Why should I invest in offshore property?

With an unpredictable political system and volatile currency, South Africans are increasingly looking to keep their money offshore. Whilst stocks have always offered attractive returns for investors, property is considered the most stable asset to compliment any wealth strategy.

At present, the South African economy accounts for less than a percent of global GDP, and order to benefit from global growth, it is important that South African’s invest in markets that are offering better growth. Owning property in hard currency is a sensible hedge against rand investments, and returns from property can usually provide both capital growth and an attractive monthly yield. It’s also an asset class that can easily be leveraged, and can usually be structured tax efficiently.

For some people, owning property overseas is not just about the returns, but may be as part of a life plan for themselves and their family. Some South Africans are investing in property to acquire residency, ensuring a plan B for their future or an overseas education for their children.

What is a buyers agent and do I need one?

Buyer’s agents are professionals acting exclusively on behalf of a property buyer, assisting the client throughout the entire purchasing process; from sourcing properties that correspond to the clients’ requirements to negotiating the best possible price and terms with the seller. We can often negotiate a better price than a private buyer could manage because they have local knowledge and networks.

Buying agents look at the different markets, keeping abreast to countries and areas offering the best returns. It is our job to know how the markets are performing, identifying the key markets to invest, as well as be aware of financial, tax and legal implications that may impact your decisions. We can preview properties on behalf of our clients, short-listing only the most suitable, saving you time and costly mistakes.

As an independent company, we work exclusively for the buyer. This allows us to offer the largest possible portfolio of properties, and give advice that best serves our clients’ interests.

Why is Hurst & Wills best positioned to assist?

Hurst & Wills prides itself on its local and global expertise. We are experienced in working with foreign buyers, and know how to implement overseas purchases through end to-end-service. From both a personal and professional point of view, we can relate to your concerns, and understand what it means to be an international landlord and foreign investor. We take a holistic approach to property investment, by looking at clients’ individual needs and motivations, as well as being able to provide a global perspective on the property markets in general.

Are Hurst & Wills an estate agency?

No. Unlike estate agents, Hurst & Wills offers impartial advice, employing our local knowledge and understanding of international buyers. As an independent company, we work directly with sellers, vendors, agents and developers to offer a range of options, most suitable for you. The service is a thorough hand-holding experience, advising on international property, conducting viewings on your behalf and creating a shortlist of potential properties for you to consider.

How does the process work with busy international clients?

Communication and transparency is at the heart of our company ethos. Not only will we go above and beyond to offer you personal service, we will do it 27/7. You will receive regular email, video and telephone updates. When sourcing a property, we will be in touch with you as often or as little as you like. We will do the viewings for you to shortlist only the very best for you to consider, and if you would like, we can oversee the buying process on your behalf.

What are the tax implications for non-residents purchasing property?

Each country has its own tax system, and the tax implications of any property purchase must be considered. Income Tax from rental income, and Capital Gains Tax are the most commonly levied taxes globally. We are not tax experts so always seek your own independent advice from your tax and accounting specialists. However, as a general rule, buying a property or two overseas is fairly simple from a tax point of view. South Africa has a double tax treaty with many countries, so you never pay too much tax. You may have to fill in a form at the tax services in that country, but this can often be done online or using one of our preferred partners who will charge you a nominal fee.

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What is the process to fund a foreign property purchase?

South Africa’s well established legal framework offers the first world security of title to foreign buyers of immovable property. There are no restrictions on the ownership by non-residents of property situated in South Africa. Purchases can be funded locally, (on the basis that foreigners can borrow up to 50% of the purchase price) or can be funded from overseas by electronic transfer.

Similarly, property overseas can be funded using money from South Africa. There are limits as to how much can be repatriated annually, though currently you can utilise your individual offshore allowances of up to R11 million (R10m foreign capital allowance and a R1 million discretionary allowance) per calendar year. There are also ways of obtaining a bond to maximise your investment, both locally and offshore, borrowing up to 75% at attractive interest onshore rates.

Hurst & Wills have finance partners who can quickly ascertain your options for leveraging our investments. Please get in touch to hear more.

Is Investing offshore only for those with Millions of Rands?

No, Hurst & Wills offers luxury student accommodation apartments, which are sound investments, at a total cost of R1,2 million. Thanks to our experience and contacts in the UK, we also have access to financing. This means that you can invest for half of that amount and have your tenants buy the rest, or you can purchase luxury residential buy-to-let apartments in a prime UK city. In reality there are plenty of options that cost far less than you think.

