Foreign Property Buyers Continue to Invest in Gauteng

Whether interest is booming or waning, it is not unusual for facts about foreign property buyers in South Africa to be met with some surprise. During years of market buoyance, there is often a perception that a large chunk of total residential sales, particularly in Cape Town, are attributed to foreign buyers. And in times of economic and political uncertainty, somehow locals find it hard to believe that foreign property investment may even be on the up.

So, what is the story here?

According to Lightstone, South Africa’s leading data experts, foreigners contributed just under 3% (7 776 units) of the 267,856 residential property purchases registered at the Deeds Office in 2022. This was an increase from 2% (4 603 units) in 2019.

Properties purchased by foreigners vs total residential property salespropertiesPurchasedByForeignersSource: Lightstone

It is interesting to note the spike in foreign buyers in 2021, and this could have something to do with the reason that interest in South Africa has not waned but increased, says Rupert Finnemore, CEO of EasyProperties.

“After the global lockdowns and economic downturns associated with the Covid-19 pandemic, South Africa, with its inimitable lifestyle and favoured climate drew significant interest from the international community who were also able to find value for money, compared to the rest of the world.

“Today, despite South Africa’s energy crisis and political uncertainty, this is probably still the case,” says Finnemore.

The Interesting Fact about Gauteng

While foreign interest in the picturesque and municipally stable Western Cape is well known and results in the bulk of foreign investment in terms of Rand value (64% of 2023 sales up until August), it may surprise you that most sales to foreigners, in terms of volume, happen in Gauteng.

Properties purchased by foreigners vs total residential property salesWhereForeignersBuyingSource: Lightstone

It seems that for better or worse, Johannesburg is still the economic powerhouse for the rest of the continent and having a property foothold, whether that is a second home or lock up and go option, instead of a hotel, is driving foreign investment in Gauteng.

Source: Lightstone

“When we look at the suburb breakdown of total sales to foreign buyers in South Africa, as well as the fact that most of the sales are attributed to sectional title and estate properties, the myth that those buyers are buying up the shores of Clifton is very quickly dispelled.

From the data, I think it is safe to assume that the commercial viability of Gauteng, which remains appealing to the captains of industry and foreign diplomates to the rest of Africa, is driving the foreign buyer market,” says Finnemore.

How Much are Foreigners Spending?

In terms of price bands, according to Lightstone, the bulk of these sales (51%) fell into the R1m-R3m.

Foreign purchase bands: 2019 - August 2023foreignPurchaseBands2Source: Lightstone

The Younger Foreign Investor is Here

Finally, the profile of the foreign buyer has also changed over the years.

The 65+ age group has dropped from 19% in 2010 to 13% in 2021. In addition, the 50-64 age group has dropped significantly, from 38% in 2010 to 19% in 2021. By contrast, the 36- 49 age group has increased from 29% in 2010 to 48% in 2021, while the 18-35 age group has increased from 14% to 20% over the same period.

“I think the fact that the appetite for South African property by foreigners has changed to reflect a much younger demographic is further encouragement. In essence, our appeal has widened from the traditional retired swallows to commercially active residents who choose to work globally from anywhere in the world.

“For existing sectional title investors in Gauteng, the vote of confidence from the rest of the continent, should bode well for long-term investors,” concludes Finnemore.

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Source: Lightstone

Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by an employee of EasyEquities an authorised FSP (FSP no 22588) as general market commentary and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information (i) contained within this research and (ii) received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.

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