Will South Africa Impose a Property Ownership Ban on Foreigners?

Property prices in South Africa rose by an average of 35% last year.  It seems that foreign investment in the real estate market is fuelling this rise, and in Cape Town where the majority of foreign buyers are British, the price gains last year far outstripped the national average of 35%.

Across the country these significant gains are pricing local buyers firmly out of the market.

In fact, more than 10% of the South African population are so poor that they are forced to live in miserable squalid conditions in illegal shanty towns.

The African National Congress are aware of the void that has always existed but which is fast widening between these people and what they can afford in life, and the wealthy foreign property investors snapping up real estate ‘bargains’ across much of the country.

The ANC Lands Minister, Angela Thoko Didiza, has proposed that a ban be enforced to prevent foreigner ownership of freehold property.  The ban is similar to that which the TRNC government tried unsuccessfully to implement in North Cyprus in 2004, and would restrict foreigners to 99 year leases on property.
Angela Thoko Didiza made the proposal last year and since then she and her committee have been researching and building on the proposal and the committee is due to report to government in the next couple of weeks.

The ANC and foreign property investors, speculators and purchasers are aware that a balance must be struck between the needs of the local population and the potential for economic growth within the country.  British expatriates in South Africa are keen to point out that the Government wants, needs and welcomes foreign investment…but this investment must not come at an unreasonable cost.

So, will the South African Government place a property ownership ban on foreigners?

Well, President Thabo Mbeki has already made it fairly clear that he supports the proposal, but British residents doubt the Government can act too radically as they will lose overseas favour and direct financial support.

Whatever the outcome of the report and the final decision of the ANC on this matter, one thing is certain; foreigner buyers are rushing to cash in on the potential of the real estate market in South Africa before any changes in property ownership law are announced. 

In a country possibly unrivalled in natural beauty and where you can purchase exclusive real estate in prime locations at far beneath the prices of rival properties in the UK or Spain for example, investors are scrambling to get in on the market before their window of opportunity is lost or restricted for good.

Those buying property now are aware that they may be the last foreign investors to legitimately own freehold real estate in South Africa, and they do not wish to miss the chance. 

So until a decision is made the market is buoyant, but real estate agents in South Africa are aware that any decision could cause a rapid about turn and down turn in the market and are holding their breath.