MAIN IMAGE: Samuel Seeff, chairman of the Seeff Property Group; Nadine Jocum, an agent with Seeff Camps Bay; Adrian Mauerberger, an agent with Seeff Atlantic Seaboard; Ross Levin, licensee for Seeff Atlantic Seaboard
“International buyers are a vital demographic for the SA property market. Generally, when these international buyers purchase a property, you can put an x5 multiplier on the knock-on economic effect as these buyers often invest in upgrades and renovating”, says Samuel Seeff, chairman of the Seeff Property Group, “These buyers bring in vital DFI (direct foreign investment) and beyond the benefit to the seller, agent’s commission, related services, and employees, legal fees, and property taxes for the government, they also spend on average more per capita in the economy compared to South Africans”.
Data from Lightstone Property indicates that foreign buyers accounted for just 3% of total transfer volumes in 2021 but paid on average 50% more for their properties than their South African counterparts.
Interestingly the sales data shows that foreign purchases were the highest in Gauteng (principally Sandton, and Pretoria), followed by the Western Cape, KZN, and the Eastern Cape. Nadine Jocum, an agent with Seeff Camps Bay shares that foreign buyers love the natural beauty of the mountain and seas and the closeness of all to other beautiful suburbs, the city, and the Winelands. They tend to spend a wide range from R5 million to R50 million but in the last season predominately over R20 million in the Camps Bay area.
Seeff notes that there are also the so-called “swallows”, who are mostly Northern Europeans (Germany, UK, Netherlands, Switzerland, etc.) who purchase a second home in SA and then spend up to 6 months of the year here to escape the cold European winters, many also retire to SA but still spend a lot of time between SA and Germany for example.
The ABCs of working with foreign buyers
A property transaction is a costly, and fairly complicated procedure, even if locally done. When it comes to a foreign buyer there are several factors, agents need to guide foreign buyers through:
Adrian Mauerberger, an agent with Seeff Atlantic Seaboard explains that foreign buyers need to be made aware of certain factors such as exchange control regulations regarding the movement of funds in and out of the country, the fact that they can only apply for 50% mortgage loans and that terms and conditions which may differ compared to what they are used to in their own countries.
IBN Immigration Solutions also notes that foreigners who wish to purchase property in South Africa must have a valid passport, a permanent residence permit, any valid visa, or an endorsement in their passport allowing them to reside in South Africa.
Potential delays (and possible solutions)
Ross Levin, licensee for Seeff Atlantic Seaboard finds that they are somewhat surprised with the timing that it takes to finalise the deals. Transfers can take place much quicker overseas, while here we can expect a transfer to take around 3 to 6 months.
Jocum believes that “It all depends on whether the buyer is in the country to view the property. Sometimes they make an offer subject to flying out to approve the purchase after doing a viewing. The sale agreement may also be delayed when the international buyer is under the impression to use a foreign property lawyer to assist them with the offer to purchase and is not familiar with our process. Experienced agents can guide them through the process, or there are local property lawyers and there are also local property lawyers who can assist with language needs if required”.
Mauerberger adds that “Deals involving foreign buyers may also have slight delays relating to the signing of the necessary transfer documents (if they are not in the country), exchange control regulations and the transfer of funds, as well as language and translation issues. To ensure a smoother and more efficient registration process, foreign buyers should work with experienced professionals such as conveyancing attorneys who are familiar with the specific requirements for non-resident property transactions”.
Jocum notes that the issue of transfer documents can be resolved by appointing a Power of Attorney in South Africa, should the buyer not be able to be in the country at the time.