A strengthened rand, coupled with pressure on major currencies, arguably provides the best time for South Africans to invest offshore, particularly in real estate, say Andrew Rissik, CEO, and Megan Copley, CEO, Sable International Offshore Property.
Now is a good time to buy in the European market with the rand performing well and interest rates remaining low. Good temporary rand strength, driven by uncertainty in the East, puts pressure on the so-called ‘hard coins’ and we see a run on commodity prices, which is all Rand-positive.
Buying property in Europe may seem inaccessible to even wealthy South Africans, however, the entry point for investing in offshore real estate is lower than most people realize, with lending accessible to most investors, and a minimum investment threshold of R1 million to R2 million.
Why should South Africans invest offshore?
We do not encourage mass exodus from South Africa, and we do not advocate a drain on skills. South Africa is beautiful and its people should enjoy living in the country, but they should never forget to use their foreign capital assets and consider buying offshore assets as part of their balance sheet and hedging strategy – offshore properties are a great way to do that.
What makes it interesting is that it is much easier to get a mortgage on a property in the UK, and in Europe than we often expect. Sable International offers professional advice on real estate property worldwide, and in many cases where you can repay as little as £ 75,000 and with a low interest loan, you could get anything from £ 250,000 to £ 300,000.
£ 250,000 is a sweet spot for the South African investor market. Rather build a portfolio where you have low interest rates and high rents than vice versa in South Africa, where interest rates are high and rents are fairly low due to affordability.
Which countries offer good options for investment in property for South Africans?
Germany, UK and Portugal currently all represent good conditions for foreign investment.
Portugal is a great place to invest; an investor or a buyer can buy a gold visa or the route to a gold visa. This is different; you can actually invest in property despite the option of a passport to European nationality. Property in Portugal is a safe haven, and they have just had an excellent tourist rating. Lisbon is an Alpha city of Europe that attracts tech nomads.
The city offers job prospects, a good lifestyle and a rich culture. South Africans are attracted to places where they can find a community of other South Africans, and Portugal has already attracted many expat South Africans.
What makes the UK an attractive option for South Africans?
The UK has been through Brexit and Covid, but it is still a strong market. The pound is currently relatively weaker in relation to the rand, with it currently sitting below the R20 mark.
The UK market is interesting because it attracts so many foreign investment. People have so much trust in the UK, and value is all about trust. How you buy and why you buy shows how confident you are about a brand and its stability, and the
The UK property market has always remained one of the most stable. Even though there are declines in property prices, there is a general year-on-year increase in those prices. Although there was a period in the recession when property prices came down, they are back to previous crash prices.
The UK has an abundance of home loans and interest rates are lower
There are property brands in the UK, for example large cities within the UK and suburbs where one can buy a property with R2 million and take out a mortgage abroad because South Africans can get mortgages in the UK. There are many lenders, more than 87 types of loans available and the interest rates are significantly lower than in South Africa.
Which cities in the UK should South African investors consider?
Foreign investors need to look outside London, as it is one of the most expensive cities in the world. At the moment, most of the property we sell is in Birmingham en Manchester, or on the edge of these cities. There is a strong demand for housing and tenants, as well as significant improvements to infrastructure and government investment in these cities.
New construction properties are great for an investor because there are fewer complications. The developer is responsible for a warranty on the construction. All your devices and fixtures will be new.
So practically speaking, there is less maintenance. If you were to deposit between £ 50,000 and £ 100,000 – around R1 million to R2 million, you could find assets ranging from around £ 175,000 to around £ 350,000. And that can be anywhere from a studio to an apartment with two bedrooms.
Offshore investments can help South Africans grow their wealth
There are many reasons to invest offshore. One is the strong currencies in Europe and Britain, which show lower volatility than the rand, making them safe currencies where you can grow an investment portfolio. Offshore investments in real estate are achievable.
With strong and well-considered investments abroad, South Africans can grow their wealth through capital appreciation of assets, but also hedge their currencies into euros, pounds or dollars, and, in many cases, take out a mortgage at a very low interest rate. or have a passive income through a rental investment. This provides a tangible, solid investment.
- By Andrew Rissik, Director, and Megan Copley, Director, Sable International Offshore Property
The entry point for South Africans buying property in Europe is lower than you think – these countries offer the best options
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