Saturday, 29 November 2008

‘For the times, they are a-changin’.........maybe

Even when you read these words above, the whiny voice of Bob Dylan pops into your head willing you to sing along even if you don’t want to. Compare this to the current property situation, the questions remain: 

Are the times for property really changing?

Or are things going to get a lot worse before they get better?

For the past 2 years, interest rates have been increased 10 times in order to curb the inflation monster. Current prime rate stands at 15.50% whilst inflation has peaked at 13.6% (a far cry from the projected 3%-6% margin set by the SARB) The Rand has devalued by 40% this year alone & our political situation leading into the 2009 elections, seems wonky at best.

But to every cloud there is a silver lining? Maybe.......

In the past few months, USA, Australia, New Zealand, the European Central Bank, Turkey and even England have cut their interest rates in order to prevent the looming global recession. So why is South Africa the odd one out?

Trevor Manual has said that the impact of the global recession still has to be absorbed into the economy, and therefore a ‘wait and see’ attitude is currently held. But with real estate agents down 50% (maybe not such a bad thing), stock market down, platinum down & business confidence down, maybe it’s time to light the fires & burn the tires !!

(As long as the Rand doesn’t weaken more to negate the expected rate decrease)

The MPC meets on 11/12 December.

Let’s hope they take a feather out of the cap of the Springboks victory against England, by defying the odds & putting the market on course for a recovery leading into 2009.

Please Uncle Tito, how about an early rate cut to get us into the Christmas spirit........

Tuesday, 18 November 2008

South Africa Property Review - From Politics to the Property Market

You must be living on the moon if you haven’t been keeping up to date on the political situation in SA: From the ‘Shikota Express’ to the ‘ANC’s jitters’ over the dissident walkout, the 2009 General Elections is shaping up to be a humdinger !!

And with this change in the political landscape, the property market braces itself for either another interest rate that remains unchanged, or an interest rate reduction (The oldest trick in the book in garnering votes just before a general election :

Thus, these questions remain: 

How long will Tito Mboweni ignore global sentiment and keep interest rates unchanged? 

Will the weakness of the Rand prevent an interest rate reduction? 

Will the recent decline of inflation from 13.6% to 13% in August 08 swing the vote in favour of an interest rate reduction? 

But not all is gloom and doom, and within such a market we are currently experiencing, buying opportunities abound for investors with liquidity. Expect prices to fall a further 10% going into mid-2009 which should then be a turning point, when the availability of credit becomes more freely available after a few interest rate reductions. (we hope !!) 

Suffice to say, the forecast for 2009 is not one that is painted with roses and petals, and more pain is yet to come for homeowners. But I can see the market ‘bottoming out’ in mid-2009 after the first interest rate reduction in the first quarter of 2009. 

A full recovery is expected by end 2009 and leading up to the ever-important 2010 World Cup, growth should be back in the black. 

Monthly Indicators: 

Prime Interest Rate = 15.50% (Last Year: 13.50%) 

ABSA House Price Index = 1.2% (Last Year: 13.6%) 

FNB House Price Index = 4.1% (Last Year: 8.8%) 

Standard Bank House Price Index = 2.5% (Last Year: 10%) 

Sunday, 5 October 2008

Panama – The Land of Canals and Hats

Fast Facts

· 3rd Largest Economy in Central America.
· There are no restrictions on ownership of property by foreigners.
· Foreigners may engage in commerce or industry without limitations.
· Capital: Panama City
· Population: 3.3 million
· Currency: Panamanian Balbao

Economic Overview

‘If I buy a condominium, do I get a free panama hat? And can I swim in the canal or must I wait for the boats to go past?’ Don’t you just love those stupid tourist questions………..

Panama, officially the Republic of Panama, is the southernmost country of Central America. Situated on an isthmus, some categorize it as a transcontinental nation, connecting the north and south part of America. It is bordered by Costa Rica to the north-west, Colombia to the south-east, the Caribbean Sea to the north and the Pacific Ocean to the south. It is an international business center which also acts as a transit country. Although Panama is the third largest economy in Central America, after Guatemala and Costa Rica, it has the largest expenditure on resource consumption, making the country the largest consumer in Central America.

Because of its key geographic location, the economy of Panama has a mixed-western economy mainly based on the services industry, heavily weighted toward banking, commerce, and tourism.

Panama's economy is based primarily on a well-developed services sector that accounts for nearly 80% of its GDP. Services include the Panama Canal (no surprises there J), banking, the Colón Free Trade Zone, insurance, container ports, and flagship registry, medical and health. While the country's industry includes, manufacturing of aircraft spare parts, cements, drinks, adhesives, automobiles, textiles and more recently, handmade artisan creation of Bush planes (No, this is not the George W variety…..).

Panama has the third highest GDP per capita in Central America and GDP growth for 2007 was 8.1% compared to 6.5% in 2006 (that’s some serious growth !!)

Property Market Review

The real estate frenzy in Panama continues as more major developments are underway. The country is busy re-inventing itself as Latin America’s regional logistics and services hub.

Around 300 tower projects, making up more than 40,000 units, are reportedly being constructed or publicly announced. Even the Trump Ocean Club International Hotel and Tower, part of Donald Trump’s (the big man himself !) $400-million project in Panama City, has started construction.

During the 1970s an offshore financial industry flourished in Panama but then came the dark years of the rule of Manuel Noriega (Dictator, Ex-CIA, Ex-Spy……I think you get the point) who was toppled by an American invasion in 1989.

In 2004, Martin Torrijos defeated ex-president Guillermo Endara. In October 2006 Torrijos’ referendum to expand the Panama Canal was massively supported with the cost of expansion being close to $7.5 billion and is expected to be completed in seven years time.
Several other mega-projects are in the wings:

· Panama has signed an agreement with Qatar for the construction of a US$7 billion oil refinery in Puerto Amuelles.

· A consortium led by Hong Kong’s Hutchison Whampoa, plans to turn Balboa into the largest port in Latin America.

· China's government-owned shipping operator, COSCO, in alliance with Ports America Group, is to build a second megaport on the Pacific coast at Farfan (even though Panama recognizes Taiwan :)

However, the current problems in the US appear to be moving south (as is the rest of the world at the current moment!!) with Panama's economic growth decelerating sharply during the first quarter of this year from 6.9% which is well down on the 10.41% economic growth during the same period of 2007.

Home-grown obstacles to growth are also emerging with Panama’s 90-day tourist visa being shortened to 30 days for security purposes, with an allowable extension of 60 more days. The changes have made it harder for foreign visitors to make extended property tours and go through the closing process in one visit. Legislators are considering reversals or modification of this new law due to its feared consequences to the second home market, but there's a definite chill in the immigration climate.

