Real Estate Investor Magazine Offshore Guidebook 2013

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International Money Transfers Sable FX specialises in foreign exchange and international remittance. We will help you negotiate the regulatory minefields and assist you with sending money to and from every major global destination, in line with exchange control regulations and Reserve Bank rules. The iconic WesbankFairland development Joburg Property Company Why use Sable FX: turns 13 in 2013 Worldwide transfers As an agent of the City of Johannesburg (CoJ) Metropolitan No transfer fees Municipality, JPC is contributing to the objectives of the Growth and Development Strategy articulated by the Mayor and by utilising council-owned land assets to leverage private sector Better exchange rates than what your investment in public infrastructure. bank can offer you The City of Joburg Property Company (JPC) JPC Background Regulatory form advice and completion services include: The Joburg Property Company was established • Management of council property portfolio in 2000 and as the only mandated agency • Selling and buying of property of the City of Johannesburg to manage and SA tax assistance • Facilities management develop land and property on behalf of the • Property planning and advise City. It currently manages a property portfolio • Property management worth over R8, 8 billion with 64 000 properties Secure online payment portal • Property development and facilitation covering at least 39 000 hectares. Since the • Property maintenance 1st of November 2012, JPC has merged with • Property register maintenance the Facilities Management Unit and Metro Unrivalled customer service • Letting/leasing of council property portfolio, Trading Company, in effort to consolidate key including functionalities in providing excellent service • Outdoor advertising delivery to our stakeholders • Servitudes, encroachments and access rights control Achievements Sable FX Since its inception JPC has been responsible JPC Objectives for iconic developments such as the Orlando The JPC objectives are to harness the City’s Towers in Soweto, Soweto Theatre, the United Kingdom South Africa property portfolio transactions to increase Newtown development, Huddle Park Golf economic growth and Broad-Based Black Course in Linksfeld and most recently the Castlewood House Regent Square, SABLE FX Economic Empowerment (BBBEE), while creating Jabulani Precinct in the Jabulani CBD in 77/91 New Oxford Street Block B1 Doncaster Road jobs and economic opportunities for the Soweto. London WC1A 1DG Kenilworth 7708 a professional edge disadvantaged communities and businesses. Key projects t: +44 (0) 808 141 5535 t: +27 (0) 21 657 2153 JPC does not use agents or brokers when The Land Regularisation Programme is the [email protected] [email protected] leasing or selling property as legal requirements first of its kind in City history and unique to www.sable-group.com/forex www.sable-group.com/forex directs for an open tender system that allows all any majorCity in South Africa where the long interested parties an opportunity to participate term/leaseholders of property are given title in the economic development of the World to their homesand business places that were Class African City. council owned. Sable Forex is a Money Service Business registered with Customs and Excise. Registration No. 12148630 Sable_Fx_A5_ad.indd 1 06/06/2012 16:50

The award-winning Soweto Theatre in Jabulani “The Land Regularisation Programme is unique to the City of Johannesburg, forming the basis of a sustainable property economy through expediting the transfer of properties to benefciaries, as well as releasing vacant sites on public tender,” says Ms Helen Botes, Managing Director of JPC. “Over the next three to fve years, the program seeks to transfer and/or release approximately 3700 properties in Alexandra, the Greater Soweto Area, the Greater Orange Farm Area, Ivory Park and surrounds.” Property Incubation The programme is aimed at transforming the property industry through accelerating the entrants of new players, especially SMME’s and BEE companies. JPC will identify, allocate and make ready for development a number of commercial properties that will be used to fast track the entrants of SMME’s and BEE in acquiring and sustaining property. Other key projects • Property Academy • Property Bulletin • Rissik Street Post Offce • Newtown Potato shed • Orlando ekhaya Redefning the Sandton skyline • Holocaust museum The Kgoro Sandton development Tel: 010 219 9000 Email: [email protected] Website: www.jhbproperty.co.za

