Foreign property ownership
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