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Buyers from BRICS countries cash in on our weak currency

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On July 25, delegates from the four foreign BRICS countries will descend on South Africa for the 2018 BRICS summit, and with the falling rand a huge attraction for their currency conversions, one should not be surprised if they decide to snap up some local homes on the market.

Statistics show the appetite of foreign investors for luxury property in South Africa continues to rise, and although European and British investors are “always quick” to spot the potential in the weaker rand exchange rate, Berry Everitt, chief executive of the Chas Everitt International Property Group, says there has been a “big interest” from those in the BRICS group, namely Brazil, Russia, India and China.

“(In these countries) the word is spreading among a growing number of affluent investors about the lifestyle on offer here, and the value for money in our luxury real estate market.”

Major attractions for foreign investors, Everitt says, are the weather, scenery and wildlife, good financial infrastructure and the relatively low cost of living compared to the quality of life.

Although the latest stats from Mercer show Joburg and Cape Town are ranked at 191 and 199 out of the 209 most expensive cities in the world, these cities, and Durban, are ranked highly among the most liveable cities in the world. Durban came in at number 89, Cape Town at 94, and Joburg at 96 out of 231 cities on the quality of life list.

Rory O’Hagan, who heads the Chas Everitt International Luxury Portfolio division, says South Africa is attractive to affluent investors from the BRICS group, especially from Brazil and China, which have stronger currencies than ours.

“And, major Brazilian cities are more expensive than South African cities and offer a lower quality of life, according to Mercer. Sao Paulo is ranked at 26 for cost of living but 122 for quality of life, while Rio de Janeiro is ranked 56 for cost of living and 118 for quality of life.”

Everitt says affluent Chinese investors keen to gain access to African markets have realised they can buy at least twice as much property for their money here as they can buy in their home country.

A 2016 research report from the Centre for Chinese Studies at Stellenbosch University stated that real estate has become one of the leading sectors for Chinese investment on the African continent. During the preceding five years, China had invested $16.8 billion in the real estate sector in sub-Saharan Africa, or more than double the investment recorded during the preceding five years.

At the time, Pam Golding Properties revealed that an analysis of Chinese individuals owning property in the Cape metro revealed a preference for freehold properties in prestigious locations, with waterfront properties, vineyards and wineries particularly popular.

“An increasing number of Indian and Russian investors are also discovering rupees and roubles will buy much more property in South Africa than in London, New York and their other favourites,” he says.

“We expect the demand for luxury homes in South Africa to keep growing, especially in estates around Joburg and along the North Coast of KwaZulu-Natal.”
New research from Lightstone reveals that foreign ownership in the local property market has experienced an encouraging upsurge over the past few years, with an increase of 42% in January 2018 compared to the same period in 2017. Gauteng and Cape Town are at the top of the purchasing pile, says Hayley Ivins-Downes, head of property at Lightstone.

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