Considering building your property portfolio? We’ve outlined below a few reasons why you should consider investing in property in South Africa.
Property shortage in South Africa
The country’s turbulent political past has left South Africa with a shortage of good housing and the government has made solving the problem a high priority. Furthermore, South Africa’s middle class is steadily growing, which is also increasing the demand for homes. This will result in a long-term structural growth potential within the South African property market, with people migrating to better neighbourhoods and more expensive homes, set to continue for a long time to come.
‘Semigration’ driving property prices in coastal areas – particularly in younger market
South Africa is seeing a trend of locals moving away from the economic centres towards areas that offer a better quality of life. This is creating new property hotspots across the country – where affluent, middle class South Africans are looking to relocate, freed up by ‘work from home’ opportunities. Cape Town was recently voted one of the Top 50 cities for remote working, beating centres like Lisbon, Portugal and Wellington, New Zealand. An increasing number of international remote workers are also moving to South Africa, and in particular Cape Town, to achieve greater quality of life at a fraction of their usual living cost in Europe or North America. This is another key driver for the buy-to-let market where many holiday makers look to stay on, or revisit as semi-permanent residents, and are able to work remotely.
High property rentals rate
Relatively high interest rates and escalating inflation has caused an escalation in the number of people choosing to rent rather than buy property in South Africa. This means that the buy-to-let market is becoming an increasingly popular property investment option around the country, particularly in the bigger cities.
Top holiday destination
Holidaymakers put South Africa near the top of the list when it comes to prime holiday destinations. There is a location to suit any taste, from azure blue sea and sandy white beaches, to lush green winelands set in the mountains, extensive nature reserves and game parks with an abundance of wildlife. With so many visitors flocking to South African shores to take advantage of the excellent climate and endless natural beauty, the demand for quality property is always high, especially in cities such as Cape Town.
Favourable exchange rate and affordability
If you are earning pounds, dollars or euros then you are light years ahead of locals when it comes to the affordability of property investment in South Africa. More and more foreigners are seeing South Africa as the ideal property investment location, particularly in light of the favourable exchange rate, as well as the fact that the economy is the second strongest on the African continent. The average house price in South Africa in 2021 was Rand 1,352,712 which equates to around Euro 78,000 or GBP 66,000.
According to the IMF, Sub-Saharan Africa is projected to be the second fastest growing region in the world between 2022 and 2027, with an average growth rate of 4.12%. Cape Town is considered a gateway to Africa with a stable economy and good infrastructure, and Cape Town International Airport has been voted the Best Airport in Africa for the last six years running.
Cape Town is also seen as Africa’s Tech Capital. According to Wesgro, the Cape Town-Stellenbosch corridor is home to over 450 tech firms, employing more than 40,000 people, making the ecosystem bigger than Nairobi and Lagos combined. Amongst those firms are Amazon, who are currently developing their new African Headquarters in Observatory near Cape Town, and already employing over 3,000 full time staff in and around the city, and Naspers, one of the largest media and technology companies in the world.
And it’s not all business – South Africa is the 8th largest wine producer in the world and produces 4.5% of the world’s wine, with the majority of South Africa’s wine coming from the Western Cape.
So what are you waiting for? Get in touch today to find out how we can help you invest in property in South Africa!