It’s ideal time to diver­sify into off­shore mar­kets

Daily News - - MONEY - Staff Re­porter

AS GLOBAL prop­erty in­vest­ments grow and lo­cal in­vest­ments un­der-per­form, now is a good time to diver­sify your prop­erty port­fo­lio.

The prop­erty mar­ket in the UK is show­ing ex­cel­lent growth, while the real value of South African house prices is de­clin­ing, mak­ing now the time to hedge your South African prop­erty in­vest­ments by in­vest­ing in the UK prop­erty mar­ket.

In­ter­na­tional prop­erty spe­cial­ist and Hurst & Wills di­rec­tor Lisa Bathurst said with the slow growth at home it was a great time to diver­sify into off­shore mar­kets, cre­at­ing a bet­ter global wealth strat­egy.

“South Africans are vul­ner­a­ble at the mo­ment,” said Bathurst. “As an emerg­ing mar­ket, South Africa’s econ­omy is im­pacted by ex­ter­nal fac­tors out of our con­trol. Add to that the ex­ter­nal debt, in­fla­tion and low em­ploy­ment fig­ures and it seems likely that the neg­a­tive growth will con­tinue for the next two to three years.”

In July, the FNB Prop­erty Barom­e­ter showed that when cor­rected for in­fla­tion, SA res­i­den­tial prop­er­ties had dropped in value. While year-on-year res­i­den­tial prop­er­ties grew by 4.1 per­cent, with the Con­sumer Price In­dex at 4.6 per­cent, real prop­erty prices are de­creas­ing.

FNB’s house­hold and prop­erty sec­tor spe­cial­ist, Jo­han Loos, said South Africa’s slow eco­nomic growth meant we could ex­pect year-on-year house price growth to be ad­justed even lower to 3.5 per­cent for this year, down from 4.3 per­cent last year.

Ned­bank’s se­nior econ­o­mist, Nicky Weimar, echoed this neg­a­tive out­look for the lo­cal mar­ket. She said al­though Pres­i­dent Cyril Ramaphosa’s pro­posed in­ter­ven­tions to boost the econ­omy were a step in the right di­rec­tion, they had failed to trans­late into eco­nomic growth or job-cre­ation, be­cause he had not been clear on pol­icy around the land ques­tion.

At a re­cent Rode REIM con­fer­ence, Weimar said she be­lieved the rand would re­main un­changed against the big in­ter­na­tional cur­ren­cies for the next few years. “This sug­gests it may be un­wise to hold off for a bet­ter ex­change rate be­fore in­vest­ing off­shore, con­sid­er­ing the De­cem­ber 31 dead­line for this year’s off­shore al­lowances,” said Bathurst.

The SA Re­serve Bank (Sarb) al­lows South Africans two off­shore al­lowances an­nu­ally. The sin­gle dis­cre­tionary al­lowance of R1 mil­lion is avail­able with­out hav­ing to ob­tain a tax clear­ance while the cap­i­tal al­lowance for up to R10m re­quires tax clear­ance from the Sarb.

“Th­ese al­lowances can be dou­bled if you are a cou­ple. With De­cem­ber 31 ap­proach­ing, peo­ple who want to use th­ese al­lowances for 2018 need to act fast.” |

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WITH house prices de­clin­ing, now is the right time to in­vest in the UK.

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