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Reacting to President Jacob Zuma's state of the nation address (SONA) of yesterday, Seeff chairman, Samuel Seeff has again reacted to the move to restrict foreign property ownership.
According to Lightstone data, only about 3% of all property in South Africa is foreign owned and, at best, 2% of all annual purchases are done by foreigners*. The reason for wanting to restrict ownership and who this is meant to benefit is then rather difficult to gauge, he says.
It seems to just be that time of year again when the land debate regrettably turns to foreign property ownership and, rather than advance a solution to the land issue, it sends the wrong message to investors and puts undue pressure on the property market.
Certainly insofar as privately held residential property is concerned, the wish to restrict foreigners seems to be more about politics than land redress, says Seeff.
It is not foreign visitors, but mostly those who reside here on a permanent basis that constitute the bulk of property buying, he adds. Consider also that as many foreigners sell their property each year, thus resulting in a negligible net effect, possibly even taking foreign buying into negative territory in real terms.
‘Foreigners’ (i.e. foreigners resident here and off-shore holiday home buyers) for example bought about 456 out of a total of 10 321 properties that sold across the entire Cape metro last year*. This is of course where the bulk of the actual non-resident buying takes place. Even across the richest and most expensive residential real estate strip favoured by foreigners, the Atlantic Seaboard and City Bowl, only just over 10% of all sales last year were to ‘foreigners’, says Seeff.
If you extrapolate this nationally, the picture remains similar. According to recent Lightstone data, only about 700* out of almost 24 000 monthly sales are to ‘foreigners’. While some R9.7bn in real estate sold to ‘foreigners’, about R11.3bn in foreign-owned property sold, thus leaving a negative net effect of R1.6bn.
The myth that foreigners buy the most expensive property and pay exorbitant prices needs to be dispelled conclusively, says Seeff. While the weak currency has made our real estate attractive, foreigners, like every buyer out there, wants to pay the lowest possible price. In fact, it is South Africans who understand the nuances and characteristics of the South African property market that are paying the highest prices.
The two highest prices ever paid for residential property were both South African bought, he says. A Capetonian paid R190 million for a Clifton apartment in 2013 while a Pretoria businessman paid R113 million for a penthouse at the One&Only at the V&A Waterfront.
Of the 51 most expensive properties sold last year, only 8 were sold to foreigners, mostly from the UK. The four highest prices were paid by South Africans – R70M for vacant land and R55.86M for a villa in Clifton, R64.9M for a villa in Fresnaye and R69M for an estate in Bishopscourt.
Most of the foreign buyers are so-called UK and northern European ‘swallows’ who travel south to escape the harsh European winters. They stay for 3-4 months over our summer and often bring friends and family. They bring Pound Sterling and Euros, shopping, eating out and visiting tourist attractions, all of which are vital job creators.
Making foreign buyers feel unwelcome is likely to have a knock-on effect on tourism, especially in the Cape where it is a vital driver of the local economy.
In any event, what constitutes a foreign buyer, he asks. Is it a permanent resident, someone who visits for up to 6 months or someone who just comes for a short-stay? What about those from the rest of the SADC-region and African countries like Nigeria who have growing business interests in Johannesburg and are looking to buy homes in Sandton. Do we want to discourage this?
If foreigners are made to feel unwelcome, they, along with their friends and family are likely to start looking elsewhere for their annual holidays and winter escapes. Tourism is vital for the economy and the biggest multiplier of jobs, adds Seeff. Most foreigners pay cash for their property and can in any event only borrow up to 50%. That is direct foreign investment.
Then there is the residual income that government receives in the form of rates and taxes and basic utilities as well as jobs created for domestic and external service providers such as property, pool and garden maintenance.
Foreigners also bring progress. The regeneration of the old run down Cape wine farms and Cape Town’s inner city development being two prime examples, but, says Seeff, also of leisure facilities and tourist attractions. All of this, Seeff says, brings money into the economy and creates jobs.
Finally, is this correct constitutionally? Can you be prevented from selling your own land/property to a buyer of your choice? Will restriction not just encourage deviant behaviour and circumvention?
Given that foreigners own a paltry 3% of property at best, the move to restrict ownership is not about retaining prime property for South Africans, these are already owned by South Africans as alluded to above nor is going to assist in the land redress, says Seeff.
We would rather encourage government to engage with industry experts before making statements that do little else other than to upset the market and create uncertainty. Especially considering that we are talking about a paltry 3% of property at best, he adds. If government feels strongly then yes, restrict the sale of government owned land rather than interfere with the free market principles of wiling buyer and willing seller.
While countries such as Australia restrict foreign ownership, many others such as the UK where about 15% of property is foreign owned, is open. Given the economic benefits of external investment, there seems to be no reason not to take the path of the latter. The converse is likely to impact negatively on the market and harm the economy.
Issued by Seeff PR Manager, Gina Meintjes, telephone 021 481 1044/079 886 4802, email: gina.meintjes@seeff.com or visitwww.seeff.com.
Cliff Jacobs (Nat Dpl Hotel Man (UJ). MPRE. GA Level 5 TEFL) Managing Principal / CEO Exquisite Hotel Consultants (Pty) Ltd Mobile: +27 (0) 84 413 1071 / +27 (0) 61 716 6951 Email: cliff@exquisitehotelconsultants.com Skype: cliff.jacobs Web: https://www.exquisitehotelconsultants.com © All rights reserved Terms and Conditions apply Scroll down to view our Hospitality Properties and Businesses for sale or lease or lease-to-buy or partnership arrangement or management agreement arrangement
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Cliff Jacobs (Nat Dpl Hotel Man (UJ). MPRE. GA Level 5 TEFL) Managing Principal / CEO Exquisite Hotel Consultants (Pty) Ltd Mobile: +27 (0) 84 413 1071 / +27 (0) 61 716 6951 Email: cliff@exquisitehotelconsultants.com Skype: cliff.jacobs Web: https://www.exquisitehotelconsultants.com © All rights reserved Terms and Conditions apply Scroll down to view our Hospitality Properties and Businesses for sale or lease or lease-to-buy or partnership arrangement or management agreement arrangement
2022-06-18 12:18
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