As with much of Latin America, Panama struggles with getting corruption under control, cementing the rule of law, and generating enough educational reform and economic growth to reduce its stubbornly high poverty rate. Combined with the financial burden of expanding the Panama Canal -- and the uncertainty over how much additional revenue it will generate – foreigners here are faced with the growing possibility of reduced tax incentives and higher taxes going forward.

However, the current market conditions aside, the following does give Panama that ‘edge’ above it’s Central American competitors:

- Panama City records rental yields of up to11.23% !!

- Individual Taxes are moderate with a maximum of 27% per person.

- Transactions Costs are low with all costs included equalling approximately 7% (This includes the estate agents fee :)

- Purchasing property that began construction before July 2009 will be exempt from paying property taxes for 20 years


So, take into consideration the amount of investment going into Panama, the current economic growth, the upgrading of the canal as well as the spectacular investment opportunities that are currently available………And what do you get?

A country that has all the attributes to be the ‘New Dubai’ or the ‘New Miami’………..as long as the big brother up North doesn’t ruin the party.

Sunday, 7 September 2008

Cyprus - The Island of Aphrodite

Fast Facts

- 3rd Highest GDP per capita in the European Union

- Non-Residents investors may freely repatriate proceeds
from any investments

- Capital: Nicosia

- Population: 800 000

- Currency: Euro (€)

Economic Overview

'The island of Cyprus is also called the Island of Aphrodite, which in Greek Mythology is the goddess of beauty and love........'

'This museum is boring !! Let's go and demolish a plate of calamari, finish off a few bottles of graca and then check out the nightlife !! :)'

Officially the Republic of Cyprus is a Eurasian island country situated in the eastern Mediterranean, south of Turkey, west of the Levant, north of Egypt, and east of Greece.

Cyprus is the third-largest Mediterranean island, and one of the most popular tourist destinations, attracting over 2.4 million tourists per year. A former British colony
(why are we not surprised?!), it gained independence from the United Kingdom in 1960 and became a Commonwealth republic in 1961. The Republic of Cyprus is a developed country and has been a member of the European Union since1 May 2004.

The island in itself is effectively partitioned by the "Green Line" - dividing the two parts from Morphou through Nicosia to Famagusta - with the northern third inhabited by Turkish-Cypriots and the southern two-thirds by Greek Cypriots. The border is patrolled by United Nations troops. (Just in case........)

Cyprus acceded to the EU in 2004 and in July 2007, the currency was locked into the Euro. From 1st January 2008, the Cyprus Pound was replaced by the Euro, with one Euro worth 0.585274 Cyprus Pounds.

Since its accession to the EU, Cyprus has tightened its fiscal policy, following a slippage in 2003 which saw a general government deficit of 6.3% of GDP. The deficit was reduced to 4.2% in 2004, and only 1.2% in 2005 which is well within the EU prescribed 3% of GDP ceiling.

The Cypriot economy saw good growth in 2007, recording 4.4% GDP growth.

Since the heady days of the 1980's, there has also been a significant decline in inflation which recorded a very respectful 4.6% in April 2008.

In February 1997, the government revised its policy on foreign direct investment, permitting 100% foreign ownership in certain cases (Whoooohoooo !!). Regulations on foreign portfolio investment in the Cyprus Stock Exchange also have been liberalized as well.

Cyprus has concluded treaties on double taxation with 26 countries, including South Africa, and has removed exchange restrictions on current international transactions. Non-residents and foreign investors may freely repatriate proceeds from investments in Cyprus. (Gotta love that !!)

Property Market Review

The past year and a half have been quite extraordinary in Cyprus in terms of house price growth. The island is enjoying an extraordinary property boom after a long period of gentle house price rises.

Liberalization of the financial sector, a decrease in interest rates, and increased demand for higher quality housing and second homes as well as the introduction of VAT on the sale of new property, are the main drivers for the recent price increases.

Under the EU accession treaty, VAT on land purchases should've been introduced on 1 January 2008. This has helped create overnight price rises, as all new properties bought since the January 1st deadline are subject to 15% VAT on the value of the land, whereas all properties bought before this time were not. (So the idea was to buy before VAT is scheduled to be added on !!!)

However, the Cypriot government were able to postpone (don't know how they managed that??) the implementation of the VAT on land to July 1, 2008, then to August 1, 2008. Real estate agents capitalized on the confusion by enticing buyers to buy before prices increased with the imposition of VAT.

Look at what this 'enticing' did to the house price growth:

So as you can see, after good solid growth since middle 2006, it was 2008 and beyond which caught the eye !!

EU nationals who are resident in Cyprus may own as much property as they wish, but Non-resident EU nationals, may own as much land as they wish (awesome news !!)

But if Non-resident EU nationals (that's us Saffers) wish to buy any other sort of property, ownership is restricted to one house or one apartment for which approval from the 'Council of Ministers' is needed. Regardless of their residency status, nationals of non-EU countries must seek the approval of the Council of Ministers before they can own any type of immovable property.


The first question you'll ask me is 'Has Cyprus had its day & has the growth in property prices come and gone?' The answer is YES........ and NO.

YES = Due to the extraordinary situation in becoming part of the EU & by postponing the introduction VAT, house property growth has shot through the roof (excuse the pun :) thereby curtailing the historic stable growth figures once experienced before EU ascension.

NO = Cyprus is now part of the EU which promotes stability and growth to its member countries and therefore growth will continue....... albeit at a slower rate than before.

(Sources: http://www.globalpropertyguide.com/ , http://www.wikipedia.org/ ,Daily Telegraph, http://www.iafrica.co.za/ )

Sunday, 3 August 2008

United Kingdom - The Land of Fish and Chips

United Kingdom – The Land of Fish and Chips

Fast Facts

· 2nd Biggest Economy in Europe
· No restrictions on foreign ownership when buying property.
· Capital: London
· Population: 60 million
· Currency: British Pound (£)

Economic Overview

‘Oi !!.......you there, Wha’ fish you wan wiff them chips, then? I aint sellin’ no chips with no fish, innit’…..

And thus our adventure with the United Kingdom and all its peculiarities get off to a good start. But apart from the adventure, experience and ‘Greener Pastures Syndrome’, what makes this mud island one of the best places, to start your property empire?

The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK), is a sovereign island country located off the north western coast of continental Europe. The UK is a union of four constituent countries & is governed by a parliamentary system with its seat of government in London, & is a constitutional monarchy with Queen Elizabeth II as the head of state.

The UK is the fifth largest economy in the world & is one of the world's most globalised countries with London being the major financial centre of the world, in front of New York City, Hong Kong and Singapore.

In 2008, a flat in central London sold for £115m, which is believed to be the most expensive apartment the world. (Crazy money if you ask me!) That aside, UK house prices are slowing down & the long-lasting property boom seems over. UK house prices fell by 2.5% in March 2008 which is also the biggest monthly decline since September 1992. To show you what this means in the big scheme of things, have a look at the graph:

As you can see, the house price boom which started in early 1997 has now returned to those levels, and the current future sentiment is anyone’s guess. Mortgage lenders have greatly reduced the amount of loans they are prepared to make & it was recorded that lending to first-time buyers was at its lowest since early 1975.

