Published on 03 December 2005 at 02:42 pm
Filed under: Africa:- South Africa Property Guides » South Africa Property Investment Potential
The property investment potential in South Africa is substantial with government investment incentives existing for real estate developers in the country’s major cities, taxation breaks available for investors and demand for property to rent and buy in South Africa increasing from overseas and domestic citizens.
Property investors already in the market have benefited from an impressive period of growth boosted in part by the disparity between the South African Rand and major first world currencies but also because now that South Africa is economically and politically stable it is an incredibly popular country to visit, retire to and purchase property in.
This demand for property for sale in South Africa from overseas purchasers underpins the real estate market currently and property investors seeking the best potential gains in South Africa may like to consider catering to this audience. Demand for gated, private communities including retirement communities is strong in South Africa with mainly British and German buyers and the most popular developments are around Cape Town and along the Western Cape.
Investors could consider buying such properties off plan and reselling upon completion to waiting buyers or even purchasing parcels of well appointed land for later division and re-sale to private buyers or for sale complete to developers. Such land resells for greater profits in the short term when planning permission has been granted and a number of investors buy land without permission and their investment consists of making successful application for planning permission and then reselling at a premium. Such speculative land purchase is not prohibited in South Africa.
Property developers looking at the potential in South Africa are afforded various government investment incentives for the creation of retail, commercial and residential properties in South Africa’s 16 major cities. These include a 20% taxation reduction on income derived from a completed development for five years as well as a good rate of depreciation to further reduce the effective taxation rate payable.
Property investors in South Africa who purchase renovation properties in the country’s 16 major cities also receive welcome taxation breaks and an investor could purchase run down residential units, renovate them and then get a 20% tax break on rental income earned from the renovated property for five years, enjoy five year’s capital appreciation and then resell for profit when the taxation breaks come to an end.
For smaller investors seeking a single property for sale in South Africa there is the chance to target European holiday makers seeking properties to let during the South African spring and summer period. Properties most popular with overseas tourists are villas with private pools in secure compounds or communities. These properties rent well and attract the highest yields...they are also the easiest type of property in South Africa to resell and attract the strongest rates of capital appreciation making them a great investment vehicle.
In terms of the most favoured location in South Africa for property investment these depend entirely on what the real estate investor is hoping to achieve from his investment. For example, commercial properties in the country’s main cities are massively in demand, cheap residential housing in and around major towns and cities are in demand from the domestic market and foreign investors, holiday makers, retirees, expatriates and holiday home hunters favour properties in Cape Town, the Western Cape and the Garden Route, and finally the Eastern Cape offers far excellent value for money and is being heralded the next strong real estate market to emerge in South Africa. Therefore in South Africa property investment potential is massive and diverse.
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