Real Estate Investor Magazine South Africa May/June 2015 | Page 58

FOREX

Currency Trends
How global forex trends affect your
offshore property investment
BY ANDREW RISSIK

W

hat a great time to be talking about investing
offshore. The South African Reserve Bank
has just further relaxed capital controls and
one can now use R11 million annually per individual
for foreign investment.
There are also dark clouds brewing over the local
investor community as irresponsible utterances from
Government about radical economic transformation
are being bandied about all over the media.
Whichever side of the fence you sit on, climb out of
your comfort zone and start hedging your investment
portfolios by using the allowances that are available (if
you have not already done so).
Whilst there is so much negativity around South
Africa and in particular the Rand, do not be fooled
that there are no problems experienced elsewhere in
the developed world. Currencies are the barometers of
a countries economic conditions and with uncertainty
being the norm worldwide right now, volatility between
currencies is a serious reality.
Why is the Dollar strengthening, when the Euro
is weakening against the Rand? Look at the United
States where there is talk about raising interest rates.
This move will make holding Dollars more attractive.
So, why not sell your risky currency and buy Dollars?
The end result is the strengthening of the Dollar.
Look at Europe where Greece is battling to repay
its debt. The political will to resolve their problems is
non-existent, so there are big question marks over the
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MAY 2015 SA Real Estate Investor

long term stability of the single currency. The end result
is people selling Euros and buying other currencies
instead.
There is one long term trend that is clearly evident
and that is the Rand is weakening at around 8%
per annum against the major currencies with a few
differentials due to the factors described above.
Owning affordable property offshore is a must. Once
you have made the decision to invest offshore, apply
similar criteria that you would for an investment
property at home. Understand the local environment
by answering the following questions:
•
•
•
•

Is there rule of law?
What are the rights of ownership?
Is the country doing well economically?
Is the local market still below the highs of the
global financial crisis?
• Are you clear about which areas are desirable, and
which are not?
• Do you have a local partner on the ground you can
trust?
Currency volatility and trends are just a small part of
the whole process. You do, however, want to get it as
right as possible.

RESOURCES

Sable Forex
www.reimag.co.za