Foreign interest in SA real estate – curtailed tourism has negative impact
MAIN IMAGE: Myles Wakefield of Wakefields Real Estate; Herschel Jawitz, CEO of Jawitz Properties
Foreign real estate investors are still positive about buying property in South Africa. Over the past two weeks we spoke to Dr Andrew Golding of the Pam Golding Property Group and Richard Gray of Harcourts about their impressions of this market segment. This week Myles Wakefield of Wakefields Real Estate and Herschel Jawitz of Jawitz Properties share some of their thoughts on this important part of the South African property market.
“As would be expected – and will inevitably be playing out globally – our severely curtailed tourism will have impacted negatively on our foreign real estate investors,” says Wakefield, CEO of Wakefields Real Estate.
“Our experience with foreign buyers is they’re usually regular visitors who fall in love with the lifestyle, and then recognise it makes solid financial sense to own their own property here. Financially, we’re immensely attractive in every possible way – property prices and cost of living – and we’re unbeatable in terms of lifestyle, weather, and sheer beauty.
“Our Kwazulu-Natal buyers tend to choose secure estate living like that offered at Zimbali, Mount Edgecombe, Cotswold Downs and other golf, eco or sea frontage estates. This allows foreigners to stay for months at a time, then lock up and go without a backward glance. We have retired foreign owners who are golfers, who buy on estates and play five days a week minimum.
“Likewise, those who own luxury apartments such as those at The Pearls in Umhlanga, where they have the ultimate ocean lifestyle. These homes firmly tick the all-important security box, and many offer a cross-over of city-country-coast lifestyles.”
Jawitz agrees with this.
“The SA residential market is still attractive to foreign buyers simply based on what you can buy and what you pay, especially in the coastal regions. There are still foreign investors buying in South Africa, however, it has slowed given concerns about the pandemic and because people aren’t travelling. SA has received some negative publicity about our variants and slow vaccine roll-out, but this will eventually be sorted out.
“Load shedding could be a deterrent to foreign purchasers, but realistically, buyers in those upper price ranges can install off-grid alternatives which are, to them, affordable and a good investment in the property. Many of the newer estates are now focussed on self-sufficiency, so issues around load shedding are minimised. The recent announcement regarding easing of restrictions around electricity generation is also a welcome one – equally, Eskom’s positive steps towards debt reduction,” Wakefield contends.
According to Jawitz people buying in SA understand the risk and challenges of buying in a first – third world country.
“The load shedding now is no better or worse than it been for some time. In some respects, I think we are in a better position now than before regarding Eskom.
“As to the type of property targeted by foreign investors, leisure and holiday homes make up the majority. It remains to be seen if the work from home and buyers moving out of urban area to work from home will extend to working from foreign countries.
“I think there is more good news coming out of South Africa which over time may result in increased foreign investment in the property market. The urgent challenge is Covid-19 and the vaccine rollout.
“I believe that some of the ‘fizz’ that we say post lockdown in 2020 has gone out of the market but demand remains steady for well-priced properties driven by low interest rates, attractive prices and solid bank lending. This should continue for the balance of the year,” Jawitz said.
According to Wakefield we, as South Africans, tend to focus more on local political noise than do foreigners, who look more at the global and financial outlook and realities.
“Our political landscape will play a role, but essentially, we’re in a better place today than we were in 2018. Of course, if the country’s progress across the board was faster, we’d have more foreign buyers – we’d also have less competition between ourselves and other financially attractive destinations which have less perceived risk. I do still feel that the majority of our foreign buyers see a beautiful country with so many attributes, and realise how immensely affordable it is, whether as a retirement destination or holiday home.”
In terms of projections for the next six months, Wakefield is cautiously optimistic: “It’s a balancing act between low interest rates and their ability to stay low for longer, versus the Covid-induced economic hardships that are manifesting themselves. In the last year, the attractive interest rate story has dominated the property landscape, and we do think that’ll continue, but probably not with the same momentum.”