Rand offers a wonderful opportunity for Foreign Investors - a word from our licence partner, Paul Turner.
These have certainly been challenging and difficult times for everyone in the world.
The word unprecedented has definitely been used an unprecedented number of times :) but it has been gratifying to see how the world has responded and proven once again the flexibility and adaptability of the human race.
We are especially proud of how South Africa has responded. Our President took quick and decisive action and introduced one of the toughest lockdowns seen worldwide which has pretty much been observed with dignity, calmness and good humour. The signs are also encouraging that this will help us to lessen the impact of Covid 19 and give the country the best opportunity to emerge from this Pandemic stronger and more unified than before.
One direct result of the global crisis has been a general weakening of currencies in developing markets and that includes the Rand. This is a typical response from the markets to uncertainty and confusion and does not truly reflect the real value of the currency. It is a global response and a basket of currencies which include the Rand are affected. This does of course present an excellent opportunity for foreign investors to benefit as it means that the properties that they are purchasing here in South Africa have suddenly become much cheaper in their domestic currencies.
The Euro and the US Dollar have both strengthened against the Rand by 22% since December 31st 2019 and the British Pound has strengthened by 18% in that 3 month period. This means in simple terms that every R1,000,000 invested has become cheaper in the foreign currency by the same percentage. A Foreign Buyer wanting to purchase a home in Cape Town for R10,000,000 would therefore save €130,000, $160,000 or £95,000 versus the cost 3 months ago and for much of the last 36 months. These are huge and significant savings and it does not matter how big or small your investment, you can save meaningful amounts of money. This saving can be used to help you purchase a more expensive property than planned or can be saved and used to pay for your travel and living expenses when you come to enjoy your new home.
