Johannesburg - Apart from isolated cases where foreign buyers purchase local residential property they perceive as bargains, South Africa is not seeing a flood of foreign buyers despite the weak rand. This is according to FNB Private Bank Lending, a unit that provides structured and complex residential property finance.
Praven Subbramoney, CEO of FNB Private Bank Lending, says the bank’s Estate Agent Survey points to a slight decrease in foreign buying. He says its statistics show that foreign home buyers (as a percentage of total buyers) is currently at 5 percent, down from 5.5 percent at the beginning of 2015.
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“The trend can be attributed to a number of factors, such as the level of uncertainty in the global economy. We also have to consider the potential impact of local fundamentals such as the general state of our economy, limits on foreign buying and the weak rand. The weak currency is viewed as a sentiment dampener, and both local and foreign investors are cautious when dealing in Rand-based assets.”
In spite of this, investors should take courage from the fact that property is an asset class that has a reliable history of recovery and performance, especially for investors who are in it for the long-haul.
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Significantly, the presently subdued performance of the property sector is by no means isolated as various asset classes continue to feel the impact of poor economic conditions. Evidence of tough economic times can be seen in the volatility of the local market and continuing adjustments of monetary policy to accommodate a higher degree of uncertainty.
Notwithstanding the challenges, FNB Private Bank Lending believes that South Africa is well placed to meet future property demand from local and foreign buyers.
* Adapted from a press release
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