by BONNY FOURIE, Property360
Data shows 15.7% of sellers are packing up and leaving South Africa; double the number recorded in 2017.
“Emigration sale” posts are increasingly popping up on Facebook timelines and online platforms as more South Africans sell their possessions and homes in the quest for new lives abroad.
Although there are no exact figures on just how many people are leaving the country each month, emigration-related property sales show numbers are rising. In Q4 2017 FNB data indicated 7.3% of property sales were related to emigration. Almost two years later, in Q3 2019, this has more than doubled to 15.7% of total volume sales, says Siphamandla Mkhwanazi, senior property and consumer economist at FNB.
And this volume has “not shown any signs of stabilising”. “Emigration-related sales have increased across all major regions. Year-to-date, Durban has the largest proportion of such sales, while Cape Town has the smallest.” According to the regional figures, 17.7% of property sales in Durban are related to emigration.
This is followed by Nelson Mandela Bay (17.17%), Tshwane (15.55%), Joburg (14.63%), and Cape Town (13.45%). “The emigration trend is having a negative impact on house prices in South Africa, but this benefits prospective buyers because there is ample supply and they are able to score attractive discounts on market prices,” Mkhwanazi says.
In Constantia Upper, “unreasonably high” levels of emigration started at the time of the water restrictions last year, and were made worse by political statements about land expropriation without compensation, says Marie Durr, area specialist for Greeff Christie’s International Real Estate.
Greeff chief executive Mike Greeff says the most number of emigration sales are of family homes in established family suburbs such as Constantia. Jacqui Wood, a Greeff area specialist for Constantia Rural, recently sold property for a young family who are emigrating to Australia and an elderly couple who are moving to live with their family in the United Kingdom, and she signed a mandate for an Irish expat going back home.
FNB’s figures showing an increase in emigration-related selling is “quite representative” of the Winelands market this year, says Chris Cilliers, chief executive and principal of Lew Geffen Sotheby’s International Realty in the area. Properties being sold for this reason are usually family homes, although young professionals are selling their townhouses and apartments on emigrating.
Emigration selling as a percentage of the total has been on a rising trend for the past five years, despite a slight slowdown last year, and currently is as high as 20% to 25% in certain areas, says Gerhard Kotzé, managing director of the RealNet estate agency group. Emigration sales are much higher this year than over the past five years, agrees Lolly Unterslak, property consultant at Jawitz Properties Atlantic seaboard.
About 15% of this branch’s sellers are emigrating. The northern suburbs of Joburg and the southern suburbs of Cape Town have been most affected by emigration sales this year, says Berry Everitt, chief executive of Chas Everitt International property group. However, the number of Capetonians emigrating is small when compared to the Joburg markets, reports Rob Stefanutto of Dogon Group Properties.
Richard Hardie, chief executive of Knight Frank South Africa, says he has also seen less emigration-related selling in Cape Town than in other provinces. “At the end of the day Cape Town is still a destination, so I tend to find even if people are thinking of going somewhere else they still keep a base in Cape Town, but might just make it slightly smaller.”
Samuel Seeff, chairman of the Seeff Property Group, says there is definitely a new wave of emigration from South Africa, and most areas are seeing an increase in listings by those looking to emigrate. These sales make up 10% to 15% of the agency’s listings. “But asking prices are often on the high side and slower demand is putting pressure on sales turnover.”
Those who cannot emigrate are “keeping the market ticking over”. “These buyers are largely ‘stuck in South Africa’ and are committed to staying and are happy to buy. “They are able to take advantage of the favourable mortgage climate but they have no discretionary money.
“This is generally the lower-market to mid-market sector up to R1.8 million with some overflow to around the R3m price market. They comprise about 90% of buying activity,” Seeff says.
Unlike expats, foreigners are still keen to buy in South Africa.
The number of South African homeowners who are selling in order to emigrate may be rising, but there has also been “some improvement” in the number of foreigners buying locally. FNB’s Siphamandla Mkhwanazi says these purchases account for “little over 2% of the market”.
Lightstone data indicates that of the 256 428 property transfers in the country so far this year, 6 779 – or 2.64% – were sold to foreign buyers. In 2018 foreign property purchases accounted for 2.44% and in 2017 a total of 2.36%. From 2017 to 2019 to date, Gauteng recorded the most foreign purchases with 11 525, which is 3.13% of the total number of purchases during this period.
The Western Cape came in second with 5 919 foreign purchases, accounting for 2.9% of the total. Since January this year, the Re/Max Living offices in Cape Town have concluded 27 sales to foreign buyers, nine of them to Germans. “Cape Town remains an attractive option for foreign buyers.
Over the last year (January 2018-January 2019), 12.5% of the office’s mandates were sold to foreign buyers, an increase on the previous year’s 10%,” says the broker/ owner Susan Watts. Knight Frank SA’s Richard Hardie says: “We are not really seeing people returning at this moment in time,” but adds there is a “good level” of foreign buying. “More serious ones will be here in December. We have also seeing a few investment buyers recently from New York.”
Charles Silbert, Greeff area specialist for Claremont Upper, says the number of expats returning has slowed down in his area, while the agency’s Marie Durr says there are “very few” expats returning to Constantia Upper. Chris Cilliers of Lew Geffen Sotheby’s International agrees: “We have not seen any expats for quite a while.”