100% mortgage loans are now no longer offered & borrowers looking for new mortgages are being thrown into complete chaos, as deals they have agreed with their broker, disappear from the market just hours before applications were to be signed. (This also happened to me !!)

So, with all these doom and gloom predictions, will we if ever, return to a hint of normalcy?

Property Market Review

The UK property market is currently in decline thanks largely to the phenomenon called the ‘Credit Crunch’? (Ever heard of it?)

Definition: A credit crunch is a sudden reduction in the general availability of loans, or a sudden increase in the cost of obtaining loans from commercial banks. So, why the ‘sudden reduction in giving out loans? Show us why in Graphs they cry !!

Have a look at the affordability of property prices by the above graph which is the ratio between house prices and earnings. House prices are now 7.0 times earnings in London, 5.7 times in the South West, 4.6 times in the Midlands, 4.5 times in Yorkshire and Humber, and 4.0 times in Scotland.

This means that UK house prices are currently more overvalued now than they have ever been !! (And if I was a bank, I’d also reduce funding until affordability returns to some vestige of normality)

So, what about the ‘upside’? …….(The UPSIDE??!! Are you kidding me??!!)

Apart from the doom-and-gloom scenario as discussed, there are still ‘pockets of light’. Rental incomes have increased at an average of 16.7% over the past year & London yields are showing a very healthy 5.7% .

A major contributor to this yield is immigration which is not only featured in London as many may think. Across the country, the average proportion of properties taken by immigrants is 20% as the UK continues to attract immigrants due to job opportunities (No, this isn’t only us Saffers !!) In addition, the economy remains strong with retail sales in the year to February rose by a stronger-than-expected 5.5 %.

Furthermore, UK house prices have been continually on the rise since 1995. From late 1995 to 2008, average UK house prices have risen from £50,930 to £179,363.This is an overwhelming 252% increase !!

Also, UK house-building has largely failed to respond to booming house prices for the past decade, largely because of building regulations. Increases in population, immigration, and a decrease in unemployment, have all added to the demand for housing as have changes in household sizes.

The Barker Review (HM Treasury), concluded that to reduce the trend in real price inflation to 1.8%, the rate of new home building would have to increase by around 70,000 homes per annum to around 195,000 per annum. Government figures show that homebuilding stagnated at 148,000 new units annually between 1989 and 2005.

In 2006, 180,000 new homes were built which is still low compared to 425,000 units in 1968……..


So forget the credit crunch, affordability & high interest rates, because as long as the UK can maintain its demand for a skilled worforce, the economy will march on unhindered through the storm.

Saturday, 5 July 2008

Dubai - The Land of Oil and Sand

Dubai – The Land of Oil and Sand

Fast Facts
· No Income, Capital Gains or any Property Related Tax.
· Residence Visa is granted to any property purchase.
· Capital: Dubai
· Population: 2.2 million
· Currency: UAE Dirham

Economic Overview

Six thousand years ago, the city of Babylon was the wealthiest in the World. It was a city of incalculable wealth, both loved and loathed across the globe for its opulence and excess.

It was built in the desert on sand and rock & stood for thousands of years, even though many prophesised that Babylon would fall ahead of its time……….Does this sound familiar?

Dubai refers to one of the seven emirates in the United Arab Emirates (UAE).

The modern emirate of Dubai has been ruled by the Al Maktoum dynasty since 1833. The emirates' current ruler, Mohammed bin Rashid Al Maktoum, is also the Prime Minister and Vice President of the UAE.

The Economy of Dubai is valued at US$ 46 billion and has been described as "centrally-planned free-market capitalism." Although Dubai's economy was built on the back of the oil industry, revenue from petroleum and natural gas currently account for less than 3% of the emirate's gross domestic product. (You didn’t know that, did you? :)

So, for you ‘right-side brain thinkers’, let’s back up all these figures we’re throwing around and look at some graphs:

Now don’t get me wrong,13% GDP growth per year cannot be sustained……….and even if and when this growth recedes, would you still be happy with 5-10%? :)

Dubai is also an important tourist destination and port (Jebel Ali, constructed in the 1970s, has the largest man-made harbour in the world !!). It is also starting to develop as a hub for service industries such as IT and Finance, together with the new Dubai International Financial Centre (DIFC).

(It is rumoured that Dubai’s oil reserves will dry up by approximately 2020, and that is why they need to steer away from oil related industries. Thus far, they’re doing a fatastic job – And did I mention that Dubai was voted safest city in the World by Interpol for the past 4 years?!!)
Property Market Review

Now before I get lambasted on how Dubai is 1) built on sand, 2) the oil is drying up, 3) many property developments are behind on schedule and might never be completed, etc etc……let me just say that for every negative calamity prophesised (remember Babylon?), every one of them has been proved incorrect thus far.

People need to live and work in Dubai. And as a place to do business, as a trading centre, Dubai continues to exceed every expectation.

In March 2008, Standard Chartered Bank forecasted an average growth of 15% in Dubai real estate prices, with net new demand for 70,000 residential units and a supply of only 57,000……….boggles the mind, doesn’t it? :)

Dubai is gaining traction as a place to live and work, despite the stress, heat, noise, and high prices. Staff numbers are surging at the Dubai International Financial Centre, an international financial hub regulated to global standards with its law in English.

Rents continue to rise in line with prices, according to Global Property Guide research. Rental yields range from 10.20% on the smallest units, to 6.88% on the largest units.
Size = 50 sq. m.
Cost = $206,400
Yield = 10.20%

Size = 100 sq. m.
Cost = $409,500
Yield = 8.23%
Size = 150 sq. m.
Cost = $605,400
Yield = 7.21%

Size = 200 sq. m.
Cost = $794,800
Yield = 7.00%

Size = 250 sq. m.
Cost = $897,000
Yield = 6.88%

(These apartments are the average of the following Development:
Burj Dubai, Dubai Marina, Jumeirah Beach Residence, Jumeirah Lake Towers & Palm Jumeirah)
Now before I get thumped by the ‘But Brigade’………But what about this?..... But what about that?…..but, but, but…..

Just look at the figures below !!.......and don’t come and tell me that transaction costs are high:

Who Pays? (Buyer)

Title Deed = 250AED

Registration Fee = 1%
Who Pays? (Seller)
Registration Fee = 1%
Real Estate Agent's fee = 1.00% - 5.00%

Average Costs paid by buyer
1.01% - 1.05%
Average Costs paid by seller

2.00% - 6.00%
So what are the benefits of buying in Dubai? And how do we go about it?

Foreign nationals (that’s us) are allowed to buy freehold properties in designated areas in Dubai. Gulf Cooperation Council (GCC) whilst nationals (that’s Dubai residents) are allowed freehold ownership anywhere in the Emirates.