CONTENTS FEATURES 6 Buying Property 14 Getting Started 22 The Quick Fire Guide 44 Botswana 60 If You Want Better 62 Protect Your Assets 4 Note From The Sponsor 14 Getting Started Scott Picken In the USA 5 Investor Talk 22 The Quick Fire Guide Spread your risk with ofshore investment To investing in London 6 Buying Property In A 26 Investing In Foreign Country New Zealand The due diligence list 30 Earn An Income 8 World Housing Market In Australia Where are the opportunities? 34 Before You Buy 10 Take The Plunge Consider your long-term plans And invest in ofshore property 37 Forging Ahead 12 Global Listed Property With prosperity in Cyprus Maximising your money INTERACT WITH US fnd us on facebook fnd us on twitter fnd us on youtube www.facebook.com/Real Estate Investor Magazine www.twitter.com/Sa_Reimag www.youtube.com/reimag 2 Ofshore Handbook 2013 www.reimag.co.za

THE TEAM 44 Botswana Publisher - Neale Petersen | Editor - Angelique Redmond Demand is high Designers - James Clark & Amy Little | Ofce Assistant - Melissa Petersen Trafc - Juanita Heilbron | Financial Manager - Marisa George 46 Residential Development Web Administrator - Russell Bennett | Sales Manager - Roy Lategan In Kenya Sales Executives - Andre Evens, Renier Lombard, Alex Masamuna, Marc Oppel & Themba Mateza 48 Retail Hits The Mark In Ghana 50 Living The Life In Seychelles 51 New Economic Gains In Zambia 54 Where Are The Property Markets In Zimbabwe? 56 Meet Mauritius Embrace the island style 60 If You Want Better Than Digital edition on your iPad, Mac, PC Your Bank or Laptop now! Don’t use your bank Go to www.reimag.co.za 62 Protect Your Assets Tel: 021 674 5026 Know the law before you invest Fax: 086 627 2400 Email: [email protected] Physical: Bizmall, Shop 3, Heritage House, 20 Dreyer Street, Claremont, 7700 Postal: PO Box 858, Howard Place, 7405 Also Published by REALE MEDIA Advertising: 021 674 5026 Subscriptions: 0861 228 669 / [email protected] JUST PROPERTY MAGAZINE PROPERTY Just Distribution: On The Dot Distribution © Mega Trends In Commercial Property Spot Checks Shaping the future of investors What to look out for For distribution inquiries contact Craig Hughes GET THE RIGHT FINANCE Heavenly Tenants Jason Lee tells you how How to fnd them ENSURE YOUR RETURNS Rent killing you! on 021 918 8659 / 073 395 2396 How to save In a volatile economy COME OUT ON TOP With Africa investments www.justpropertygroup.co.za FREE Printing: CREDA Communications OFFSHORE HANDBOOK ISSUE August 2013 R50.00 (Incl. VAT) WINNER 4 R43.86 Other Countries SAPOA AWARDS Autumn 2013 Best Printed Property Publication 2013 Z Published by www.reimag.co.za MASTER INVESTOR JT FOXX All rights reserved. No portion of this publication may be REALE MEDIA reproduced or used in any form without prior written consent Neale Petersen (CEO) and permission from Real Estate Media. The publisher gives no written guarantees or assurances and makes no representation B. Taylor regarding any goods or services written or advertised within this edition. Prospective investors should always consult their Printed by Distributed by attorneys, advisors or accountants. Copyright © Real Estate Media cc www.reimag.co.za fnd us on youtube www.youtube.com/reimag www.reimag.co.za Ofshore Handbook 2013 3

