Tuesday, 6 August 2013

S/African market is new investment destination for Nigeria’s elite

South African property market, arguably the fastest growing in the black continent, is today an investment destination for Africa’s elite who are increasingly looking to invest in prime residential properties on Cape Town’s Atlantic Seaboard  with Nigerians featuring prominently in the leading pack.
The surging economies in countries such as Nigeria and Zambia, thanks to oil wealth and burgeoning tourism markets, have created a new wave of super rich who are drawn not only to the luxury of Cape Town’s internationally renowned and picturesque Atlantic Seaboard, but also to the comfort of bricks and mortar investment in one of the continent’s most politically and economically stable countries.
Business trade routes between Nigeria and South Africa are already firmly entrenched with that county’s Revenue Service reporting that in the first quarter of 2012, Nigerian exports to South Africa were worth $750 million and South African exports to Nigeria totaling around $150 million for the same period.
“We’re increasingly seeing buyers from across Africa, in particular Nigeria, investing in high end beach front properties. The number of private residences we sold to Africans of other nationalities in the beach front suburb of Clifton in March 2012 was 5, compared to more than 11 sales in March of this year,” says Brendan Miller, CEO of Lew Geffen Sotheby’s International Realty Atlantic Seaboard. “The average sale price for these transactions falls between $1.2 million and $1.5 million”, he adds.

These properties are, in the main, being sought as holiday home and buy-to-let investments so the buyers are opting for smaller lock-up-and-go properties with lower rates and taxes that require minimum maintenance. These ‘live on the beach’ properties are very appealing to tourists visiting Cape Town in the summer months, when they attract very high rentals.
Nigerians are among the investors into Sol Kerzner’s five star hotel and high end residential development ‘One & Only’ at the Cape Town Waterfront and they are buying very specific kinds of properties according to Miller.
“The Nigerian buyers we have dealt with are clearly not just buying into a lifestyle but want to know that the property will work for them financially and deliver consistent returns both from an income and capital gains perspective,” he said.
“The instability of the European markets over the past few years, coupled with the familiarity of countries closer to home means South Africa and its real estate market, which is currently well priced and enjoying a low interest rate period, is emerging as a front runner among wealthy Nigerian investors,” adds Miller.
That view is echoed by Michelle Sims- Handcock of Curries Direct, a currency exchange specialist: “There’s currently no restriction on foreigners owning immovable property in South Africa, but all foreign funds remitted to the country must be documented and declared to ensure repatriation and there is clearly a growing appetite for the South African real estate market Africa-wide.”
Miller says the appetite for South African and, in particular, Cape Town properties will continue apace and grow in the coming years, despite a call earlier in the month from Nigerian Minister of Information, Labaran Maku, that Nigerians invest at home.
In 2012, Nigerians remitted close to $22 billion back into Nigeria but given the opaque nature of Nigeria’s property market, both residential and commercial, many investors still choose to place their property bets elsewhere.
“South Africa has a relatively mature property market and there is significant data available to investors to track the relative health and performance of the market,” says Miller. “Given its state of development and still high levels of corruption, the Nigerian property investment market is viewed with more than a pinch of salt by many investors despite the fact that Nigeria’s economy is booming overall.”
Indeed, the Nigerian property market is experiencing rapid growth both in homes to accommodate a growing middle class and a veritable explosion in the demand for expatriate housing and commercial office space. “Many of our Nigeria buyers cite a lack of quality supply as well as the massive surge in house prices back home and limited resources for mortgage lending, which in turn puts upward pressure on lending rates as among the reasons it makes more sense for them to look at property investment in South Africa, “ says Miller.
Investors in the present climate can expect 10 percent year on year growth; this is especially good if you consider that at least 50 percent of the capital is geared money.
The most sought after investment properties in Clifton are three-bedroom and  two-bathroom apartments with sea views.
Source: BusinessDay

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