Residence Visas are issued to property owners, which extend to their immediate families. These visas are renewable every three years during ownership. (So much for having to live in London for 5 years before you get a passport :)

Property Development can be either be bought using financing from the different commercial banks in Dubai (Foreigners can qualify for 90% mortgages) or staggered payments to the developer before completion. Once the development is completed and units can be handed over to the buyers, full payment of the purchase price must be made.

Combine this favourable buying process with No Income tax, Capital Gains or any Property Related Tax, and you have an almost perfect investment environment.


This modern day Babylon seems to defy logic with its incredible vision of wealth and splendour. But the questions remain:

‘When will it all end?’ ‘And will Dubai crumble and return to the sands on which it was built?
‘Or, will this city prosper and emulate the Babylon of old?

I for one back the latter.

(To view our current Dubai Developments, please click HERE

Tuesday, 1 July 2008

How and Why and When??

One of my favourite movies is 'Gattaca' where the world is devided into the super-elite, and the rest make up the 'degenerates'. But isn't this what the world is like right now, due to our own human nature?

When I started this journey, I believed that with hard work, honest opinions on which property market was set to boom (or not), and to provide the level of service that would set us apart from the rest would push Horizon into the 'super-elite'. And the truth is, I still firmly believe that we are capable of this :) It's just gonna take a little time...........

My business partner, Francois de Wet and myself completed our financial statements of our first year of incorporation. And although 'things can only improve' (Thanks for that, Francois :), I'm sure that things will go from strength to strength.

So let's get to the 'How' ?:

In his book 'How to get Rich', Felix Dennis says that the reason to get rich is not only to enjoy the benefit of what money can buy, but to be able to enjoy 'Time'. Now this might seem a tad strange for someone as wealthy as himself, but please bear with me........

Time allows us to enjoy life by providing us with no constraints to do so. Make sense? :)

And now the 'Why' ?:

I get asked this question very often and it always surprises me. Why do you work so hard? Why do you want to own your own company when you already have a day-job? Why would you succeed when so many have failed?

The answer is simple really: I have been given every opportunity to succeed in life........So what is my excuse when I do not?

And last but probably the most important question, 'When'?

In Horizon's business partnership, I am the impulsive / not tomorrow but today / sales type person. I want it NOW !! But then I have Francois who quietens things down and looks at the world with a quite perspective.

So if I may, I'll compare the answer to the Lottery (which I don't believe in, but that's another story altogether........) It is a proven fact that 90% of people who win the lottery will lose ALL of it within 5 years. The reason for this is because they were entrusted with 'too much too fast' and with no discipline to manage rather than spend..............it'll just be a waste.

To conclude, our little venture may be taking its time to go forth and conquer. But 'A journey of a thousand miles, starts with the first step'.

Tuesday, 17 June 2008

Moving into the Middle East......

After weeks of red tape, Horizon Consultancy is finally an Authorised DAMAC Property Agent !!

If you don't know, DAMAC Properties is the largest private property developer in the Middle East, specializing in offering outstanding returns, on Off-Plan property investments. 

DAMAC Properties was established in 2003 and has grown into one of the most successful residential, leisure and commercial developers in Dubai and the Middle East. DAMAC is also expanding rapidly into North Africa, Jordan, Lebanon, Qatar, Saudi Arabia and the Far East.

Notable Developments by DAMAC are:

- DAMAC Heights, Dubai Marina, Dubai 

o For information on this Development, please click HERE 

- Lincoln Park, Dubailand, Dubai

o For information on this Development, please click HERE

- Marina Bay, Abu Dhabi

o For information on this Development, please click HERE 

- Hyde Park, New Cairo, Egypt

o For information on this Development, please click HERE 

Developments can be acquired using a Payment Structure or Financing of up to 90% (yes, that includes Saffers as well !!) by a local Commercial Bank in Dubai or wherever the property in located.

If you would like more information on the above Developments or on purchasing property in the Middle East, please click HERE

Monday, 2 June 2008

A Guide to Buying Property Abroad

by Sarah Scrafford 

It’s extremely easy to make mistakes that have severe financial consequences when buying and selling real estate, more so when the property you have your eyes on is located overseas. Here are a few things to consider before finalizing the papers on that home or piece of land abroad: 

  • Don’t believe all that you hear or read about the property. It’s wise to make a couple of visits and go over the place before you even think of buying.
  • Deal only with agents who are authorized and legit.
  • Check if the seller is within his rights to sell that particular property to you – you don’t want to be caught on the wrong foot paying good money for property that’s caught up in a legal wrangle or other problem.
  • Familiarize yourself with that particular country’s real estate laws and if possible, find a good local lawyer who can guide you through the process.
  • If you plan to renovate, go through the planning permission rules with a fine-tooth comb to make sure you don’t breach any laws.
  • Open a bank account local to the country you’re buying property in. It eases your financial transactions.
  • Your country’s embassy can help in educating you about local taxes and work permits.
  • Don’t rush the process – take as long as you can to make sure you’re not given the short end of the stick.
  • Make sure you’re not quoted a higher rate just because you’re a foreigner.
  • Retain an alternative housing arrangement in case the deal falls through.
  • In case you’re paying for a house that’s yet to be built, ensure that your insurance is in order.
  • If the company you’re buying the property from is a member of the Federation of International Property Developers, it’s an added plus point.
  • The rules and regulations governing foreign property purchases vary from country to country.  
  • Talk to other fellow countrymen who have bought property in the same country to get information, views and opinions.
  • Don’t buy property overseas just because there’s a current housing boom and you hope to cash in later.
  • If you think a deal is too good to be true, check it out again and again until you’re sure there are no loopholes. 

Investing in property is a financial decision that can either pay rich dividends or get you deep in the red, depending on how wise (or foolish) you are. So be informed, be savvy, and be careful when buying property in a foreign country.  

About Sarah:  

Sarah Scrafford is an industry critic, as well as a regular contributor on the subject of entrepreneurship. 

She invites your questions, comments and freelancing job inquiries at her email address. To contact her, please click HERE


Sunday, 1 June 2008

Investment Opportunity - London, United Kingdom (£239,999)

Property in the United Kingdom has always been a good investment, but the best returns have always been experienced in the capital, London. Reasons for this include a rampant Rental Market due to the steady influx of Foreigners, Low interest rates & steady growth for the past 10 years.

But now London finds itself in a Buyers Market which bodes well for the informed investor. One such 'Buyers Opportunity' includes the following property that is up for sale:

The Property is situated in the South West of Central London in an area called, Southfields. 

(Click HERE for the location)

Details of Property: 

This newly decorated bright and attractive two bed roomed first floor flat in Southfields features a modern open-plan reception room/kitchen with a stylish interior. 