NOTE FROM THE SPONSOR the entire journey until the property is ready for Handover to the particular Managing Agents. We take pride in our strategic affiliations with our Best of Breed Partners who specialise in international investment in each country (Australia, the UK and USA); and our highly professional, nternational Property Solutions (IPS) and dynamic and knowledgeable Team. Principally, IPS Wealth Migrate are really proud to be sponsoring only does two things: we educate sophisticated and Ithe REIM 2013 Ofshore Handbook. We truly intelligent investors about their future; and then we believe to be sucessful in International Property you provide them with the solutions! need the right partners and the right information. We believe that Real Estate Investor Magazine is It’s by means of this strategy that we help you the leader in South Africa at providing people with create wealth through property – and preserve the right information and we wanted to sponsor the wealth through international property – and build handbook so that we could show people how to chose a better life for you and your family in perpetuity! the right partners. Te Wealth Migrate mission is to provide a global, self service, crowd funding property solution, which IPS provides an all inclusive Private Banking takes advantage of local property markets, through Solution to ofshore investment, essentially doing best of breed partners and collective buying power. only 2 things, educating you so that you have the This will be optimised by a Global IT Platform, knowledge to make educated and informed decisions providing transparency and efciency of property about your future and then providing you with markets! solutions. Over 80% of people who invest overseas actually lose money, however with our experience Bottom line is the world is global and South of assisting over 2000 people invest internationally African’s need to be seaking the best returns and - to a value of R1.6 billion - we can ensure that you investments globally. We are sure you will enjoy invest with confdence and ultimately create wealth this handbook and good luck taking advantage of preservation, a Plan B and peace of mind. the great opportunities which present themselves in international property markets. It is far more than just international property investment... Tanks Scott Picken We understand your needs and then help you FOUNDER AND CHAIRMAN OF IPS AND design a bespoke solution to achieve your long term CEO OF WEALTH MIGRATE investment goals. We then help you implement that plan by choosing an investment destination, the For more information go right property, arranging the fnance and fulflling to www.wealthmigrate.com all legal obligations, in addition to managing www.ipsinvest.com the International Purchase Process throughout 4 Ofshore Handbook 2013 www.reimag.co.za

INVESTOR TALK Spread Your Risk With Offshore Investment elcome to the 2013 Ofshore Handbook. Globally the property market has been on a bit of a In this Handbook you will fnd all the rollercoaster ride, but things seems to have stabilised Winformation you need to start your and there is defnite recovery on the cards, and as the investment journey in another country. You might be economies recover so too will the property markets. asking, why you should think of investing in another One can see this in the USA which not only survived country? Te answer is simple, not only is it the smart their economic crisis but saw property in the USA decision from an investment point of view, but by becoming sought after as people picked up bargain diversifying your assets you are essentially spreading deals knowing that once the market had hit rock your risk. After all having all your eggs in one basket bottom the only place left to go was up. is pretty risky. Te Organisation for Economic Co-operation and With the technological age we now live in, Development (OECD) has predicted that GDP investing in another country has never been easier. worldwide growth in 2013 is expected to match that You have all the information you could need to make of 2012 at 1.4%, before increasing to 2.3% for 2014. an informed decision at your fingertips, and with Google Earth, you can even view the landscape from With that in mind, I wish you happy reading and the comfort of your own home. researching as you start your offshore investment journey! Before you decide which country you want to invest in, it’s best to start at the beginning and consider Angelique Redmond what type of investment you want? Are you investing EDITOR for returns? Or do you want a holiday home that doubles as an investment? Or a retirement home whch you can let out now and earn money from? “Risk comes from not knowing what you’re doing”. Warren Buffet www.reimag.co.za Ofshore Handbook 2013 5

GETTING STARTED BY ANGIE REDMOND Buying Property In A Foreign Country The due diligence list tenants, as these will play a large part in making sure the home is not only a good investment, but will also suit your tenant’s and your needs. Deciding on the physical features such as size and number of bedrooms may seem simple, but it is wise to bear in mind that buying property is a long-term investment. Therefore, anticipating your needs over the next 5-10 years will make it a more valuable asset uying a home, whether as a first-time and ensure that you don’t fnd yourself in a position of home buyer or an experienced property needing to sell too soon. Binvestor, comes with many important considerations. In addition to the fnancial aspects Decide which property type suits you and taking into account your afordability, bond Tere are diferent types of homes, such as freehold applications and negotiating an Ofer to Purchase, properties or sectional titles, and deciding whether you there are many useful guidelines that can make have a preference for one specifc type over another will the ofshore house hunting process a simpler and simplify your house hunting experience further. smoother experience. While freehold houses offer freedom regarding Create a list of criteria alterations or renovations, sectional title properties ofer To begin the process, identify your requirements by security and convenience with maintenance. Also keep creating a list of “must haves” and “nice to haves”. in mind that there are additional monthly payments on Tis allows you to compare properties that you view sectional title properties in the form of levies. As with more objectively. the required features of a home, the decision regarding which property type suits you will depend largely on Thoroughly research the country you are your needs and your tenant’s needs, both now and in interested in to ensure that it offers investment the future. growth opportunities. Consider your needs in terms of renting your house to a tenant, things such The online search as proximity to schools, work, public transport, With this information to hand and the ease of access to shops and other amenities that are important to information which online technology ofers, searching 6 Ofshore Handbook 2013 www.reimag.co.za

