I N V E S T
&
d e v e l O P
The calculations
The table below compares similar developments in different cities along with some key factors. Note
that the exchange rate used for the UK investments is R17.40 to the Pound.
Purchase
Purchase price
Deposit – SA 10% | UK 20%
Bond Interest Rate
Monthly installment
Monthly rental
Potential rental p.m.
Profit / (Loss ) over first year
Years to break even
Taking it abroad
Investing in property abroad is not
as complex as you may think. There
are a host of specialist companies
that can assist in all aspects of
investing abroad – from the initial
research and acquisition through
to management and even exit
strategies.
Nightly rental
Potential nightly
Nights to break even
Annual revenue at 80%
capacity
Profit / (loss) over first year
Capital growth – after 5
years
Average growth in area
Balance on bond
Potential value of property
Possible leverage
Regarding Airbnb and similar short-term
rental services, the city of London has
already implemented regulations that
limit the number of nights to 90, along
with an additional council tax. Manchester
has not yet implemented any regulations
but, as we see locally, change is imminent.
Assumptions for all calculations:
• 10% deposit is paid along with a
home loan over 20 years.
• No taxes, rates, levies or other fees
have been taken into account.
While sifting through many listings, one
gets a sense of a realistic monthly or nightly
rental, but it’s important to remember that
there is quite a variance depending on
exact location, the state of the unit and the
building. For short-term stays, the interior
and finishes play an important role too.
One should err on the side of caution
when doing calculations and try to factor
in all the costs that are known.
Cape Town
De Waterkant Johannesburg
Rosebank UK
Manchester UK
London
R 3,250,000.00
R 325,000.00
10.5%
R 29,202.61 R 2,450,000.00
R 245,000.00
10.5%
R 22,014.28 R 2,992,800.00
R 598,560.00
4.0%
R 14,508.62 R 9,256,800.00
R 1,851,360.00
4.0%
R 44,875.51
R 20,000.00
R (110,431.34)
6 R 15,000.00
R (84,171.32)
6 R 17,458.00
R 35,392.52
Not
straightforward R 46,284.00
R 16,901.88
Not straightforward
R 2,300.00
13
R 671,600.00 R 1,400.00
16
R 408,800.00 R 1,200.00
12
R 350,400.00 Regulations
- 90 day limit
- council tax
R 321,168.66 R 144,628.68 R 176,296.52 - planning permit
6%
R 2,641,816.55
R 4,349,233.13
R 1,707,416.58 3%
R 1,991,523.24
R 2,840,221.48
R 848,698.24 4%
R 1,961,451.98
R 3,641,198.81
R 1,679,746.83 3%
R 6,066,816.58
R 10,731,168.25
R 4,664,351.67
Thinking it through
Besides the facts and figures, an important factor to
consider is whether you are purchasing a place that
you plan to live in yourself later in life. Finding a suitable
retirement apartment has many added advantages
and having a foot in the door in the UK may be useful
in the future. Similarly, retiring in Cape Town may be
appealing to you or perhaps you wish to be nearer your
family in Joburg.
There are many elements to consider, so consulting
with a specialist is always recommended – especially
for some of the trickier aspects such as taxation and
estate planning.
Brendan Dale