She says, however, that the Winelands are seeing a “steady stream” of foreign buyers who purchase for lifestyle and often spend summer in Europe and the European winter in South Africa. The levels of buying by returning expats or expat investors are currently “virtually zero”, says RealNet’s Gerhard Kotzé.
“We are seeing higher numbers of buyers from other African countries. They are mostly acquiring homes for their own use and generally prefer to live in older suburbs in major cities or close to new commercial hubs.”
In his 2019 property market overview, Pam Golding Property group chief executive Andrew Golding says March to September saw foreign purchases account for just over 3% of the total number, with buyers from 36 countries. Lolly Unterslak of Jawitz Properties says she has not made any sales to expats but the Atlantic seaboard sees regular inquiries from foreign buyers.
Foreign buyers outweigh expat buyers, agrees Chas Everitt’s Berry Everitt: “Foreign buyers are more in evidence, especially from elsewhere in Africa, India, Indonesia and China, where there are dollar millionaires and billionaires looking for good property investments.”
UK, US, Australia, New Zealand, Europe and Canada preferred.
Whenever there is economic or political uncertainty, migration practitioners see increases in emigration-related inquiries, says Robbie Ragless, director at New World Immigration. In the past five years these were seen when minister Pravin Gordhan was fired, when details of the land expropriation bill were released, and when load shedding was at its peak.
There has been a “huge increase” in business people wanting to move their businesses abroad, especially to the US. Australia was also a popular destination for South Africans considering leaving.
“But with their tightening their point counts, Canada has surged through offering young, skilled professionals with only a few years work experience an opportunity to secure permanent residence.” Ragless says 50% of their clients are families looking for safe living environments for their children.
About 20% are business or investor clients, 20% family-related inquiries (spousal visas and dependents) and 10% student and visitor visas. Those who own property in South Africa often sell to move to Europe or the UK, although younger families are also looking at Canada, Australia, and New Zealand, says Chris Cilliers of Lew Geffen Sotheby’s International Realty.
“There is a growing trend among younger people with education qualifications to move to Asian countries, and they often settle there permanently.” Lolly Unterslak of Jawitz Properties says Atlantic seaboard sellers vary in age from young singles and newlyweds to middle-aged families looking to go to Australia, the UK and Israel.
Those who have left are generally younger, skilled South Africans who opt for Australia, or older people who opt to join their children in England, says Knight Frank SA’s Richard Hardie. Emigrating sellers in Constantia Upper are choosing Australia, New Zealand, the UK and Canada, says Greeff’s Marie Durr. Most prospective emigrants seen by the Chas Everitt International are aged 35 to 55, says Berry Everitt, and their destinations are most often Australia, the UK, the US and Europe.
“Emigration for people younger or older than this bracket is much more difficult as it requires exceptional educational qualifications or the investment of millions of rands to acquire a golden visa.”
Older people who can afford to buy a golden visa or retire in another country with the support of ex-pat children are one of three main categories of emigrants, says RealNet’s Gerhard Kotzé. The other two are graduates in their 20s who do not own property to sell, and people in their 30s and 40s with families and professional, technical or artisanal skills.
The biggest volume of emigration seen by the Seeff property group is to the US, Australia, New Zealand, Canada, the UK, Netherlands and Germany. Many sellers are also investing in second passports, says chairman Samuel Seeff. Due to the current politico-economic climate and a somewhat weak property market, there’s been a “notable uptick in demand for second passport residency programmes”, agrees Nadia Read Thaele, managing director for LIO Global.
Property owners selling in order to emigrate mostly own apartments and small houses they must sell within “relatively short deadlines”, says Dogon’s Rob Stefanutto.
“Most sellers at this stage are not achieving their selling prices. Depending on the markets, we see anything from a 6% to 7% markdown. Or they let their homes until they get the prices they want.” Often sellers need to sell urgently, agrees Greeff’s Mike Greeff, but this can be tough in a buyers’ market.
“Some sellers are happy to let their homes if they have not sold in time.” Greeff’s Marie Durr says most sellers are prepared to take a cut because they need the funds to emigrate. While some sellers let their homes if they cannot sell before they leave, many plan their emigration for “quite some time” so they do not run out of time, says Chris Cilliers of Lew Geffen Sotheby’s International Realty. But generally no-one is achieving their asking prices.
“Properties stay in the market for a long time and will not sell unless owners drop their prices.” Denise Dogon, chief executive of Dogon Group Properties, agrees: “Achieving asking price is almost a thing of the past. Today we have an opportunity market where buyers can dictate price to a certain respect.”
Sellers on the Atlantic seaboard do not seem to have major deadlines to sell, says Lolly Unterslak of Jawitz Properties. “Some leave before selling and others are not willing to ‘give away’ their properties. Our sellers mostly seem to have offshore funds so they leave anyway.”
Seeff’s Samuel Seeff says most middleclass sellers need to sell, but there those who may emigrate if they have received a good overseas job offer, and can wait for their house to sell. “But there is not a huge trend of price cuts to emigrate.”
RealNet’s Gerhard Kotzé says emigration sellers are generally selling for about the same percentage below asking price as other sellers, which is about 10%.