Real Estate Investor Magazine South Africa June 2015 | Page 58

FINANCE

Investing Internationally

In Property

Where to invest now
BY KATE LEWIN

T

here is an interesting investment profile that
South Africans have been lead into over the
decades. Factors contributing to this profile
start from days as early as 1652 when learned men and
global traders washed ashore and invested everything
into land and property development in the Cape of
Goede Hoop. Legacy of this age was held onto dearly,
iconized on tactile things such as stamps and coins
right up to 1993.
As blood spilled in 1960 Sharpeville massacre, so
too did South Africa’s foreign exchange. Government
attempted to restrict the damaging outflow of capital
and an additional level of capital control bolstered in
the dregs that remained. Residents were prohibited
from removing capital from the country and foreign
investors could only remove investments via the
financial Rand, trading at 20% to 40% discount to
the commercial Rand. The ambitious, who took the
significant ZAR/US$ hit were caught in a grey area
of then-illegal offshore investments, facilitated through
trusts and other loophole investment platforms.
The conservative investor remained in South Africa,
building large property portfolios. Still to this day
South Africans are more patriotic to their cherished
property than any other asset class, even the nonpatriarchal.
The floodgates on exchange control opened this
year as the South African Reserve Bank (SARB)
announced increases to private client limits with effect
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JUNE 2015 SA Real Estate Investor

from 1 April 2015. South African residents’ foreign
investment allowances increased from R4 million to
R10 million per calendar year, with an additional annual
R1 million per calendar year out of the country for any
legal purpose abroad (the R1 million discretionary
allowance was removed).
With recent political movements and the
consistently declining and volatile Rand, many look to
greener pastures. Now, more than ever, South African
High-Net-Worth (HNW) investors remain South
African residents but disinvest their portfolios leaving
everything, apart from permanent residence, liquid for
the offshore market/bolt-hole.

“Locations in London still show
particularly high potential for
strong returns.”
Statistics show that worldwide HNWs invest at least
37% of their wealth in globally diversified portfolios
held in hard currencies. South African HNWs typically
diversify geographically by less than 7%.
According to a new report from IP Global, investors
looking to diversify their portfolios for succession and
retirement planning need not look further than the
United Kingdom and Australian property market.
Investors will benefit from exposure to fixed assets in
www.reimag.co.za