The property further comprises of two well proportioned bedrooms, a newly installed bathroom and ample storage space in the hallway. Situated on Bell Drive, Southfields the green open spaces and woodland walks of Wimbledon Common and Putney Heath are within easy reach, whilst the shops, bars and restaurants of Southfields are also nearby. 

The nearest station is Southfields Underground station that is a 12min walk away (District Line), which provides regular services to central London and London Victoria (for Circle and Victoria lines and British Rail services to Gatwick Airport). Regular bus services (2 every 10mins) also stop nearby that’s travels to Putney town centre within 5 mins.

Features of the Property: 

  • Totally re-furbished in July 2007
  • New combination Boiler and Central Heating Network (Boiler under warrantee)
  • Integrated fridge & freezer (under warrantee)
  • Newly installed Oven, Hob and Extractor Fan (under warrantee)
  • Newly fitted Bathroom
  • Two big hallway storage cupboards
  • Main Bedroom build-in cupboards
  • Ample free off-street parking
  • Flat is sold fully furnished !! 

Financials of Property: 

  • Potential rental income: £1050 - £1100/calendar month
  • Service Charge: £450/calendar year
  • Lease: 107 years remaining

If you require more information on this property, please contact me HERE

Sunday, 25 May 2008

Property Review - Mauritius

Mauritius – The Jewel in the Indian Ocean

Fast Facts

• No Capital Gains & Inheritance Tax.
• Recorded an average of 5% economic growth since 1968.
• Capital: Port Louis
• Population: 1.2 million
• Currency: Mauritian Rupee

Economic Overview

‘I wonder what it would be like to live in Paradise?’ Soft sandy beaches, Turquoise seas teeming with sealife……….and then you get to call this paradise……..Home :)’

But would you still consider it to be paradise once the novelty wore off? And would boredom soon set in, once you had ‘conquered’ the fishing, surfing, exploring…….?

République de Maurice (or Mauritius) is an island nation off the coast of the African continent, in the southwest Indian Ocean. In addition to the island of Mauritius, the republic includes the islands of St Brandon, Rodrigues the Agalega Islands. Mauritius is part of the Mascarene Islands, with the French island of Réunion to the southwest, and the island of Rodrigues to the northeast.
Mauritius attained independence in 1968 and the country became a republic within the British Commonwealth in 1992. The country has been a stable democracy with regular free elections (Yes, this can happen……..even in Africa !!), and a positive human rights record which has attracted considerable foreign investment, earning one of Africa's highest per capita incomes.
Since 1968, Mauritius has developed from a low income, agriculturally based economy to a middle income diversified economy with growing Industrial, Financial, and Tourist sectors.
For most of the period, annual growth has been of the order of 5% to 6%. If you don’t believe me, look at the graph :

And with a sustainable GDP per capita that impressive, it’s no wonder the country has the seventh-highest GDP per capita in Africa !!

The government's development strategy centres on Foreign Investment. (This is where things getting really interesting………) Thus far, the country has attracted more than 9,000 offshore entities; many aimed at Commerce in India and South Africa. The investment in the banking sector alone has reached over $1 billion !! :)

In order to provide residents with access to imports at lower prices and attract more tourists going to Singapore and Dubai, Mauritius is gearing towards becoming a duty-free island within the next four years.(Not that they would EVER admit to copying the idea from Dubai…….) And just to reiterate their stance on this Duty Free Issue, the Finance Minister, Rama Sithanen in the 2007-2008 Budget, reduced the corporate tax to 15%.

Mauritius has also drawn up plans to become the first nation to have coast-to-coast wireless internet access. (Can you imagine what this will do for the already fast growing Economy??!!) The wireless hot spot currently covers about 60% of the island and is accessible by about 70% of its population………

Property Market Review

The Mauritian government’s new Development Strategy, has only recently made it possible for foreigners to own property. This strategy is divided into 3 Government Schemes’:

1) Permanent Residence Scheme (PRS):

a. Under the PRS, the foreign investor can purchase up to 5,276 m2 of residential property which must be at least 100 meters away from the sea.
b. A minimum investment of US$500,000 is required.

2) Integrated Resort Scheme (IRS):

a. Under the IRS, foreigners can purchase luxury villas of up to 5.276 m2 each.
b. As a property-owner, a residency permit is also granted, which is extended to the investor’s family. (How awesome is that??!!)

3) Scheme to Attract Professionals for Emerging Sectors (SAPES).

a. SAPES is an incentive to encourage professionals to work in Mauritius, and allows foreign professionals to acquire residential property.

Mauritian Rental Law is generally pro-tenant & sets out 2 important elements to renting:

1) Rent:

a. The initial rent is regulated by the Fair Rent Tribunal and cannot be changed within the first three years of tenancy.

b. Rent increases must be justified by the landlord.

2) Tenant Security:

a. A landlord must go through the court system when evicting a tenant, as only District Courts have the power to evict.

b. In case of eviction due to landlord’s use of the property, the court can order that the tenant be compensated for any prejudice suffered.

But rental yields still give us a healthy 6.17% as below:


To Buy:

100 sq. m. = $85,000
200 sq. m. = $160,000
300 sq. m. = $250,000
500 sq. m. = $350,000


100 sq.m = 4.24%
200 sq. m = 4.50%
300 sq. m = 5.76%
500 sq. m = 6.17%

Probably the only thing keeping Foreigner out of Mauritius at the current moment (this is both a good and a bad thing………but I’m confident that this will change) is the high Transaction costs…….


Notary’s Fees = 0.5% - 2% (+15% VAT) (Buyer Pays)

Agency Fees = 1% (+15% VAT) (Buyer Pays)

Registration Fee = 10% (Seller Pays)

Transfer Tax = 5% (Seller pays)

Site Plan = US$1,606 (Seller pays)

Stamp Duty = US$5 (Seller pays)

Costs paid by Buyer 1.725% - 3.45%

Costs paid by Seller 18.04%

………and then the high Rental Income Tax costs:


Monthly Income (Tax Rate%)

US$1,500 = 12%

US$6,000 = 16.7%

US$12,000 = 17.4%

But there being no Capital Gains tax, these costs are still very reasonable……………as long as you follow the old adage,’ You make your money when you BUY, and not when you SELL’:


In the past, Mauritius has definitely had its share of problems: bad weather which affected the sugar cane crop which in turn affected the economic output / growth.

But now that the government has started making a concerted effort to create a ‘Mini-Dubai’, I believe that Mauritius is geared to explode onto the international scene in the next few years………..but shhhhhhhhhh, and don’t tell anyone :)

Saturday, 19 April 2008

Property Review - Egypt

Egypt - The Land of the Pharoahs

Fast Facts

· GDP growth currently at 7%

· No capital gains or inheritance tax.

