|Over the last two years, there has been tremendous growth in the number of British-based expatriates looking to buy properties back home in South Africa.|
Spurred on by the 1,4m South African expats that live in the UK we started nearly four years ago with a London office to help educate people about buying property, as most are first-time buyers and have little idea about the buying process and the costs involved. We then provided a service to help people buy, as it can be extremely difficult trying to co-ordinate everything from overseas. We’ve now evolved to a point where we focus on selling off-plan units in sectional title developments priced up to about R1,25 million.
IPS primarily selling property in South African urban nodes, which runs contrary to most developers belief that the main overseas market is for upmarket holiday homes.
Expats most popular areas are Johannesburg, Cape Town, Durban and Pretoria, in a descending order of market demand. Our biggest challenge strangely enough is not sourcing buyers but sourcing good quality developments and persuading SA developers to take advantage of overseas buyer opportunities.
Most developers will launch locally, and then try to sell their last few units overseas, almost as an after-thought, which is a gross under estimation of the expat market, both in terms of its potential and astuteness. Expats know the areas they are buying in, they almost always have strong local connections, and they are very internet-savvy. They know they are getting second-choice properties and in the process being charged top-dollar.
To overcome their treatment as an afterthought, which was highly negative, we at IPS are now now launching South African developments to the London market simultaneously with the local launch and offering the same investment opportunity to this market.
The intention is to take the entire launch experience to the UK. Whatever you see at a launch here – floor plans, DVDs, the model – we try to emulate that in London. The expat market is that big. When everyone talked about the massive ‘brain drain’ around 1999 and 2000, that’s the market. They’re young, educated professionals with serious earning power that have now settled in the UK. They have climbed the corporate ladder and now have money to spend with a voracious appetite to own South African property in the R500 000 to R1,2m price range. It’s a phenomenon unlike anywhere else in the world. They come from all over the country – Birmingham, Oxford, Bristol, even Dublin – to attend our launches.”
These are the ideal clients for developers to build long-term sustainable relationships with, as they will be buying property for the next 30 years. The forward thinking developers have realised this opportunity and have been willing to launch with IPS to this market.
In 2006 we sold 250 properties to this market valued at about R200m and this year we hope to come pretty close to doubling those figures.
We have 10 000 people on our database right now, and it’s growing by about 20 new subscriptions every day. Last year we struggled to get developers to buy into the concept, but that’s changing. We did two big launches for developers in Johannesburg and Cape Town that were very successful – beyond our expectations – and we’ve got another Cape Town development lined up for the mid-February, with excellent sea and mountain views, and in the right price-bracket. Now we’ve just got to find a similarly good development in Durban, which is eluding us, for some reason. But we’re working on it!”
IPS provides a full solution for overseas investors, from the launch and sales, through the bond origination, and assistance with the transfer process and the property management.
Kearsney College-educated Scott Picken left SA in 1999 to broaden his professional horizons. After completing a second degree, this time in IT construction, he and three other ex-Kearsney and UCT colleagues identified a need to link foreign and expats into the SA property market through a comprehensive property services giving birth to International Property Solutions in 2003. The company has representatives in Durban Johannesburg and Cape Town. This column was written during a recent visit to his Kloof family