Advice and Opinion

Increased tourism could lead to increase in foreign buyers

The latest figures (November 2013) from Stats SA show that income from tourist accommodation figures have increased year on year by 12,8% and this, in turn, “we believe, has led to the increase in enquiries about property on the Atlantic Seaboard from people from out of town that our branch has experienced,” says Helen Hoekstra, manager of Knight Frank Residential SA branch in Sea Point that covers this area.

Gail Gavrill, one of the Knight Frank agents who works predominantly in the Clifton and Bantry Bay areas, has reported that, of those prospective buyers she has shown property to over the last three months, over 90% of them were buyers from overseas. These buyers were predominantly from United Kingdom, Germany, Sweden and Switzerland, she said.

“With the exchange rate being around R15,30 to the Euro at present, it becomes very attractive to European buyers to buy South African property once again,” said Hoekstra.

John Loos’ latest FNB Property Barometer report on the effect that the drop in the rand will have on property, says “In dollar terms, the year-on-year drop in the FNB House Price Index for December was -9.6%, in Pound terms -10.9%, and -13.5% in Euro terms. The cumulative drop since as recently as July 2011 has been quite extreme -19.7% in Euro terms, -22.9% in Dollar terms and -24% in Pound terms. So, for a foreign property investor these days, the SA market is far cheaper.”

While Loos says he does not think that this will bring foreign buyers rushing in, and he says that “some may take advantage of “bargains”, but we doubt whether it would have a significant impact, in the same way that SA’s goods and services exports never seem to be boosted dramatically by a weaker Rand.”

Hoekstra’s opinion differs, she says that the exchange rate being in foreign buyers’ favour right now, she feels, makes it more attractive now than it did a year ago, and if buyers were hesitant before, this might tip them in the direction of buying. For example, a house that was listed at R10 million a year ago would have cost €771 604 but now they would pay around €653 594. This is a considerable saving, she said.

“In addition, with the increase in demand for holiday accommodation in the Cape, a foreigner buying a holiday home here will find it easier to rent their home out on short lets when they are not in South Africa,” she said. “The Knight Frank Residential holiday villa letting division has increased their turnover this year and if there were more homes available to rent out, we would easily have filled them. Currently we have villas on our books that are achieving rentals of up to R20 000 per day, which makes this sort of rental a good proposition if the home might stand empty for extended periods of time.”

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