Real Estate Investor Magazine South Africa September 2016 | Page 50

AMERICA

The
Rand
and
the
Dollar
The US as a magnet for investors
BY MATT LAVIN

T

he surge in the value of the rand against the
dollar has given investors an impetus to move
funds offshore – and made US property all the
more attractive as a home for their money.
With the turmoil in the markets in the wake of the
UK’s Brexit vote, and increased optimism at home
followingthe local elections, the rand reached an
11-month highon 16 August, closing at 13.27 to the
dollar, compared to 15.88 on 18 May. Effectively that
meant South Africans could buy US property at 16%
lower prices than just two months before.
Not surprisingly, agents have seen a sharp rise in
interest from South African buyers. Matt Lavin of
Benoit Properties International says: “Given the
strength of their currency, South Africans are seizing
the opportunity to derisk their portfolios by moving
funds into dollars – and to snap up US property at a
discount at the same time. Buyers are seeking rand
protection, high yields and long-term security – and
our US properties tick all the boxes.”
In fact US residential property has been attracting
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SEPTEMBER 2016 SA Real Estate Investor

increasing interest from overseas buyers for a while.
Sales to foreign nationals rose by 2.8% in the year
to the end of March 2016 to reach over 214,800,
according to figures from the National Association
of Realtors show. Of these, Florida was the most
popular location, accounting for more than one in five
(22%) of all sales.
The ‘sunshine state’ has enduring appeal for overseas
buyers including Latin Americans, Europeans and
Canadians, thanks to its pleasant climate and its
popularity as a holiday destination. Orlando is the
most visited city in the US, with over 97 million
tourists a year.
An added attraction for buyers is that, while prices
have been rising for the past two to three years, they
are still around 50% below their peak in 2006. Twobed apartments start from under $100,000 and,
because of the low entry point, offer rental yields of
around 6-7%.
Corbus van Zyl, a South African investor who
bought a one-bed apartment in Florida in July, said:
www.reimag.co.za