In­vestors urged to buy lo­cal

Weekend Argus (Saturday Edition) - - PROPERTY -

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.

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