Where do South Africans invest?

Konzerthaus, Berlin.

A recent survey on where South Africans choose to invest reveals that 28% invest in local property, and 3% in property offshore, while almost half (45%) have no money in any investment assets at all. The survey was conducted among online South African adults aged 18+.

The global investment trends survey was commissioned by property investment firm IP Global and conducted by YouGov. It polled the public in five countries – Hong Kong, Singapore, the United Kingdom, United Arab Emirates and South Africa.

Over 1000 online South African adults were asked what investment assets they held, as well as their preferences and key concerns when it comes to investing in overseas real estate.

When asked to pick where they would consider investing in property abroad from a list of 8 locations, the majority of South Africans chose the United Kingdom (36%), the United States (34%), and Australia (29%).

Commenting on the results, George Radford, Africa Director, IP Global, said: “The United Kingdom remains a favourite for South African investors, who are looking to pockets of value in outer London and to ‘Northern Powerhouse’ Manchester where property prices are expected to grow by 26.4% between 2016 and 2020. In the United States, Chicago is emerging as a major city to watch with average yields of 7.9%, while in Australia we’re still seeing huge amounts of interest in Melbourne and Brisbane.”

The cost of foreign transactions (47%), tax considerations (46%), and fluctuations in currency (44%) were each selected by nearly half of South African respondents, when questioned on reasons for not wanting to invest offshore.

Interestingly Radford says that these are primarily reasons for investing offshore.

“South Africans, over all other markets taking part in the survey, are most concerned about costs and currency fluctuations due to South Africa’s volatile economic climate,” he explained.

“However it’s in times of uncertainty that we notice more and more people investing in stable asset classes such as property. Many of our clients are liquidating their share and local property portfolios in favor of investing in property offshore – ensuring they have fixed assets, in addition to the fact that they are not solely Rand-asset based.”

Respondents also cited poor understanding of local laws (40%) and political instability (37%) as reasons not to invest in overseas property markets.

“Investor sentiment is undoubtedly dampened by the prospect of political uncertainty, which is why South Africans have historically favoured investing in safe haven markets. The UK and Australia are good examples of robust, well-regulated, highly transparent markets where real estate prices have historically increased steadily over the medium to long term,” Radford added.

*All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,003 adults. Fieldwork was undertaken between 12th and 22nd January 2016. The survey was carried out online. The figures have been weighted and are representative of all South Africa adults (aged 18+).