Investors urged to buy local
SOUTH AFRICAN investors should be cautious about taking advantage of the increased offshore investment allowance, especially if they are contemplating property investments, says Rawson Properties chairman Bill Rawson.
The Reserve Bank recently announced that an amount of up to R4 million a person can now be invested overseas by South Africans. However, Rawson warns that “all sorts of difficulties crop up on foreign property buys”.
“To take just one example, the conditions under which mortgage bonds are issued may be different from those in South Africa: certain foreign banks limit the term of their bonds to relatively short periods after which they reserve the right to alter the interest rate.”
Rawson says neither the capital appreciation growth rates nor the return on investments abroad are likely to be as high as in South Africa. “Commercial property here is still giving an average return of 8.5 percent and residential returns around 6 percent,” he says.