into the residential market in one of the most important cities in the EU; while Miami offers a unique opportunity to capitalise on a growing inner city – which has a long way to go to reach the price levels of say Boston or New York. Berlin is not only a rand hedge, affording the investor the opportunity to diversify his or her assets, it is a key city in Germany and Europe, a Tier 1 city on Tier 3 prices.”

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