· Capital: Cairo

· Population: 80 million

· Currency: Egyptian Pound

Economic Overview

'I don't where to go first, the Pyramids of Giza or the Valley of the Kings? Why not do both and even add on a Red Sea scuba dive in Sharm El Sheikh'? Well, that depends on how much time you have? Oh.........about a week'

You might need a little longer than that, as you'd only be able to cover half of Cairo in a week J'

Officially, the Arab Republic of Egypt, is a country in North Africa that includes the Sinai Peninsula, a land bridge to Asia. It borders Libya to the west, Sudan to the south and the Gaza Strip and Israel to the east. The northern coast borders the Mediterranean Sea; the eastern coast borders the Red Sea.

Egypt declared its independence from Great Britain in 1922 and only became a Republic in 1953. Hosni Mubarak became Egypt's 4th President in 1981 since being declared a Republic and is currently serving his 5th term in office.

Under comprehensive economic reforms initiated in 1991, Egypt has relaxed many price controls, reduced subsidies, reduced inflation, cut taxes, and partially liberalized trade and investment. This has promoted a steady increase of GDP, as well as the annual growth rate. The Government of Egypt tamed inflation bringing it down from double-digit to a single digit..........Wanna see?! :)

And yes, I PROMISE that this graph is correct as the nosedive from 25% inflation in the late 1980's is truly incredible !! And just to top that, GDP is currently rising smartly by 7% per annum due to a successful diversification.

Egypt is currently, truly coming into its own and the emerging sectors such as IT Sector and the Investment Climate (yay !! :) are showing the way !!
The Egyptian IT sector has been growing significantly since it was separated from the transportation sector. The market for telecommunications market was officially deregulated since the beginning of 2006 according to the World Trade Organisation agreement.

The government established the Information Technology Industry Development Agency (ITIDA) as governmental entity. This agency aims at paving the way for the diffusion of the e-business services in Egypt, capitalizing on different mandates of the authority as activating the Egyptian e-signature law, and supporting an export-oriented IT sector in Egypt.

The Egyptian equity market is one of the most developed in the region with more than 633 listed companies. Market capitalization on the exchange doubled in 2005 from USD 47.2 billion to USD 93.5 billion, with turnover surging from USD 1.16 billion in January 2005 to USD 6 billion in January 2006.

Property Market Review

After years of only state-built housing, in the early 1990s the government allowed private housing projects. And guess what happened? Inexperienced companies jumped in and soon you had a massive oversupply which soon ended up with many Developers going bankrupt (Will they never learn?! : )

But now, the situation has changed.........WHY? (do I hear everyone shout !!)

Well, if you wait a second, I'll tell you........:

- Egypt offers excellent rental income returns.

- The Gulf is now exploding with new oil money, and sees Egypt as less risky than Lebanon or Jordan.

- Egypt has a rapidly-growing economy (remember the 7%?) with a fast-growing outsourcing sector.

- There is enormous European interest in Red Sea property.

The government initiated a managed float of the Egyptian Pound in January 2003, leading to a sharp drop in its value which has since recovered. And what happens when a currency weakens against international currencies, and you have a significant Expat Community? They start buying of course !!! And so did everyone else............

The passing of the Real Estate Finance Law in May 2001, created a mortgage market. (Can you believe that it took them this long??!!!) For the first time since the 1948 civil code, banks can now repossess properties and evict owners who default on loan repayments.

Total mortgage lending is expected to grow rapidly to LE 4 billion (US$690 million) by the end of 2007, as the Egyptian Company for Mortgage Refinancing (ECMR) begins operations. ECMR is likely to help lower interest rates, which have hitherto been an obstacle to lower income groups. Lending rates in the 12% - 14% range have discouraged housing purchases, but in turn increased rentals due to affordability.

Now, let's start at how we as 'Foreigners' can secure property in the Land of the Pharaohs:

Foreigners can buy property in Egypt, under Law No 230 of 1996. (Well, that's a start J) But, foreigners cannot buy more than two pieces of real-estate, and the purchase must have the approval of the Council of Ministers, which takes around two months.

Property in Sharm El Sheikh follows a different regime where foreign purchasers in cannot acquire freehold rights, but only 99 year leases. Foreign purchasers must therefore follow a procedure called a 'signature validity court verdict'.

The 'signature validity court verdict' method could well become the dominant route for foreigners, because it allows the foreigner to buy as many properties as he likes, rent them, and sell when he likes.

The following steps must be taken:

1. A 'negative' certificate for the property should be obtained from the government, stating that there are no mortgages, pledges, or any other sort of rights on the property registered to any other party.

2. The tax authorities must issue a certificate stating what taxes are due on the property.

3. A sale / usufruct contract should be drawn up.

- The validity of the sale depends on the terms of the contract.

- So it is essential for the purchaser to have a detailed contract, defining the property boundaries, the purchase price, the method of the acquisition of the rights of the previous owner, and the method of payment.

- The contract must be in Arabic, since Arabic is the only language recognized by the courts. (very NB !!)

4. Purchasers must issue a power of attorney to their lawyer so that he can act on their behalf, a procedure which requires the purchaser to obtain a multi-entry visa:

- Then the lawyer files a legal suit to obtain a court verdict certifying that the signature on the sale / usufruct contract truly belongs to the seller

(This is the 'signature validity court verdict').

- This suit will take between 6-8 months.

It's always very important to have a look at the transaction costs involved when making your purchase, and to give yourself an idea of the 'hidden costs' involved, have a look at this table:

Transaction Costs

- Registration Fee EGP500 - EGP2,000 buyer

- Legal Fees 3% buyer

- Real Estate Agent's Fee 2.75% - 3.30%

- Transfer Tax 2.50%

- Capital Gains Tax 2.50%

- Costs paid by buyer 3.10% - 4.00%

- Costs paid by seller 7.75% - 8.30%

- Roundtrip Transaction Costs 10.85% - 12.30%

Source: Global Property Guide

Now that you have had a look at the Purchase Procedure, let's have a look at what the results could be once you do decide to buy. Here is the graph of Rental Yields & Property Prices per Type of Unit for Cairo:

CAIRO - MAADI - Apartments

Size: 250 sq.m.



YIELD (p.a.)



Size: 250 sq.m.



YIELD (p.a.)


CAIRO - ZAMALEK - Apartments

Size: 250 sq.m.



YIELD (p.a.)


Source: Global Property Guide

So the question is: Would you buy in Maadi at 17% Rental Yield?

YES I would !!! :)

Therefore, the transaction costs in itself are not too expensive, but it's the Buying Process that needs VERY careful consederation.................as it gets pretty complicated !!


Although all the economic and property market indicators, correctly point to Egypt as a awesome viable investment destination, there is 1 thing that bothers me:

Egypt relies heavily on tourism.

The tourism sector suffered tremendously following terrorist attacks on tourists in Luxor in October 1997,Sharm al-Sheikh in July 2005, and the town of Dahab in Red Sea resort in April 2006. And therefore, any type of terrosist attack can upset the entire region, and bode badly for the investor.

