South Africans are positively giddy that Suze Orman, a personal finance expert who is a household name in the U.S., has chosen to buy property in their country. She purchased a home in Northcliff, one of Johannesburg’s poshest areas, according to iafrica.com. Apparently, South Africa is the only other country besides the U.S. where Orman owns a place.
Orman’s purchase, local real estate professionals hope, speaks well of the property market in the country. Johannesburg is becoming the city of choice for professionals and companies who want to take advantage of its closeness to African markets, Lew Geffen, Chairman of Sotheby’s International Reality, told iafrica.com. The fact that Johannesburg has a good business infrastructure, ranging from international standard banks to telecommunications, puts it ahead of its African counterparts. The city also has a range of options in the luxury home sector, another quality lacking in other African cities.
Real estate prices are still reasonable, especially for international buyers who come into the market with a strong foreign currency against the South African rand. For example, prices for apartments at The Cliffs, the luxury development where Orman bought a home, fall somewhere between $500,000 and $900,000 — very much within reach of the wealthy who are used to London style prices. It is predicted that Johannesburg’s profile as an up and coming international city will increasingly push its property market into the lime light.
South Africa has also emerged as a destination for Europeans, most notably Germans, who come in search of sunshine. Highly sought out are stand-alone properties located in the Western Cape, a South African province bordered by the Indian and Atlantic oceans. Cape Town, one of the country’s well-known cities, is the capital of the Western Cape. In addition, bed and breakfast properties are being snapped up by foreign buyers who wish to run a hospitality business in some of the most beautiful parts of the country, iafrica.com reported.
The Eastern Cape, one of South Africa’s poorest regions, is also emerging as a popular choice among those who are looking to buy property for a relatively cheaper price. Holiday villages such as Oyster Bay have attractive market prospects, according to BusinessDay, a South African business journal. The Eastern Cape is giving way to development as the number of tourists who choose it as a destination continues to increase.
Despite the global recession and property market blues, demand for real estate is improving little by little according to iafrica.com. This year’s First National Bank (FNB) Residential Property Barometer report for the first quarter showed that demand is picking up albeit at a slow pace. The report is based on property agents’ rating of demand in their areas on the scale of 1 to 10. The rating reflected a rise from 4.1 in the third quarter of 2008 to 4.8 in the first quarter of 2009. However, when compared to last year’s, current figures are still lower.
The market improvement has had a limited effect on buoying the expectations of professionals working in the real estate sector. Only 41 percent felt market demand will pick up further during the next quarter. In addition, 31 percent felt credit restrictions put in place by banks were still too strict making it difficult to obtain mortgages and in turn hurting the property sector further. Nineteen percent of respondents felt the gloomy mood surrounding the economy in general and the property sector in particular is also impeding recovery.
The latest FNB figures also showed that prices were down by 7.8 percent in March 2009 when compared to the same time last year, according to iafrica.com. Experts speculate that the price decline is partly a result of oversupply in the residential market. Prices will likely continue to slide throughout 2009 alongside South African disposable income, which has shown negative growth for the last two quarters of 2008.
The South African economy is severely affected by the global economic recession. Demand for the country’s exports has been low and commodity prices continue to remain unstable. More and more people are choosing to hold on to their money as recession begins to hit the economy harder. The tight credit conditions in South Africa are not expected to improve anytime soon either.