South Africa is gaining in stature as a destination for overseas property investors. What is behind the boom, and what does it mean for the rental market?
Seeff Property Group reports that, as at early October, foreign buyers had snapped up more Western Cape properties than in the whole of 2021 or 2022, and the province appears to be the fastest-growing market for overseas investors – especially those in search of luxury properties.
Meanwhile, according to Lightstone, Gauteng still attracts the biggest share of foreign property investment, while KwaZulu-Natal also received significant interest.
What (besides the obvious) is the attraction?
At the top end of the market, South African prime property is seen as a good growth prospect while also being relatively affordable. Earlier this year, global real estate company Savills made headlines by putting Cape Town fifth on its World Cities Prime Residential Index – the only city in Africa to make the list. The firm forecast price growth of 2-3.9% in 2023 during a time of global slowdown, and at $260 per square foot for prime property, it’s also the most affordable city on the list.
Analysts at Seeff, Pam Golding and Savills have also pointed to high inflation in Europe, the weakness of the Rand compared to other currencies, growing confidence in the SA market, and a growing desire from investors to diversify into new markets – plus, of course, the appeal of South Africa’s lifestyle and climate.
What does it mean for the rental market?
While many foreign buyers are looking for retirement or holiday homes, rental agents can also look forward to an influx of foreign landlords – especially in the Western Cape, Gauteng and KZN. As Lightstone’s data shows, many foreign investors are looking for low-maintenance, lock-up-and-go sectional title and estate properties. With limited ability to check in on their properties themselves from abroad, they are also likely to look for help from expert rental agents if they decide to rent them out.
Working with overseas landlords comes with some extra admin for agents. The new Approval for International Transfers process that came into effect this year means more paperwork is needed to transfer funds abroad.
But PayProp-powered agents can keep investors in the loop no matter where they are in the world with automated invoices, live payment updates, and self-service access to payment records through the PayProp Owner app.
