Nigerians have been listed among some of the top foreign buyers of choice properties in different parts of South Africa, with particular focus on developing areas instead of highbrow areas of Pretoria, Cape Town, Durban and Johannesburg.
For instance, Nigerians and other foreign buyers purchased about 670 properties worth about R800 million in Kwazulu Natal and 260 properties worth about R23 million in the Eastern Cape. Checks reveal that there is a growing trend among the said foreign buyers to purchase properties in South Africa as investment, rather than for their own use.
For the investment analyst, this is a positive development, but not for our domestic economy in general and our property market in particular which is struggling with low demand at the upper end and low purchasing power and unaffordable factor for potential buyers at the lower end.
“Ours is a country with a very low homeownership level and very high housing demand-supply gap that could only be bridged when both public and private sector operators make the right and needed investment as these Nigerian investors have made in South African market”, an analyst said.
It is pertinent to point out again that Nigerians are lured to invest in foreign markets because the local market is relatively too expensive without a functional, accessible and affordable mortgage.
Industry analysts explain that the consistency South Africa’s economic policy in recent years and the fact that the country’s general election ended without a major hitch accounted for investors’ interest and attraction, adding that there has been a global growth in the number of high-net-worth individuals.
According to a recently released World Report 2014, the number of financially solid individuals worldwide rose 15 percent to 13.7million.
The buying trend has risen from 16 percent last year to 19.5 percent in the first quarter of this year, according to Lew Geffen, chairman and chief executive, Sotheby’s International Realty company.
Property sales to foreign buyers topped R6.5 billion worth of property with Africans grabbing a bigger slice of the pie in South Africa last year. BusinessDay investigation reveals that the depreciation in the value of the rand over the past two years has made South African property more attractive to those buyers with pounds, euros or dollars to spend.
Although the names of the beneficiaries were not mentioned in the report, the proportion of buyers from countries such as Nigeria, Cameroon, Zimbabwe, Angola and Mozambique had risen from 16 percent in the third quarter of last year to 19.5 percent at the end of the first quarter of this year. Foreign buying accounted for about 3.6 percent of the total value of residential sales across the country in the previous year.
Africa is expected to see the most rapid growth in the creation of millionaires over the next 10 years. These individuals are currently growing their real estate’s portfolios quite aggressively, which accounts for the growing number of buyers from other African countries.
They generally hold about 25 to 30 percent of their wealth in real estate. Although most of these are in developed countries, with increasing number of them desirous of buying investment properties in developing parts of the world, like South Africa, which is considered to remain peaceful and offer good growth prospects.\
Mike Ochonma
