Real Estate Investor Magazine South Africa August 2015 | Page 60

UNDER THE
SPOTLIGHT

WHY ARE SOUTH AFRICANS
BUYING UK PROPERTY?
In recent months, there’s been a distinct surge in the number of South Africans
heading to the shores of Britain in search of a rand hedging asset.What’s driven
this demand for UK real estate?
RETURNS IN A CURRENCY
WITH LOW VOLATILITY
Currency concerns are one of the
most important considerations
for South African investors, with
many preferring to possess some
international assets to minimise
their exposure to domestic currency
changes.
For example, although property
prices in South Africa have increased
by 27% in the last four years, the
rand’s continuing slide against the
world’s leading currencies means
that in a wider international context,
property investors have actually lost
23% in capital returns over the same
period of time.
With a long established reputation
as a hedge against the rand, the
pound is not only strong, but it also
rarely registers sharp fluctuations.
As any returns achieved through
British real estate are sterling-based
so, they will be largely resistant to
forex volatility.

EXTENSIVE PRODUCT
RANGES THAT DRIVE STRONG
RETURNS FOR INVESTORS
South African investors are often
attracted overseas by more diverse
property markets, and the UK
can offer several property sectors
that have proven track records of
generating excellent returns.

Investors with residential property
in the UK’s private rented sector
have enjoyed returns of 1,400% in
just under 20 years. On average,
£1,000 invested in a rental property
asset in the final quarter of 1996 was
worth £14,987 by the end of 2014.
Student property, too, is also hugely
popular, with over £4 billion worth
of investment in the first six months
of 2015 alone. Record domestic and
international student numbers and
huge undersupplies of purpose-built
student accommodation across the
country ensured that investors saw
returns increase throughout every
year of the economic downturn.
SIGNIFICANT GROWTH
EXPECTED
There are currently 5.4 million
households renting in the UK. This
is set to grow by 1.8 million over the
next 10 years, with over half of 20-39
year olds in Britain expected to rent
their property rather than own it
by 2025, an astonishing change in
attitudes in a nation, historically, of
home owners.
Furthermore, the uncapping of
student enrolment numbers in
England will increase the number
of people attending British
universities, thus placing even
greater emphasis on the need for
quality student accommodation for
these students.

SELECT PROPERTY GROUP
Select Property Group is a
developer, retailer and operator
of market-leading UK property
investment brands.
Operating since 2004, the Group
has a well-earned reputation of
delivering successful investments
in both emerging markets and
through the identification of
niche opportunities in established
markets.
The Group’s success is underpinned
by a clear vision to develop marketleading brands that align end user
needs with investor returns. Key
to this strategy is an unswerving
commitment to understanding
the end customer in every market
it serves, delivering exceptional
lifestyle experiences for residents
and fully managed property
investments to its investor clients in
117 countries.

selectproperty.com