Overview Of Property In South Africa

The real estate market in South Africa has gone through some turbulent times. During the Apartheid period, the non-white immigrants from China, India, and other countries who were brought into the country to work were not allowed to own land, engage in trade, or apply for citizenship. The discriminatory acts compelled these immigrants to slowly begin to open their own businesses which enjoyed a growth spurt once the Apartheid period ended. This was the only time they were free to buy land.

However, it was just in 2007 that the real estate market enjoyed its best year which was unfortunately followed by a 2 year dearth where property prices fell by as much as 30%. It was in 2010 that property prices began to pick up and remain stable. One could only imagine the impact this had on businesses like hotels in Durban, amongst a wide variety of others.

Some of the factors that stalled the growth of the real estate market in the country are the bank regulations for loans and lack of good schools in some areas. Since South Africa does not limit or restrict foreigners from buying land in the country, there are a lot of buyers from Europe that stream in on a regular basis. Recently, there has been an increase in Canadian and American buyers. Many of them are drawn by the picturesque scenery, perfect weather, and diversity.

The real estate in Winelands, for instance, has been seen major developments which have caused the prices of property and new houses to sell for as high as US$1.7 million. Luxury homes in the Cape are selling for as much as $3.5 million or 30 million rand if it comes with acres of land. Many foreigners are willing to invest in South Africa because the ROI on their real estate investment is very promising. The 2010 FIFA Cup that was held in the country did a lot to promote the country as an ideal investment opportunity with so much beautiful and pristine land.

In addition, an international yearly real estate survey that was published this January 2013 revealed South Africa as the 17th most desirable investment markets in the world. Compared to other emerging markets, the commercial property in South Africa is better developed and organized. The country is being compared to countries like Singapore, Saudi Arabia, and Qatar in terms of growth in the real estate market.

Foreigners that plan to buy real estate are not required to pay transfer tax if the property they buy is to be used for business. If the land is commercial property but not used for business, there is the 14% VAT that has to be paid.

One of the most active groups investing in property in South Africa is Dijalo Property Services Pty Ltd and the Redefine Income Find which manages the Dipula Property Fund. It was established in 2006 and is now worth 775 million rand with 92 properties in their portfolio. They are concentrating on rural development and acquired property in Limpopo and KwaZulu-Natal in the hopes of encouraging sales from low income families which they see as having a higher growth potential than the high income households.

Lastly, the Internet has had a positive effect on the property market, giving people with the appropriate computer hardware access to information at times that are most convenient to them.