Other than that, at properties priced starting at £19k, who'll NOT be buying?

(Sources: http://www.globalpropertyguide.com/ , http://www.wikipedia.org/ & Daily Telegraph)

Monday, 10 March 2008

How to buy Overseas Property as a Foreign National?

‘Is it just me, or is the World getting smaller?’

You can get on an airplane, and in 24 hours you’re at the other side of the World !! (Be it New Zealand, New York or even Tokyo for that matter) And with this ability to travel, comes the possibility of investing in property in all 4 corners of the Globe (except in the countries where they have a Bob…..or a Fidel / Raul, who are in charge :(

South African property in global terms, is not as cheap as it was a few years ago, but many Saffers are still under the impression that it is. Therefore, the idea of investing in other countries, has just simply not occurred to us………

But, as South Africans, there are limits to this ‘abundance’ of investment potential. The main factor is due to the current foreign exchange controls that South Africa has in place. These controls stipulate that no South African National may take more than R2m out of South Africa in his / her lifetime.

With this in mind, let’s take a look at buying Overseas Property...........

So why Overseas Property?

1) Overseas Property allows you to protect against economic / political uncertainty.

2) It protects you against the devaluing of the Rand.

3) It allows you to take advantage of booming world economies such as India & Brazil.

4) Some countries such as Mauritius, provide you with residency if you buy property.

So where should I buy?

I’d be telling ‘porkies’ if I told you that this decision is due to research...........because the answer would be LOTS and LOTS of research !!

The Move Channel which is a popular search engine for overseas property ranks the following markets as good investments: Australia, Brazil, Bulgaria, Canada, Canary Islands, Cape Verde, Cyprus, China, Czech Republic, England, Estonia, France, Germany, Greece, Hungary, India, Italy, Latvia and Morocco.

But my choice would be the ‘New World Economies’ which would provide the best property and rental growth. Areas such as Brazil, India, Eastern Europe, certain Caribbean countries as well as Egypt, Morocco and Mauritius are definitely the way to go.

For example, in the Dominican Republic you don’t pay capital gains tax, you get residency and very often Developers can provide financing instead of the local banks.

How much does it cost?

So this is what all investors will look at……….the Cost !! But read on as you might be surprised to hear what overseas property costs :)

Studio apartments in Bulgaria, around the Red Sea or in Brazil start at less than R800 000 which is a bargain compared to what a similar property would cost in Cape Town’s CBD (let’s not even start with how expensive that is……)

Factors to consider before buying?

1) Go on an Inspection Trip or an Overseas Property Exhibition:

Inspection trips are usually package tours that aim to give you an overview of what the properties will look like once it has been built

Tip: You can also consider this as a ‘free holiday’ if you decide not to buy :)

2) Arranging Finance:

If you can, pay the full price in Cash.

Many of the emerging countries do not have banking systems that are as refined as in South Africa.

Tip: No jokes……….South Africa has one of the best banking systems in the World !!

3) Seek Specialist Advice:

Seek specialist advice from estate agents, solicitors, architects and surveyors in the country where you plan to invest.

Ask questions, including costs that the local authorities may charge, but that you might not be used to paying when buying property in South Africa.

Tip: There are ALWAYS hidden costs with overseas purchases, so make sure that you are aware of any ‘extra’ costs that might come your way !!

4) Open a bank account in the country where you choose to invest:

Some countries require a Certificate of Importation for any money you bring in from South Africa.

Tip: A local bank account allows you to monitor all revenues / costs more affectively, as it is displayed in local currency.

5) Make your offer in Writing:

Ensure that your offer is subject to the signing of a Contract.

Tip: This sounds seriously obvious, but okes still get this wrong !!

6) Never sign a contract in a language you do not understand:

The contract should include a clause stipulating that the English contract takes precedent in the event of a clash with the contract in the local language.

Tip: Probably the most important factor of all !!

Wednesday, 20 February 2008

Want to buy property in the UK as a Foreign National?

So you’ve been in London for a few years now…….and although you are not ready to head off home to South Africa just yet, and you’ve started thinking of buying property in the UK………

1) But where do I start?

2) And is it possible to secure financing with my current visa?

3) And what are the chances of qualifying for a 100% Mortgage?

So, let’s have a look at the FACTS:

Only a small proportion of UK Mortgage Lenders accept applications from Foreign Nationals who do not posses permanent right to reside in the UK:

So, What does this mean in ‘Saffer Lingo’?

- If you are on a 2 year Working Holiday or Student Visa, then aikona you can forget it !!

- If you are on a Highly Skilled Visa or a Work Permit, then LADUMA ,you have just advanced to the next step !!

Of these UK Mortgage Lenders, the fundamental principle they all apply in respect of applicants of Foreign Nationality, is that they must have been in the UK for a minimum of 18 months, and they must possess a suitable work permit (with at least 1 year to expiry) which enables them to work in the UK.

So, again, What does this mean in ‘Saffer Lingo’?

- If you have a HSMP or Work Permit and have not been on it for 18 months or more, then Jammer Boet, you are outta here !!

- If you have a HSMP or Work Permit and have been on it for 18 months or more, then JOU Doring, you are in the money !!

It is possible to obtain a 100% mortgage as long as the applicant is a Doctor, Dentist, Accountant, Solicitor, Veterinary Surgeon, Teacher, Pharmacist or Ophthalmic Optician AND they are a registered member of the appropriate UK Professional Body.

- In some circumstances, Nurses can also qualify for a 100% mortgage but, generally, the maximum available is 95%.

- So I guess all those years of studying in SA, before you came to the UK did count for something………:)

University Graduates can also qualify for 100% mortgages but they must have graduated from a UK University:

- The minimum period they must have been in the UK is 18-24 months and they must have 2 years left on their visa.

So, to conclude: YES, it is possible to buy property in the UK, provided that you are on the correct visa / permit, for a minimum period of 18 months or more.

Wednesday, 6 February 2008

Horizon Consultancy – South African Property Investment Event , 6th April 2008 - London, United Kingdom

Our South African Investment Event will be hosted at the Wimbledon Park Golf Course (http://www.wpgc.co.uk/) in London, UK on Sunday, the 6th April 2008 from 12:00 to 15:00.

For a map of the location, click HERE !!

We will have several Cape Town property developments available on the day, but our flagship Development will be the Stellendale Village in Kuils River, Cape Town.

Stellendale Village is in its 4th Development Phase, due to the success of the previous 3 phases. The 1st and 2nd phases have 100% tenant occupancy.

The Development is situated next to the Stellenbosch Arterial in Kuils River , and a stones throw from the currently under construction, Zevenwacht Mall. The Development's location allows for direct access to the N1 and N2, and is close to schools and sport amenities.

