South Africa Investment Growth

Many factors make South Africa a good property investment arena. Here you can read about what keeps investors excited by South African property.

A growing middle class and the 2010 World Cup have helped bring about a new demand for property in South Africa, especially within the rental market. Admittedly 2007, with the introduction of higher interest rates has seen a slowdown in property prices, but this is considered to be an advantage by many investors as they now have the opportunity to buy into a slower market. In addition, the recent increase in interest rates (2007) is driving the rental market upwards creating strength in the buy-to-let market. While growth has slowed to 8-9%, it hasn't stopped and it is predicted to recover to double digitsagain in 2008, in line with the imminent drop in interest rates.

President Thabo Mbeki actively welcomesd foreign investment and developers of new residential and commercial properties, and those undertaking renovation projects in the major cities now receive tax breaks of up to 20% for five years. Investors on a smaller scale who are looking at buying one or two units are also in line to benefit from the increasing demand for rental properties in the internal and external tourism sectors.

The shortage of housing and slow building rates keeps the property market buoyant and off-plan purchases continue to give investors very good returns of around 20 to 50% per annum, especially in areas of the Eastern Cape on the Garden Route and West Coast developments. Cape Town and the surrounding suburbs as far as the redeveloped Muizenberg are crying out for homes as the middle-class in this region grows at unprecedented levels. Less developed, future hotspots are predicted to be located at Kwa-Zulu Natal in the areas around Umhlanga and Ballito.

Capital Growth Predictions

Capital is unlikely to maintain the very high growth rates achieved during the 2004/5 periods, but, according to the ABSA (one of the largest mortgage lending banks in South Africa), growth is predicted to maintain a steady rate of 12 to 13% per annum. The levelling out of property prices has led to an increase in interest from international property buyers, which in itself maintains a steady growth rate.

Rental Yield Predictions

The recent increase in interest rates, which is responsible for the slowing of the property market, is predicted to be responsible for a rise in rental demand and a consequential hike in rental rates. Rental rates in 2007 are predicted to rise by 12 to 15% according to the South African property pundits.

South Africa Economy

The predictions for the South African economy are for steady growth over the next ten years. Tourist numbers are on the increase and 2006 saw a growth of over 16% in this sector, with visitors from the UK and the rest of Europe as major contributors. .

Reasons Why South Africa is an Intelligent Property Investment Location

  • An exciting tourist destination with varying climatic conditions according to region, South Africa has something to offer everyone.
  • The low rate of the Rand (ZAR) against other major world currencies means that properties are cheap in comparison with European standards.
  • Encouraging tax breaks are available for property investors in certain circumstances and areas.
  • A growing middle class and a healthy tourist market is fuelling the demand for holiday rentals.
  • English is the official language and the property purchase system is transparent and well regulated.
  • South African climate and sporting outdoor lifestyle is encouraging many people from European countries to retire to South Africa.
  • Incredible beaches, a plethora of wildlife, varied scenery and the “reverse climate” attract visitors from all over the world.
  • Steady economic growth is predicted to keep stable over the coming years.
  • The 2010 World Cup is stimulating demand for accommodation.

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