South Africans buying property overseas and the passports that come with it

Globally, Covid-19 precipitated an instant and significant change in home and lifestyle priorities for many people. There has been a universal move to properties that will more easily accommodate the needs of homebound families and allow one to work from home.

And, in countries like South Africa, where the economic and social repercussions have been more severe, there has been a spike in emigration and off-shore investment enquiries – and the desire to have a firm Plan B in place, such as permanent residency in another country through property investment.

“An established agency with an international affiliation that affords them access to a vast global network will offer clients the considerable advantages of established relationships with a worldwide community of professionals and a wide-ranging marketing reach,” said Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty.

“Most people emigrating have a home to sell in South Africa and will also want to buy property in the country to which they are moving, which is not the easiest process at the best of times, but with travel restrictions, it can be a convoluted minefield.

“However, working with only one agency to sell and buy makes it a lot easier and also significantly reduces the risk of costly errors – and minimises the stress factor.”

Grahame Diedericks, manager principal in Midrand and International Liaison for the group, said that in addition to America and Europe, the company has also forged close working relationships with their counterparts in countries attracting a growing number of South African investors.

“South Africans can get a very respectable bang for their buck as well as a foreign residency in countries like Spain, Portugal, Cyprus, Malta and Mauritius, all of which are fast-emerging as leading destinations for property investments that deliver returns.”

Once largely dependent on tourism, Malta, an EU member, now has one of the strongest real estate industries in Europe due to stringent banking practices, 85% home ownership and major foreign investment, which have become pillars of its economy, he said.

Since the introduction of the Malta Individual Investor Programme (IIP) in 2014, there has been a growing awareness of the island’s considerable attributes and, according to a recent report by the Office of the Regulator of the Individual Investor Programme, has attracted over €1 billion in revenue since inception.

“And since the Cyprus government’s March 2014 decision to offer Cyprus citizenship to foreign property investors, the largest island in the Eastern Mediterranean has also grown exponentially in popularity among overseas investors.

“Cyprus has already issued more than 3,300 passports to foreign investors and their families, with property owners reaping the benefits. They are also earning a Euro-based income, with buy-to-let investments accounting for 25% of all property sales.”

The success achieved in emerging economies that have introduced schemes to attract foreign investment has not gone unnoticed, and a growing number of countries are following suit, said Diedericks.

He noted that Portugal launched its ARI/Golden Visa scheme in 2012, and it has fast become one of the most popular European property investment schemes.

There are minimal residency requirements; investors and their families naturalise for citizenship after six years, and tax is only payable if you spend more than 183 days in the country, he said.

“Spain is another central European country which now welcomes foreign investment, and the recently implemented Spanish Golden Visa (or “Property Visa”) grants investors automatic residency when they purchase property for €500,000 or more.

“Applicants are not restricted to residential property and will enjoy the same benefits if they purchase commercial property, land or a combination of properties.”

And, unlike the wealth visa, the golden visa does not require you to be in Spain 183 days of the year, although you have to visit at least once a year.

In 2017, the Netherlands joined growing the club with their Visa Residence by Investment Programme, also referred to as the Dutch Golden Visa Programme, which offers non-EU investors the ability to establish a foothold in Holland.

“The key criteria is that foreign investors must bring value and/or added value benefits to the economy, and the programme targets High Net Worth and Ultra High Net Worth Individuals, with stringent eligibility criteria and a minimum investment of €1.25 million.

“The Netherlands may be geographically small, but it’s an influential EU member country, boasting some of the highest living, healthcare and education standards in Europe,” said Diedericks.

Closer to home, Mauritius has become a firm favourite with South Africans who are buying property on the island and moving their families and companies to more tropical climes where an investment of $375,000 or more secures permanent residency.

“South Africans have become increasingly aware of the long and short-term financial gains of investing in Mauritius, and South Africa now accounts for almost one-fifth of foreign direct investment in Mauritius and around 40% of the buyers in property development schemes,” said Geffen.

However, money is still flowing both ways. Despite South Africa’s political uncertainty and the impact of the pandemic, South African real estate is still very appealing to foreign buyers, said Geffen, adding that the group’s International Referral intake is at its highest levels since 2019.

Not only are property prices lower than they have been in many years, but people are also getting zero return on money in banks overseas, so savvy investors are putting their money to work in markets where they’ll get bang for their buck.

Geffen added that local sellers are also more realistic in reviewing offers, especially in the upmarket areas like Houghton, Sandhurst, Morningside and Bishop’s Court, where there has been very little activity for the best part of two years.

“A number of sales have already been concluded digitally by agents in these areas, and most properties were bought physical sight unseen by buyers hailing mainly from Africa, UK, Canada and Germany with a preference for traditional freehold homes on large grounds.

“There has also been an uptick in foreign interest in Johannesburg’s affluent Neighbourhoods with buyers looking for a base in the central business hub of South Africa.”

“A number of coastal regions remain popular with foreign buyers,” said Diedericks, “with areas like Plettenberg Bay, Durban’s North Coast and the ever-popular Cape Town offering the lifestyle many foreigners are seeking but at a fraction of the cost of comparable international destinations.”


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South Africans buying property overseas and the passports that come with it