A Summary of the Development is as follows:

· 5% DEPOSIT secures unit! (No other costs until transfer)
· 3 Bedroom, 1 or 2 bathroom with optional garage
· Estimated occupation beginning 2009
· 100% financing available for qualifying clients
· Estimated levy: R380 p/m
· Estimated Rental Income R3 600 p/m
· Freehold Title
· Home Owner's Association
· Controlled Access & Security
· 24 hrs Internet Connectivity & DSTV enabled
· Automated Irrigation
· Includes Hob and Oven

For more information on Stellendale Village, click HERE !!

If you would like to attend this Investment Event, please register on our website under 'Investment Events' as numbers are limited: www.horizon-consultancy.com
Kind Regards,

The Horizon Consultancy Team


Saturday, 12 January 2008

Property Review - Turkey

Turkey – Where East meets West

Fast Facts

  • Associate Member to European Union (Candidate to Full Membership)
  • Registered Economic Growth of more than 8% in 2004 - 2005.
  • Capital: Ankara
  • Population: 71 million
  • Currency: New Turkish Lira

Economic Overview

‘So, just to confirm, you would like the mezes as a starter, the kebab as the main course and the baklava for dessert? Would you like any strong, almost oil like, coffee with that? :)

As you await the arrival of your food, you can’t help but survey your surroundings, expecting a Turkey you envisioned in books and movies…………just to find that it’s not all a 3rd World marketplace teeming with camels, men in white linen and oceans of sand.

Welcome to the real Turkey.........

Turkey is a developed country, with a political system established in 1923, under the leadership of Mustafa Kemal Atatürk, following the fall of the Ottoman Empire in the aftermath of World War I. Since then, Turkey has become increasingly integrated with the West while continuing to foster relations with the Eastern world.

The Islamist-based Justice and Development Party, which won a landslide victory in November 2002, has been a powerful force behind resolving many of Turkey’s long-standing economic problems.Prime Minister Recep Tayyip Erdogan early identified EU entry (as he should :) as his government’s key priority. He has pushed reforms to the court system and increased freedom of speech, long restricted my military influence.

But most importantly, the new government presided over dramatically better management of the economy.
But let’s have a look at what the graphs have to say:

As you can see, there is a sharp increase after 2002 when the Justice and Development Party started their reforms to betterment of the Economy.
For decades, Turkey has suffered annual inflation of 25% to 106% per annum. Runaway inflation was successfully brought down from a decade’s old double-digit levels to a more acceptable 8.6% in 2004, and 8.2% in 2005.

Though inflation has unexpectedly picked up to 10.5% in Q3 2006, due to the rise in oil prices and various supply shocks, the authorities will have no truck with renewed inflation, and a tightening of interest rates by 4% in June, and a further 0.25% tightening in July, is expected to squeeze the higher inflation out of the system.

Have a look at the nosedive that inflation has taken since the 1980’s!!

Turkey has recently experienced a strong economic performance – a 5.8% growth in 2003, 8.9% in 2004 and 7.4% growth last year. Because of the tightening of interest rates, GDP growth to the third quarter of 2006 was a restrained 5.9%, and the full year figure is likely to come in lower. But although the graphs above tell a story of a country on the up, the biggest hurdle that Turkey has to cross is becoming part of EU……….and this has been met with strong opposition from France and Austria :( Therefore, analysts expect EU accession negotiations to be difficult and slow.

Property Market Review

So, if EU accession is the only thing that prevents Turkey from becoming a viable investment option, why are investors so eager to become part of this Juggernaut while things are still relatively affordable? Well, I’ll tell you……….

House prices continued their increases on 2006, following very sharp increases in 2005. Exactly how much house prices have increased is hard to tell, as Turkey publishes no official house price statistics, nor do any private organizations of realtors publish statistics !!

Therefore, Turkey is relatively ill-served by international realtors…….(can you where the potential lies? :)

So, the international market seems to be climbing in abated………but what about the domestic market?

Domestic housing loans have risen from 2% of GDP two years ago, to 14.4% of GDP by end-December 2006.The engine behind the increased borrowing was a significant decline in interest rates until mid-2006 (when an upward blip in inflation caused a rate tightening).
If you don’t believe me about interest rates, have a look yourself……

So, now that we have found that buying in Turkey is viable, let’s look at the particulars……..namely the Buyer’s Guide and what it involves:

1) Foreigner Restriction to buying Property?

Foreign ownership in Turkey is ruled by the reciprocity principle.

Citizens of countries that allow Turkish citizens or legal entities to own property in their country are allowed to acquire property in Turkey. Citizens of most EU countries (except for Belgium, Cyprus, Czech Republic and Slovakia), the United States, Canada and other countries in Asia, Latin America and Africa can freely purchase properties in Turkey.

On 07 January 2006, a new law was enacted which put a limit to the amount of land that a foreigner can purchase. Foreigners are allowed to acquire a maximum of 30 hectares (74 acres) of real estate. Any piece of land exceeding 30 hectares requires a permit from the Turkish authorities.

2) Rental Yields steady?

Gross yields in Turkey are moderate to high. Properties in central Istanbul offer yields of 6% to 7.6%, while property in coastal areas can yield 13% to 16% (but rents in coastal areas are predominantly seasonal).

Property yields in the suburbs are generally more attractive than in the cities. While apartments in Istanbul yielded around 6% to 7.5% at end-2005, Ankara apartments yielded from 7% to 9.5%.

Houses in the suburbs of Istanbul yielded around 6.5% to 8.5%, while house in the suburbs of Ankara, could yield 12%.

3) Is Turkish Law Pro-Landlord or Pro-Tenant?

Rents may be freely agreed at the beginning of rental contracts between Tenants and Landlords.

The lessor is required to inform the lessee at least one month before expiration of the lease of the amount of rent he wants for the new rental period. If the lessee does not agree to this amount, the lessor may request an assessment of the rental value of the property by applying to a court. The court will take into account the report of an expert as to the amount of rent appropriate for the property in question, taking into account prevailing market rents.
There is no other form of rent control in Turkey.

Apart from there being no rent control, the Turkish legal system generally favours tenants.

4) How much tax will I pay on my Property?

An example of what a Non-Resident would pay:

Non-resident couple's joint monthly rental income:

Tax Example: €6,000
Annual Rental Income 72,000
Less Exemption Amount (2,094)
Less Standard Costs (25%) (17,476.50)
= Tax Income 52,429.50
Income Tax Rates:

YTL6,600 – YTL15,000 ( 20%) 691
TL15,000 - YTL30,000 (25%) 1,099
YTL30,000 – YTL78,000 (30%) 2,356
YTL30,000 – YTL78,000 (35%) 3,678
Over YTL78,000 (40%) -
Annual Income Tax Due €15,648
Tax Due as % of Gross Income 21.7%

Now that Turkey is at the crossroads, between EU accession or not, the savvy investor should have a look at the calculated risk of investing in an economy where East meets West.
Are you such an investor?