4 days ago
Rental yields, tax benefits, residency lure South Africans to offshore property
More South Africans are hedging their bets on offshore property, lured by benefits such as attractive rental yields, tax benefits, and the opportunity for a second residency, according to the Seeff Property Group.
These investments are also seen as a currency hedge, particularly in stable, dollar-based economies like Dubai and Mauritius, enabling investors to earn hard currency, grow wealth, and diversify their assets. Dubai has for example seen property transaction volume growth of 22.5% and 40.1% in value, while prices are up by 15.6%. Mauritius property prices grew by around 27.19% (late 2023), and about 22% as at early this year.
Nombasa Mawela, licensee for Seeff Dubai, says the fast-growing expat population continues to drive high demand for rental investments with an average yield of around 6.31% on top of the opportunity to obtain residency, subject to a minimum investment level. Mauritius rental yields are typically 3 – 7%.
Most opportunities offer attractive payment plans which are well received, says Nombasa. South Africans are also leveraging the annual allowance that they can take offshore (R11m, being R1m discretionary, R10m foreign capital allowance). While requiring a higher level of investment, residency in Dubai (UAE) and Mauritius is also an attraction, offering easier access to the EU, UK, and USA.
Dubai – fast growing and luring more South Africans
Although South Africans continue heading to Dubai and there are now more than 2,400 South African-affiliated companies present, you do not have to invest with the view to relocating or obtaining residency, says Nombasa.
Aside from the favourable tax benefits (no personal income tax, Capital Gains Tax, or property tax), investors are drawn to the lucrative rental market. South Africans are opting to invest in the new developments, often making use of the attractive payment plans. Rental services are often part of the deal which adds convenience.
South Africans typically target the AED 1m – 3m bracket (approximately R4m – R12m), mostly apartments and townhouses with 5 – 8% rental yields. For a Golden Visa with a 10-year renewable residency, a minimum of AED 2m (R9.8m) into property is required, she says. South Africans can open bank accounts in Dubai and finance is also available.
Mauritius – increasingly popular for relocations from SA
Severine Dalais-Pietersen, licensee for Seeff Mauritius, says the close proximity and direct flights to the island has made it a popular destination for relocations. It also offers a favourable tax regime (no inheritance tax, flat 15% income tax, although CGT is being introduced).
Government-approved schemes for property investment by foreigners are a popular option as they are high quality, and located across the island, usually in high demand tourist areas, thus offering the added incentive of earning good rental income streams. The close proximity to South Africa makes it an attractive option, says Severine.
Prices start at MUR 10m/R4m. A minimum USD 375,000 investment is needed to qualify for a Permanent Residence Permit. There is usually a payment plan for the developments. South African investors can also get finance in Mauritius subject to certain conditions, usually including a large deposit.
Namibia – an attractive holiday or retirement property option
Neighbouring Namibia is a popular holiday destination, and more people are thinking of retiring there, especially in the coastal towns such as Swakopmund, according to Maria Esterhuysen, licensee for Seeff Namibia.
Property prices are very similar to South Africa, and the currencies offer similar value. There is no Capital Gains Tax on private sales, and the proceeds can be freely repatriated. Prices from N$ 800,000 – N$ 2,500,000 on average, but there are many luxury options ranging to around N$ 8,000,000 with some exceptions above this.
The Namibian government has added a Retired Persons option for 60-plussers with a considerable permanent income from an external source. There is also a Permanent Residence option for those with considerable wealth of at least N$ 4m net worth (and be N$ 2m in property, and the rest in a Namibia bank account).
Issued by Gina Meintjes
