CALLING ALL INVESTORS - Weak Rand good for luxury property

06 Feb 2014

The weak Rand is enabling South African luxury property buyers and high net worth individual investors to turn to bricks and mortar as a store of value, says Lew Geffen, chairman of Sotheby’s International Realty in SA.

Located in the lush suburb of Sandhurst inJohannesburg, this three bedroom home is selling for R10.5 million through Sotheby's International Realty Craighall. Click here to view.

Geffen explains that since the devaluation of the Argentinian peso and the Turkish lira sparked a loss of confidence in emerging markets, and a major sell-off that worsened with news of weaker Chinese manufacturing, political turmoil in Thailand and the platinum strike in SA - is likely to keep currencies like the Rand under pressure.

He says these buyers and investors know that property is much more likely to retain its value than cash in such situations and their moves to protect their assets against depreciation have added further impetus to the top end of the residential property market, which has in any case been performing well for the past year.

As an example, he says they sold a property in Sandhurst for R20 million to a Johannesburg executive and on the Atlantic Seaboard a house was sold for R50 million to a South Africa buyer.  

“At the same time, the lower Rand exchange rate has resulted in an increase in foreign buyers who are now able to acquire much more property with their dollars, euros and pounds than they could have a year ago.”

Geffen notes that the Atlantic Seaboard especially is seeing huge demand from European buyers who have already exchanged their currency and are ready to buy just about anything priced at under R5 million– which equates to about €350 000 currently.

Sotheby’s International Realty is also seeing a trend for offshore money to make its way back to SA to be invested in local property.

“This is money that local investors or expats hold in offshore accounts and which currently attracts very low rates of interest,” he says.

According to Geffen, many of these investors buying in SA currently stand to make returns of at least 6 to 10 percent, he points out that they are free to take the money out of the country again if and when they resell.

Popular choices for such investors are resort and retirement areas such as the Cape West Coast, the Garden Route and the KwaZulu-Natal North Coast.

Taken from Property 24 News