International Property Investment : A Great Rand Hedge

With the rand weakening, wealthy private investors and real estate professionals would agree that investing in property abroad is an excellent way for South Africans to hedge their investments and continue to see healthy returns on their investment in the future, says James Bowling, CEO of Monarch&Co - a company that specialises in residency and citizenship programmes. He points out that the recent depreciation of the South African currency has highlighted the benefits derived from foreign residency and citizenship for local investors.

“Benefits such as favourable tax regimes, unrestricted travel and no exchange control restrictions are just some of the advantages that have been the driving force behind international property investment growing in popularity among high-net-worth individuals,” says Bowling. “Demand for property abroad through citizenship and residency programmes is particularly high in countries within the European Union (EU), due to the lifestyle benefits that these countries provide their citizens.”  

Aside from the travel benefits, purchasing property abroad will diversify an investor’s portfolio and investment risk - provided the decision is carefully considered, the necessary research has been done and the investor works with a reputable service provider on the transaction.

“Foreign property investment can act as a currency hedge, something which most investors are currently looking for with the volatility of the rand. It will provide investors with the chance to earn capital growth in a foreign currency,” explains Bowling. “Purchasing a property in a country with high tourism interest and low-tax benefits is a sound investment and it provides the opportunity to earn an attractive annual yield from letting out the property.”

There are currently a number of excellent property investment opportunities linked to residency or citizenship by investment opportunities including apartments in Del Mar, situated in the popular coastal town of Limassol on the island of Cyprus, or a range of luxury homes in Portugal's Algarve region. Investors looking towards the UK, which is a good option for those specifically looking for investment as part of a wealth strategy and rand hedge, there are commercial property opportunities and student accommodation investment options with guaranteed rental returns and sound capital appreciation potential.

Bowling points out that purchasing international property as a wealth-building tool makes sense, as property has historically been one of the best hedges against inflation and turmoil. “There is a limited supply of land, yet there will always be demand from people who require a place to reside.”

Rental income from well-placed international properties will also assist in generating a good cash flow in a foreign currency, which is always useful.

Bowling concludes by saying that aside from the number of financial benefits of purchasing property abroad, this kind of asset can also provide investors with lifestyle security and the assurance that they have easy access to a range of international countries, something that many South Africans are placing greater importance on than ever before.