for property has become a far simpler process. Agents and developers may often ofer the services of Tere are many factors to consider when looking at their own legal representative, however, be careful of global opportunities in the housing market, and these accepting such an ofer as it may not be objective due are detailed below. to confict of interest. Property ownership laws difer in each country and you need to know whether the laws in The price of the property: Te price of the property the country you want to invest in restrict or discourage needs to be considered with the exchange rate in mind. foreign ownership. You could opt to take out an overseas mortgage through a specialist broker. They can give you information. Taxes: In addition, as a property owner overseas, you Specialist brokers may have links with estate agents or can enjoy tax benefts in the country where you’ve lawyers in your chosen country. Since the credit crunch, invested. Many countries impose very low, even it has become more difcult to obtain fnance in some negligible, property taxes or no property taxes at all. countries. Lending criteria and the maximum amount Tis can be a big plus for a foreign property owner, you can borrow as a proportion of the property’s value just make sure you know and are familiar with what (loan- to-value) have been tightened up in many places, will be expected of you in terms of taxes, before you and you will need to supply detailed documentation to purchase a property. prove you can aford it. Type of investment: What type of investemt Costs involved: You will also need to budget for are you looking for? A year-round basis or holiday buying costs, such as mortgage and lawyers’ fees, taxes accommodation in a tourist hotspot? The type of and insurance. Estimate this as a percentage of the investment you are looking for in terms of use will purchase price – around 10% in France and Portugal, have a large impact on where you decide to invest. 12% in Spain, 15% in Italy and 5% in the US. Be careful when using money transfer services as not all frms put Price and rises: Two factors that should weigh client money into a ring-fenced account to protect it in heavily on the decision are the current price and case they go bust. the scope of the price rise, as this influences the resale value, and in turn any profit you stand to What to pay when: Once you’ve found a property make. So have a look at the current price and how you like and agreed a price, you’ll need to pay a non- property prices in that country have risen over the refundable deposit of at least 10% of the purchase price last seven years, this will give you and idea of what in some countries, the deposit will vary dependant sort of the price growth trend, taking into account on the country you purchase in. In some countries, any anomalies, for example if the property market including Italy and Portugal, you may need to hand experienced a crisis, in which case the data may be over up to a third of the total price upfront. Don’t hand skewed and not present an acurate refection of the over any money before you’ve negotiated an initial growth you can expect. contract, and then only to a lawyer or bonded estate agent. Once you have all the information at your fngertips you will have a better idea of where the investment The legal aspects: Seek advice from an independent opportunities can be found and you can narrow solicitor, well-versed in the property laws of the chosen your list down, and with the Internet, searching for country and from an independent financial advisor, information is easier than ever, just make sure the before deciding on an overseas property investment. websites you use are reputable. www.reimag.co.za Ofshore Handbook 2013 7

GLOBAL MARKET BY ANGIE REDMOND World Housing Market Where are the opportunities? ith globalisation on the rise and the What is the general state of the global market? steady increase in population, people Certain housing markets such as the UK, Ware becoming more interested in China, US and Australia promise stability and buying property not just in their own country but even improvement, while others are more risky also in other cities around the globe. There are investments, as the markets are not as stable. many factors to consider when looking at global European countries have been hard hit by the opportunities in the housing market, factors recession, unemployment and tight credit and while such as the price of the property, costs involved, they should not be ruled out entirely, they have a the legal aspects, property ownership laws, taxes higher risk factor associated with them. The UK, and whether you are acquiring the investment as Sweden and Switzerland continue to be strong and a year-round basis or as holiday accommodation in promising for the near future. In North America, a tourist hotspot. Two factors that should weigh Canada is going through a soft period, while the US heavily on the decision are the current price and is a fast growing hotspot for property investment. the scope of the price rise, as this infuences the Both Columbia and Chile have shown steady price resale value and, in turn, any proft you stand to increases in 2012. Looking towards Asia, China is make on it. the leading destination for buying property. India, 8 Ofshore Handbook 2013 www.reimag.co.za

