Real Estate Investor Magazine South Africa July 2015 | Page 17

that in these areas a typical three
bedroom unit with a double garage
in a new security estate sold for R1,
350, 000 a year ago. Today, just 12
months later, the price tag will be
R1, 5 million. This means that such
homes are appreciating at 11% per
annum, a significant capital gain by
any standards. In addition to this,
the investors is receiving rent, in
this case at R13, 500 per month.
This means that from early on
the investor’s rent will probably
cover his monthly bond payments
(depending on the size of his
deposit) and the overall return
after, allowing for taxes, levies and
agent’s fees, will again have been
11%.
Nevertheless, the uncertainty
and volatility in the local and
global investment markets have
underscored
the
importance
of diversifying an investment
portfolio to spread, and therefore
reduce, risk.
Fortunately, the property sector
offers great scope for diversifying
an investment portfolio, allowing
investors to tap into the incomegenerating and capital growthproducing ability of buy-to-let
property investment in numerous
different ways and across diverse
geographies.

STRATEGY ONE
Offshore Buy-To-Let
Investment

www.reimag.co.za

The tried-and-tested model of buyto-let property investment works
anywhere, from the established
towns and cities in the UK, US and
Australia, to the growing capitals of
Kenya, Nigeria and Tanzania and
other emerging markets.
While the South African market
offers plenty of opportunities for
excellent buy-to-let investments,
this investment model will work
as well, if not better, in countries
with stronger currencies, and more
stable economic and political
environments, allowing investors
to diversify their risk from the local
market, while also benefitting from
low interest rates in other countries
for financing.
For South Africans considering
a Plan B in light of the current
developments in South Africa,
an offshore property investment
can present a double benefit. To
boost their economies through
foreign investment, a number of
countries offer various citizenshipby-investment programs, providing
a direct route to citizenship based
on investments in property. South
Africans looking to invest in
offshore property can consider this
model of investment not only to
build foreign income and capital,
but also to gain a second passport.
With your offshore property
investment, the world really
is your oyster. There are many
locations to choose from in many
different countries, and regardless
of where you choose to invest, the
fundamentals remain the same.
You need to pinpoint a good
property in an area that offers
solid current and future rental
demand, as well as good prospects
for capital appreciation, and
tenant and maintain the property
professionally.
Investing offshore has become
somewhat easier with effect from

1 April 2015. The South African
Reserve Bank (SARB) increased
South African residents’ foreign
investment allowances from about
R4 million to R10 million per
calendar year, with an additional
annual R1 million per calendar

“With offshore
property investment,
the world really is
your oyster.”
year out of the country for any
legal purpose abroad, while the R1
million discretionary allowance has
been removed.
Nevertheless, investment advice
from a financial adviser who
specialises in expat investments
is crucial. So is a reputable,
trustworthy team on the ground in
the area you are investing in, who
will not only be able to advise you
regarding the best investment, but
will also be able to assist with local
legal peculiarities and hands-on
rental and property management.

STRATEGY TWO
Commercial Property
Investment

The buy-to-let property investment
model works just as well in the
JULY 2015 SA Real Estate Investor

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