For­eign prop­erty own­er­ship

Finweek English Edition - - IN THE NEWS -

South Africa is not the only coun­try at­ten­tive to for­eign prop­erty own­er­ship. There are those that do not al­low prop­ert y own­er­ship by for­eign­ers, while oth­ers have par­tial re­stric­tions like lease­hold or des­ig­nated ar­eas for for­eign buy­ers.

Of­ten the re­stric­tions come about due to that coun­try’s con­cerns about for­eign own­er­ship push­ing up prop­erty prices and lo­cals be­ing priced out of the mar­ket.

While s eem­ingly not t he case lo­cally, on the ta­ble this year is the Reg­u­la­tion of Land Hold­ings Bill that will seek to im­ple­ment re­stric­tions on for­eign own­er­ship in SA.

For­eign res­i­den­tial prop­erty buy­ing ac­tiv­ity lev­els re­vived in 2014 (from a low of 2% in 2010) on the back of the rand’s de­pre­ci­a­tion and the re­turn to pop­u­lar­ity of prop­erty as an as­set class. While not the high of 7% reached in 2005 at the height of the boom, FNB’s Es­tate Agent Sur­vey es­ti­mates for­eign buy­ing pat­terns of 5.5%, with t he Cape Town re­gion experiencing the strong­est re­cov­ery in for­eign buy­ing lev­els, around 13% of to­tal buy­ing in that re­gion.

Yet for­eign land own­er­ship in SA is a mere 3%, ac­cord­ing to Deeds Of­fice records, points out An­drew Golding, chief ex­ec­u­tive of the Pam Golding Prop­ert y group. Of t he 280 395 reg­is­tra­tions be­tween 2013 and 2014, tracked by prop­erty an­a­lyst Light­stone, only 8 530 were to for­eign buy­ers, to­talling for­eign in­vest­ment of R9.7bn. At the same time, for­eignowned prop­erty worth R11.3bn was sold, ex­ceed­ing for­eign pur­chases by R1.6bn.

“Cer­tainly it is worth re­it­er­at­ing t hat t he level of for­eign buy­ers of res­i­den­tial prop­erty in South Africa is so in­signif­i­cant rel­a­tive to the to­tal mar­ket, but more im­por­tantly, the benefits of for­eign in­vest­ment in prop­erty in this coun­try and the knock-on ef­fect of that in­vest­ment far out­weigh any per­ceived neg­a­tive,” says Golding.

Sev­era l f i r s t- world countr i e s , cog­nisant of the inf low from for­eign di­rect in­vest­ment, have few, if any, r e s t r i c t i ons on f oreig n proper t y own­er­ship. The UK is one of them. For­eign l a nd own­er­ship t here is es­ti­mated to be 15%, around 2m for­eign own­ers, many of them in­vest­ing in Lon­don’s su­per-prime ar­eas like Chelsea, Kens­ing­ton and Knights­bridge.

Per­haps sur pris­ingly for some, for­eign­ers do not own the bulk of SA’s prime prop­erty – it is owned by South Africans. Even though the Cape metro has the l ion’s share of non-res­i­dent buy­ing, at best this amounts to 4%.

But when it comes to t he a rea

Sa­muel Se­eff

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