HSBC’s latest Expat Explorer report for 2017 ranks the world’s best countries for expats to settle in, offering the highest quality of life, and the safest and richest environment for the families.
For the third year in a row, Singapore topped the list of 46 countries that qualified for the ranking, carrying the overall highest score for expat quality of life. While the Asian nation did not top the ranking in any of three main indices (for economics, experience and family), it still earned the highest score.
Behind Singapore was Norway, followed by New Zealand, Germany and the Netherlands rounding out the top five.
The economics category ranks each country using a score that summarises expats’ views on things like personal finance, the local economy and working life, while the experience category looks at things like lifestyle, the people in new countries and what it takes to get set up.
The final category – family – focuses on education and other quality of life factors that would affect the well-being of having raising a family in the new country.
South Africa ranked 33rd out of 46 countries, relatively low down on the list, with its best indicator being in the ‘family’ field (16th), while economics was the poorest indicator (41st). Despite its lower ranking, South Africa has emerged as one of the hottest property markets for expats, the report showed.
Globally, expats have an average gross personal income each year of just under US$100,000, HSBC said.
They earn on average 25% more than they did at home, and more than one in ten expats (14%) say their income has doubled since moving abroad.
According to HSBC, many expats take with them their financial attitudes to investing, which highlights property ownership as a valuable investment – and with the appetite for international
property ownership growing, 62% of expats own a property somewhere in the world, with 9% owning bricks and mortar in both their home and host country.
Three quarters (75%) of British nationals overseas own a property, influenced by a strong sense of the importance of home ownership in the UK culture.
This puts British expats third in the expat property ownership rankings (just behind Sri Lankans and Egyptians), closely followed by Indian expats at 74%, the banking group said.
Three quarters (73%) of expats in Norway own a property, making it the country with the highest rate of expat property ownership out of all countries measured. This is followed by France (69%), Portugal (64%), New Zealand (63%) and South Africa (61%).
The value of some Cape Town residential property has nearly doubled in the last seven years with, in many cases, a 10.5% per annum average increase in value. Some people, says Rowan Alexander, director of Alexander Swart Property, are now saying that Cape Town homes are overpriced.
However, he says, those coming from the UK or Europe to buy a suburban house here are staggered at how inexpensive our properties still are: on the current exchange rates, they are often able to get homes in Cape Town at 15-20% of what they would pay back home.
“Looking at this matter in a worldwide context,” says Alexander, “one has to realise that Europe and the UK have had a highly active property market for well over 500 years whereas our property market is less than 100 years old. It is so young that we have only recently begun experiencing what the First World has witnessed for centuries, i.e. greatly increased values caused by rapid influxes of people to the urban areas.
“I know that South Africa’s big cities have seen this trend for some time but we are still in fact in the early stages of the densification that has led to the central precincts of the big cities – New York, London, Paris, Berlin, etc. – reaching astronomical price levels, with concomitant spinoffs for the suburbs surrounding them.”
Densification of peripheral, suburban areas
Alexander believes that much South African property is undervalued because, he says, if you accept that our major cities will inevitably follow the same trends as those elsewhere, they will continue to densify and although this may cause slum areas in certain precincts, in others CBD property values will rise exponentially – and this, in turn, will lead to further densification of the peripheral and suburban areas.
In Cape Town, says Alexander, the city council already encourages the densification of those suburbs lying within relatively easy commuting distance of the CBD – and certain developers, such as Rawsons, have been able to cash in on this and build multi-unit apartment blocks where previously there were only houses on separate plots.
“In the long run, the price trend will continue to rise upwards,” says Alexander, “because of increased demand for urban and peri-urban space and ongoing densification. We cannot simply spread out interminably: we will continue to consolidate and this consolidation will make all those areas affected and those near to them more and more valuable.”
This article appeared on www.bizcommunity.com
Young upwardly mobile property buyers are now a force in the property market, especially if they are living and working overseas most of the time.
Discussing this, Tony Clarke, MD of Rawson Properties, said that this trend to gain momentum despite the new strength of the rand and the slower capital growth predicted for property.
“I have recently been in touch with two adventurous young South Africans who did a two year stint in Afghanistan where they earned in the region of R50k per month – far more than either ever earned in SA.
“One came home and blew most of his savings on a R400k car. The other, on my advice, put the same amount into buying a flat in Gordon’s Bay and an old, cheapie car.
“The two are likely to return to Afghanistan in two years’ time. By then the expensive car, if sold, will have lost almost 50% of its value, but the cheap car will probably sell at very close to what was paid for it.
“The Gordon’s Bay flat is producing a rental of R48k per annum, which will rise at 10% annually on a compound basis. It will also appreciate at 8% per annum, giving it a value in five years of R590k (47% up on the purchase price). By then, too, it will have generated an income of R360k.
“Which of the two young men has shown the most investment sense?”
Clarke has seven pieces of advice for other upwardly mobile people contemplating property as an investment, all of which, he said, has been tried and tested in the market and in his own career.
“First, accept that property is always a long-term investment with ups and downs. If you are out for a quick buck, you will not find it in property.
“Second, set yourself the goal of building up a property portfolio which you expand steadily. Do not sell your investment property, even to buy another.
“Third, do not rush this process: Avoid the temptation of buying many highly bonded properties. Rather buy one and gear it correctly before you move on to the next purchase. Later, as your income increases, it may be possible to buy more than one property at a time.
“Fourth, diversify your portfolio: Try to invest in both freehold and sectional title residential property, as well as small commercial and industrial units. Try also to avoid being in one area. The markets fluctuate: if you are spread wide, the rises and falls will be cushioned.
“Fifth, accept that your own home is part of your portfolio. Too often, as salaries increase, so does the desire for a bigger and better home, resulting in huge bond repayments having to be paid. Rather have a moderate home and save by having a small bond here and use the spare cash to buy elsewhere where you will earn rent.
“Sixth, unless you face financial disaster, do not sell. The ancillary costs of buying and selling are high – you will have capital gains tax (CGT), agent’s fees, transfer and conveyancer's fees – all of which will eat into your profit.
“Seventh, focus on income rather than capital growth. The more cash you can actually collect monthly, the better your chances will be of buying elsewhere. Focus on the cash and the capital growth will look after itself.