Foreign buyers not falling over each other for discounted SA properties
SA’s largest estate agencies are reporting mixed results in terms of house sales as the Covid-19 pandemic grips the SA economy.
Lew Geffen Sotheby’s International Realty chair, Lew Geffen, says international buyers are using Covid-19’s effects to their advantage as luxury and higher-priced home sellers have been willing to accept discounts on asking prices over the past few weeks.
A weaker rand has also made SA residential property more attractive to foreign buyers. The economic effect of the worsening virus outbreak has put the rand at risk of reaching R20/$.
“Investors globally are looking to make their money go further safely, and they’re finding further exchange discounting in the luxury end of the local market right now — up to 8% less than they’d have paid a month ago,” he said.
Geffen said sellers were also being more realistic in reviewing offers, especially in upmarket areas of Gauteng including Bryanston, Houghton, Hyde Park, Morningside and Sandton, where there has been little activity for the better part of two years.
“There has not only been a spike in sales to foreign buyers in recent weeks in Johannesburg’s upmarket suburbs but, interestingly, most of the sales (that) agents have concluded have been done completely online,” Geffen said. Buyers viewed the homes via virtual tours and the admin was all digital.
But Seeff Properties chair, Samuel Seeff, said his company hadn’t experienced growth in the number of foreigners buying SA property.
“There has definitely been no rise in foreign buyers and sales to foreign buyers. On the contrary, many have put their properties on the market [and] we don’t expect foreigners to flood back to high-end areas, for example, Cape Town’s Atlantic seaboard, to any significant degree any time soon.”
Seeff said a fallout from Covid-19 was the effect on tourism, with the company expecting a flood of short-term rental stock becoming available. “This has already been seen in the Atlantic seaboard and City Bowl areas in the Cape.”
High-end sellers had brought prices down by 20%-30% over the past year. “We have seen some urgency this year, given the level of seller fatigue. Coming out of lockdown, buyers will be able to negotiate further, up to 20% in many instances.”
Whether upper-end buyers will take advantage of the market is yet to be seen but “we don't expect to see any notable uptick in that regard”, he said. High-end buyers were largely driven by confidence about the future of the country, he said.
Pam Golding Properties CEO Andrew Golding said international buyers saw SA property as a safe haven. “As a consequence, during the lockdown period we are still receiving inquiries from international buyers, including the UK and Germany, where we are seeing an increase in buyers, and even Montenegro, for properties in various regions, including Gauteng and the Western Cape,” he said.
“One buyer is seeking a couple of properties here for holiday and investment purposes, another from Germany is looking to relocate here permanently, while a UK buyer is wanting to buy now to capitalise on the favourable exchange rate,” he said.
Somerset West, which has a large German-speaking community, was sought-after among buyers from Germany, with inquiries ranging from R2.5m for a beachfront apartment in nearby Strand to Somerset West house on a large plot selling for R15m, as well as a farm priced at R45m.
Golding said SA appeared to be dealing with the crisis quickly and decisively. “As soon as signs of a global or local recovery in the wake of the pandemic emerge, the attractive pricing offered by world-renowned subregions like the Atlantic seaboard, with its compelling lifestyle appeal, may well attract foreign investment once more.”
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