South African investors looking to buy offshore property

Owning a leisure home in sought after luxury spots have not lost any of its appeal with the super rich, however they are now buying these properties for a completely different reason.

The world's wealthy are no longer buying second homes solely for lifestyle or currency diversification benefits. They are now also looking to own property offshore as an insurance policy against political, security and economic risk at home, according to British property group Knight Frank.

South Africans are no exception. Real estate agents say South African investors are looking to buy offshore property in countries where they qualify for residency.

While Mauritius and the Seychelles have until now been top of the list for most South Africans keen to buy a cross-border bolthole, a number of other countries have in recent years also introduced schemes that offer foreign real estate investors a second passport.

These include Cyprus, Monaco, Austria, the Bahamas and the Eastern Caribbean islands of Saint Kitts and Nevis.

However, the Mediterranean archipelago of Malta, traditionally the preserve of wealthy British retirees, is set to become the next destination of choice for South Africans seeking dual-residency status. That follows the introduction by the Maltese government this month of the Malta Global Residence Programme.

Malta consists of three islands: Malta, Gozo and Comino. The island's investor-friendly tax regime, reasonable cost of living and relatively affordable property prices are seen as key attractions. The fact that Malta, a British colony until 1963, is one of the few EU countries where English is an official language - alongside Maltese - is another drawcard.

Malta's new residency scheme replaces the previous programme known as the High Net Worth Individuals Tax Residence Scheme. Mel Roberts, consultant to international legal, tax and fiduciary advisers Maitland in Malta, says the new legislation is far more investor- and tax-friendly.

The minimum entry level for foreign property buyers has also been reduced: from €400000 (R5,4m) to €220000 (R2,97m) in Gozo and the southern parts of the Maltese islands and to ?275000 (R3,71m) in the more up-market central and northern areas.

The minimum amount that foreigners can rent for to qualify for residency is €8750/year (R118 125/year) and €9600/year (R129600/year), again depending on area.

Roberts says the introduction of Malta's new residency scheme coincides with the introduction of more stringent requirements for Southern African applicants who want to obtain a Schengen visa for travel to EU countries.

"A key benefit of the new Malta scheme is that once residence status is granted, South Africans will no longer need to obtain a Schengen visa to travel in Europe."

Roberts says this is likely to be a major attraction for South African investors who travel frequently to Europe on business or pleasure, as they can do away with the onerous process of having to apply for a Schengen visa each time.

Roberts says the scheme's tax benefits include a flat 15% tax rate on income remitted to Malta, zero capital gains tax on assets sold outside Malta, no inheritance tax and no rates and taxes on property owned in Malta. Foreigners, however, pay a minimum tax of €15000/year (R202500) per family.

Foreign applicants must buy or rent a property in Malta within 12 months of being accepted into the scheme. Once residency is granted, foreign investors have to spend at least six months of the year (182 days) in Malta.

Joseph Sullivan, director of estate agency Fine & Country in Malta, says foreign buyers tend to favour the up-market areas of Sliema and St Julian's Bay on Malta's main island, where modern, luxury apartments with sea views will typically sell for around €350000.

Investors who let their units can earn a gross income return of around 4%-5%/year. Modern, three-bedroom apartments with sea views, normally fully furnished with kitchen appliances, rent for R9500-R10500/month.

(Source: eProp)

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 23 Jan 2018
      Many people only start thinking about home-ownership when they are ready to “settle down” or start a family, which is why first-time buyers these days are generally in their mid-30s, compared to those in the previous generation who were usually in their mid-20s.
    • 22 Jan 2018
      Moving away from the city to a country or coastal town and a slower-paced life is a frequent new-year resolution for South Africans, but thorough research should be done before you break free from the hustle and bustle, because making the wrong move could turn out to be a very expensive mistake, and even more stressful for you and your family than staying in the “big smoke”.
    • 22 Jan 2018
      Cape Town is home to many breathtaking and historic homes, but House Invermark designed in 1969 by South African architect Gilbert Colyn, with inspiration from two modernist icons: the Glass House by Phillip Johnson and Farnsworth House by Ludwig Mies van der Rohe is in a class of its own.
    • 22 Jan 2018
      2017 was a challenging year for the South African property market in general, despite small pockets of thriving activity in areas like the Western Cape. As we head into 2018, Tony Clarke, Managing Director of the Rawson Property Group, casts his eye forward to property trends and market influences that could make their impact felt in the New Year.
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us