Indonesia and Australia remain steady, with Tailand demand in the city renowned for its cool summers, and Korea a bit behind. fog, steep rolling hills and landmarks including the Golden Gate Bridge, former Alcatraz Federal Housing market prices vary from city to city for a Penitentiary. It’s also a primary banking and fnance plethora of reasons. Brazil, for example, is set to be centre. a leading global tourist destination in both 2014 and 2016, with both the Soccer World Cup and the next Cote d’Azur: Te name conjures images of opulence Olympic Games to be held there. You still need to do and wealth and for good reason; this coastline off homework and your own research before working the Southeast corner of France became popular as a out where you want to buy property, and while past winter resort for the British upper class in the 18th trends are a good indicator of what to expect, as they Century. Frequented by artists, writers, royalty and say, nothing is certain. Tere are certain cities which celebrities, the housing market price is growing daily stand out as top global destinations to invest in. Lets and that makes this a destination to invest in. take a look at a few of these. Toronto: If you are a professional buyer then investing Top global cities in semi-detached houses in the provincial capital of Ontario is a smart move, if you prefer to play it safe London: With a rise of 2.2 per cent in the frst three you might fnd this market a bit tricky right now. months of 2013 and an annual growth of 4.7 per cent, England’s capital is among the top cities for property Dallas: Single-family home prices rose by over 7 per investment. cent over the past year, and with supply and interest rates low, this growing city is a good option. New York: Tis is one of the top business capitals of the world and as such is worth taking a look at, despite Los Angeles: Also known as the city of angels due escalating rises in land and rent rates, housing is 4 per to its original Spanish name, El Pueblo de la Reina cent overvalued owing to rents and 2 per cent owing de Los Angeles or ‘ the town of the Queen of Angels’, to incomes. and home to both Hollywood and Disneyland. Hong Kong: Prices have increased to more than Miami: Best known for its beaches and its port, which double since the financial crisis of 2008 and the is considered the ‘cruise capital of the world’, it boasts apartments here are the world’s most expensive, with natural beauty, tourists and commercial aspects ofce property coming in at second most expensive in making it a good investment option. the world. Limited land makes property a commodity and one that is set to remain a good investment. Regardless of where you decide to invest, it all comes down to the numbers mentioned in the frst paragraph Paris: More than just the city of love, Paris is and of course your personal taste and what you want to one of the world’s top tourist destinations and as do with the property, so wherever you decide to invest, such accommodation will always be a worthwhile make sure you do your due diligence frst! investment here. San Francisco: Low mortgages and extremely low RESOURCES levels of inventory have resulted in huge price rises and Global Property Guide www.reimag.co.za Ofshore Handbook 2013 9

GETTING STARTED BY ANGIE REDMOND Take The Plunge And invest in offshore property nvesting in real estate in another country is the Your property will double as a retirement plan smartest thing you can do with your money right and tomorrow’s retirement residence. Inow. Tanks to the global market events of the past, many options exist right now for you to buy Your property offers many uses, an investment and make money in an offshore property market. for you and your family and a holiday home, And with the age of the Internet, seizing these when you feel the need to get away. opportunities has never been easier! So why, you may ask, should you invest in ofshore property? Here are The property you buy today can be left as a just some of the many reasons. legacy for your children and their children, continuing to give your family a steady income Like real estate anywhere, ofshore real estate is even after you are not able to. a hard asset, and in the current economic climate, hard assets are the most sensible investment class You can buy, sell, rent or develop according to for storing value. Hard assets are investments with your needs and time schedule; you retain control intrinsic value that are typically an excellent infation of your investment. hedge. You can generate a cash f low in another As with real estate anywhere, you’re buying with currency, and with the exchange rate, you could the hope of capital appreciation, which is an increase end up with an excellent investment return, in the price or value of assets. depending on the exchange rate of the country. Overseas real estate ofers your portfolio diversity, Real estate investing is fun. Your real estate an important means of reducing your risk by investment can double as a personal retreat, investing in a variety of assets, giving you less risk part-time residence, or vacation getaway. You than if you had an unvaried portfolio. Not only is can enjoy it while it’s appreciating in value… your portfolio diversified but the market you are generating rental returns…and safeguarding investing in is diversifed, as is the type of asset. your net worth. By investing in overseas property you position yourself So what are you waiting for? Get started on to proft from both expanding and crisis markets. your offshore property journey today! 10 Ofshore Handbook 2013 www.reimag.co.za

