Country Guide: South Africa
Why buy property in South Africa?
In recent times, property in South Africa has caught the eye of international investors from across the globe, with tens of thousands of second-home buyers already having flocked from Britain to grab their slice of the pie. The obvious attractions are the country's pleasant climate, stunning scenery, low cost of living and rapidly expanding infrastructure.
UK investors are also particularly drawn to South Africa as English is widely spoken throughout the country, while it also shares the same time zone as Britain. Though typical house prices remain among the lowest the world has to offer, average values have more than trebled in the past decade, making South African property a very appealing investment opportunity.
What's South Africa's property market like?
From 2011, South Africa joins the group of major emerging markets, which already includes Brazil, Russia, India and China, in what will now be referred to as BRICS. According to the country's Minister of International Relations, the move "legitimises South Africa as a future global power and as an investable country".
Even prior to the BRICS announcement, South Africa had been enjoying a surge in interest from foreigners, not least those looking for property with solid returns and an aspirant lifestyle. One of Africa's largest money lenders, the Standard Bank, has noted that confidence in the South African real estate market has grown significantly in recent years.
Popular areas in South Africa in which to invest
The key deciding factor for most foreign buyers will be South Africa's wide-ranging property prices. While city homes generally command much larger amounts than rural estates, it is the nation's coastal and beachfront dwellings that are most expensive of all.
Most Brits stick to the Cape region, with Cape Town being an established favourite, as well as wine-growing areas and the Garden Route. However, average prices in these parts of South Africa are likely to be much higher than in the rest of the country.
Over the past few years, homes on private complexes – particularly on golf, wine and equestrian estates – have become extremely popular with foreigners. These luxury ranches usually boast an incredible range of facilities, allowing buyers to enjoy South Africa's good points without the worry of crime that's often associated with its cities.
The property-buying process in South Africa
Most homes are sold freehold through estate agents, but while the purchase process is relatively straightforward, legal costs in South Africa tend to be very high.
Once both the buyer and seller have signed the contract, it is binding and neither party can withdraw from the deal without incurring strict penalties. On the upside, a deposit is not compulsory.
The main cost for which buyers are responsible is the transfer expense, which includes conveyance fees – around two per cent of the purchase price – and transfer tax. Levied by the South African government, this is usually between five and eight per cent of the home's value.
