The surge in the value of the rand against the dollar has given investors an impetus to move funds offshore – and made US property all the more attractive as a home for their money.
With the turmoil in the markets in the wake of the UK’s Brexit vote, and increased optimism at home following the local elections, the rand reached an 11-month highon 16 August, closing at 13.27 to the dollar, compared to 15.88 on 18 May. Effectively that meant South Africans could buy US property at 16% lower prices than just two months before.
Not surprisingly, agents have seen a sharp rise in interest from South African buyers. Matt Lavin of Benoit Properties International says: “Given the strength of their currency, South Africans are seizing the opportunity to derisk their portfolios by moving funds into dollars – and to snap up US property at a discount at the same time. Buyers are seeking rand protection, high yields and long-term security – and our US properties tick all the boxes.”
In fact US residential property has been attracting increasing interest from overseas buyers for a while.Sales to foreign nationals rose by 2.8% in the year to the end of March 2016 to reach over 214,800, according to figures from the National Association of Realtors show. Of these, Florida was the most popular location, accounting for more than one in five (22%) of all sales.
The ‘sunshine state’ has enduring appeal for overseas buyers including Latin Americans, Europeans and Canadians, thanks to its pleasant climate and its popularity as a holiday destination. Orlando is the most visited city in the US, with over 97 million tourists a year.
An added attraction for buyers is that, while prices have been rising for the past two to three years, they are still around 50% below their peak in 2006. Two-bed apartments start from under $100,000 and, because of the low entry point, offer rental yields of around 6-7%.
Corbus van Zyl, a South African investor who bought a one-bed apartment in Florida in July, said: “I think it’s a safe, long term investment in a stable environment, with relatively low barriers to entry. Prices are affordable and transfer costs are only 3% of the purchase price.”
One of Florida’s most exciting new developments is Bayside in St Petersburg. Located directly on the Gulf of Mexico, it is set within 88 acres of landscaped waterfront parks alongside Tampa Bay and boasts a yacht club, three resort-style swimming pools, gym and tennis courts. Bayside is within easy reach of the shops, bars and restaurants of downtown ‘St Pete’ and a short drive from the white powder beaches of St Pete’s and Clearwater.
Benoit Properties is offering one-bed apartments from $99,900, each one with direct views over the water, making them ideal for investment or future personal use.
Yields come in at around 6-7% net, with Benoit’s property management arm taking care of the day-to-day affairs.
Another option is Melbourne on the Atlantic coast, which was ranked in the US top 15 fastest recovering real estate markets and voted the seventh best place to live in America. Benoit has apartments in Cypress Cove, a gated community which has seen a significant investment, starting from $84,900. Cypress Cove is located just ten minutes from downtown Melbourne, close to major employers and with excellent public schools.
Matt Lavin adds: “Despite the weaker outlook for developed countries, the US remains the world’s largest economy with a stable political system. Our investors are typically looking five to ten years ahead. They see US property market as a secure place to park capital for long-term income and growth. The added value for South African investors presented by a stronger rand is an added bonus and presents an unmissable opportunity.”
Established in 2005, Benoit Properties provides selected buy-to-let properties to clients worldwide through its dedicated offices in the UK and USA. Benoit simplifies the task of property acquisition providing everything from property sourcing and consultation, right through to completion and effective ongoing rental management of your assets. Since its inception, it has facilitated over $300 million worth of real estate transactions and has helped thousands of clients acquire property safely, smoothly and successfully. For further information see www.benoitproperties.com