The London property market is highly competitive and options for South African investors to raise finance or conduct lengthy due diligence are therefore not as readily available as they are in South Africa. As the exchange of contracts and deal completion are often very close together, funds have to be available and ready in advance, so that when the opportunity does arise, the property can be secured immediately.
This is according to Elias Tzouvanni, Co-director of Nexus Property Group (NPG), who says that while many South African investors would like to capitalise on the more developed property market in London, there is often a lack of understanding around the practicalities of purchasing property overseas.
“One of the most common queries we receive from South African investors in the process of selling local property is around what they should do with the money they are going to receive from the sale. Given the ongoing uncertainty of the rand, there has been an increasing interest shown by investors in international markets, especially London” says Tzouvanni. He goes on to explain why London is such a popular investment destination for South Africans. “In addition to earning stable returns and serving as protection from the rand’s future volatility, South Africa and England share a long-standing history. The United Kingdom also boasts a highly developed property market, offering investors a vast range of opportunities in every economic climate. “Adding to this attractiveness is the fact that the Bank of England recently cut interest rates from 0.5% to 0.25% – an all-time low,” Tzouvanni adds.
As South Africans rarely have access to the deal flow which is available to full time London-based investors who often have decades of experience, Tzouvanni recommends that investors who are interested in this opportunity consult with experts who possess extensive experience in facilitating international transactions of this nature. “Partnering with a well-established property group will ensure that the process moves as quickly and efficiently as possible. NPG has a satellite office in London and can handle these transactions in their entirety on behalf of clients, from sourcing the property through to completion”.
He points to a recently purchased free-hold mixed-use property in Zone 4 as an example. “NPG concluded the purchase and are currently asset managing the property to improve the tenancy. We predict that the eventual yield for the property will be in the region of 5%. Once the property is tenanted, NPG UK will facilitate the refinancing of the property through their relationships with financial institutions, to unlock capital for further investment.”
Tzouvanni concludes: “Essentially, South African buyers will be competing with experienced property investors from places like Eastern Europe and the Middle East, adding extreme pressure on deal facilitation and turnaround time. NPG is able to assist by offering local clients exclusive access to off-market properties within Zone 1 to Zone 4 of London, bringing together the experience and deal flow required to secure a high-yielding property.”