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GLOBAL LISTED BY ANDREW CATTELL Global Listed Property Maximising your money n local currency terms, the performance of global yield expansion, opportunity may well still exist to listed real estate has been on par with that of invest in global listed real estate. Ithe local listed real estate sector year-to-date. However, given the performance of the rand so far When investing in rands there are various this year, global listed real estate has outperformed opportunities for South African investors to gain the local market in rand terms. On average, the yields direct and indirect exposure to global listed real of global listed real estate markets with REIT (Real estate if the preferred entry point is to invest in Estate Investment Trust) or REIT-like characteristics the share market directly. These opportunities (like the local sector) are trading 1.5% to 2% higher have different risk profiles with a broad range of than their respective local bond markets. In South investment angles, either ofering income streams Africa, however, the listed real estate sector is trading or development upside. Investors should therefore at a marginally lower yield than the local 10-year bond start by identifying what their investment needs yield. Terefore, in a world of potential global bond are before deciding whether global real estate is an 12 Ofshore Handbook 2013 www.reimag.co.za

attractive opportunity and if being directly invested in includes MAS and GoGlobal. Both of these counters the stock market is their preferred entry point. are in the process of building up portfolios; MAS with a UK development angle, while GoGlobal has In uncertain economic times investors tend to revert an initial German retail focus. MAS’s shareholders to what they believe to be safe haven investments. have created long-term value through South African Central London property, from residential to real estate development, while GoGlobal should ofer commercial, has benefited from its perceived safe a defensive income stream, thereby both warranting haven status in the current uncertain economic times. a closer look as they gather momentum in creating Capital & Counties Properties (CapCo), listed both critical mass. in London and Johannesburg, was and continues to be perfectly positioned to beneft through its £1.7 billlion Africa could create attractive investment investment portfolio in the Covent Garden precinct, opportunities in the medium to long term. Besides Olympia Exhibition Centre and the potential mixed South Africa, sub-Saharan Africa has underdeveloped use development and regeneration at the Earls Court commercial real estate markets with various Exhibition Centre. For investors preferring exposure multinational corporates and local and international to shopping centres, CapCo’s pervious sister company, retailers wanting to expand into these markets. At Intu Properties (formerly named Capital Shopping present it remains difcult for an individual investor Centres), provides an easy entry point as it is also to gain exposure to this opportunity as most of the listed both in London and Johannesburg. Intu’s key capital still comes from institutional investors. On attraction is its concentrated shopping centre portfolio the local stock market direct and indirect exposure consisting of 16 shopping centres across England, can however be obtained. Rockcastle is a Mauritian Wales and Scotland located within most of the major and South African listed real estate company that urban nodes in the UK. aims to have exposure to direct real estate in sub- Saharan Africa excluding South Africa and Nigeria. Although the United Kingdom seems to be a frst At present most of the underlying investments are in stop for most South African investors, shopping global REITs and should start to partially migrate to centre exposure can also be gained in Romania via direct real estate as opportunities to either develop the locally listed New Europe Property Investments or acquire are exploited. Indirect exposure to sub- (Nepi). With most of its shareholder base also South Saharan real estate can be gained via local listed real African, Nepi provides exposure to mostly Romanian estate players Resilient and Hyprop. Resilient has assets, many of which are retail, in a previously set up a joint venture to develop retail properties in underserviced consumer market with growth Nigeria, which should start to come through in the potential. Also like Nepi, out of the stable of a major next 18 to 24 months. In turn Hyprop has entered local listed real estate stock, is Redefne International. into a joint venture with local real estate developer Redefne International has a collection of investments Atterbury to build up a sub-Saharan direct real estate in UK retail, hotels and ofces, German retail and portfolio. Its frst retail property investment has been Australian offices; thereby offering an investor made in Ghana with the immediate potential to exposure to a diversifed asset base and risks spread develop further retail properties in that country. accordingly. RESOURCES Smaller locally listed real estate stocks, and thereby Catalyst limited liquidity, with offshore property exposure www.reimag.co.za Ofshore Handbook 2013 13

