Country Guides Country Guide: South Africa

Date Published:

18/11/2009

South Africa encourages foreign investment with no restrictions to foreign investors. But transaction costs are high. Arguably, however, the country is never again going to see four-fold property price increases in under a decade.

The FIFA World Cup may produce a ‘spike’ in prices but be careful that you don’t buy at feel good prices and end up with a hangover once the party’s over.

Investment Potential: Capital Appreciation

Let’s just repeat the amazing stats: house price inflation/capital growth – call it what you will – of 351 per cent between 1997 to 2006. Staggering. The largest bubble ever? Well prices haven’t fallen back that much – perhaps by 25 per cent against their peak in some cases, but it’s hard to make a case across the board for a great deal of capital appreciation in the short-term. In the longer term – why not? Home ownership is low and so should only go one way.

Investment Potential: Rental Yield

GlobalPropertyGuide.com reports that yields on apartments in Johannesburg are 13.25 per cent for two bedrooms; apartments in Cape Town have much lower yields at an average of 5.02 per cent. Holiday lets are more attractive in Cape Town. Holiday lettings website holidaylettings.co.uk has 80 per cent of its South Africa listed properties in the Western Cape and almost half in Cape Town. Prices start upwards of £250 pw.