Are the property investments cash-only?

No, not necessarily. We have secured bonds for many of our clients. The myth here is that you need a foreign passport or you need to earn millions of rands a year to get a bond abroad, and this is not true. We have successfully helped clients buy properties by putting down a 25% deposit with an interest rate as low as 2.5%, and having their tenants pay the rest.

How does the exchange rate impact my investments?

The exchange rate can be a tricky one to navigate, as nobody can accurately predict what will happen with currency rates. We recommend that our clients send their cash using a reputable FX company and send it in batches, that way you can hedge. Most of our properties can be purchased in instalments and we can assist clients with tailored payment plans. In some cases, a client only needs to send 10% overseas and then has several months, sometimes up to two years, to send the rest.

Does your investment property portfolio offer the best returns available?

This is a good question. We do a thorough due-diligence on all of our projects to check the anticipated yields and growth projection. These are only estimates however. There are opportunities out there offering extremely attractive yields and guarantees, which seem too good to be true. We only promote in markets that we believe are safe, stable and secure. We do not work in ‘risky’ markets, where you may find much higher returns,as your investment could be at risk. Some of our partners offer guaranteed returns, which we look into very seriously. Many guaranteed yields are built into the purchase price, so this is something we are very careful to be transparent about.

Do your properties qualify for the citizenship and residency programs?

We have an extensive portfolio of properties for residency programs, across the globe. We do not claim to be immigration experts, as we are a property advisory first and foremost. Our job is to make sure the property element of your investment stacks up. We carefully source properties that fit into the stringent criterias of citizenship programs across the globe, and have a good knowledge and understanding of the individual programs. We also partner with the best immigration, legal and tax partners to offer you access to the best experts.

What is the process of working with Hurst & Wills?

We identify key markets and investments that offer attractive opportunities for our South African clients. We visit our markets every three months, checking the progress, infrastructure and conducting site visits, whilst liaising with our partners on the ground on a weekly basis. So, when you contact us with your requirements, we have a good idea what is available.
You’ll meet with one of our team, who will listen carefully to your requirements, your financial goals, family objectives, current portfolio and your wealth strategy. We can also do this meeting with your financial advisor if you so wish. Our next step is to present you with a carefully researched shortlist of properties for you to choose from. Once you have selected your property, we work with our local and foreign partners to guide you through every step of the process, negotiating price and terms on your behalf and seeing the sale through to completion
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Whilst we encourage you to always seek your own financial and tax advice, we can consider this when suggesting your property plan. We can refer you to the best specialists and advise when to invest to take advantage of discretionary allowances, and the best foreign exchange rates, and most efficient tax planning.

We believe in lifelong clients, not on a one-off sale. We are committed to helping you build your international property portfolio, and can advise on a long-term strategy including diversification, resale and exit strategy.

I'm looking for something I don't see on your website, can you help?

Our buyer’s acquisition service offers clients access to off-market commercial opportunities and bespoke properties. This could be a business or bulk buy opportunity, or a joint venture with property developers overseas. Some clients are looking for a very specific property such as a vineyard or boutique hotel. We have partners on the ground globally and a credible network of property specialists across all asset classes, with whom we work with to find very specific investment opportunities for our clients.

Please note that this service is subject to minimum investments and professional sourcing fees will apply.

Student accommodation is very popular, but how do you deal with the tenants?

Yes, student accommodation is a very popular investment due to its high yields, low entry prices and sometimes guaranteed returns. Modern student accommodation overseas is nothing like the university accommodation we remember. The Purpose-Built Student Accommodation, or PBSA as the UK refers to it, is a result of government initiatives to provide safe, appropriate student digs close to universities. These purpose-built buildings are more like luxury flats with media rooms, rooftop gardens, coffee kiosks and laundry. Students are prepared to pay a premium to rent them. They take pride in their apartments. The rent is guaranteed, and most projects include maintenance as part of the deal. So, you’ll never have a student headache, or have to worry about the apartment’s condition.

Will it be difficult to find tenants and maintain when I’m thousands of km away?

All of our property investments come with hands-off, fully-managed options. Many come fully furnished with curtains and TVs. Most of our builds come with building warranty so that solves the maintenance and fixing aspect. The properties can be managed by yourself if you choose to, Otherwise, we work with partners who will vet your tenants, check them in, instruct maintenance and collect rent.

 

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