USA BY SCOTT PICKEN Getting Started In the USA nyone who invests in property needs to around the country including the likes of Wall know what is happening in the USA. It Street Bankers, Dr Dolf De Roos (author of Real Ais where the trouble started and it won’t Estate Riches, part of the Rich Dad Poor Dad series, necessarily be where it ends, but it is certainly having and leading international property expert) and a a major impact on the global property market, let plethora of property people, lawyers, accountants, alone the opportunity it presents. etc. Personally I always fnd I learn most from the ‘taxi drivers’ about what is happening in any city. At Scott Picken, IPS (International Property Solutions) the end of the day we always invest with a cynical and Wealth Migrate Founder & CEO, has approach, trying to punch holes in arguments, travelled to USA fve times in the last 12 months, trying to understand the risks, trying to evaluate and investigating 14 different markets and investing measure the opportunity, based on these risks!” millions of dollars. Scott says, “Te one thing you have to understand is that it is a massive country With that in mind, let’s now understand what has and the property market is very regional! To try and happened in the world’s biggest economy – the USA understand, we met with many strategic partners – their economy and property market. 14 Ofshore Handbook 2013 www.reimag.co.za

against your name when you walk away from your property, the bank can’t come after you for your other assets. Terefore, people, who fnd themselves in this negative equity position, fnd it easier to walk away from their mortgage than to continue trying to pay. c. Ease of arranging fnance: When I asked people how one got a mortgage before 2007 they said, “All you needed was a heartbeat!” Tis was the major problem – anyone was given mortgages and this is what caused the “subprime” crisis. Te banks/mortgage lenders provided what was known as “NINJA” loans – “No income, no job, no assets”. When George Bush was re-elected in 2003, he said it should be every American’s right to own a home and encouraged banks to lend freely. As an example in Orlando we were told how the bank would approach lenders and ask them what they What caused the crisis and where are we now? would want to pay monthly. Tey would normally Before we can understand where the market is going, be paying $2000 a month but would agree to pay we need to understand what caused the chaos, so that $200 a month and put the rest on the end of the we can make educated and informed decisions about loan. Most people will always take the easy the future. mortgage and that is why most Americans had 3 to In the USA The two major issues, the subprime crisis and 4 mortgages over their homes. the oversupply of property are discussed below. d. Te question is: “Where do we go from here.” Te The sub prime crisis scary thing is that there is another resurgence of a. It is all about the ‘reset mortgages’. What this reset mortgages (over $1 trillion) which is on means is the banks/ mortgage lenders were the horizon for the Commercial Securitised Debt. providing really cheap fnance Although government and banks are preparing to people on 2, 3 and 5 year fxes. What mortgage for this and doing everything within their power to brokers told people is that when they came to the prevent the same catastrophe from recurring end of their fxed period they would just remortgage – it is still coming and it depends on how successful again. However, as the market changed, they could they are as to the type of damage it will do to the not refnance, the mortgage rates often doubled commercial market. if not tripled and then they could not aford their mortgage. Oversupply of property a. Oversupply: Unlike UK, Australia or South Africa b. Another problem is that in the USA all lending where demand continued to out strip supply, in the is ‘non-recourse lending’. Basically what this USA there were and are major oversupply means is that although you will get a black mark problems. Te country got so caught up in the www.reimag.co.za Ofshore Handbook 2013 15

USA property boom that they just built – whether or to understand where the economy was in 2010, the not there was demand. In fact, in 2004 it was unemployment, national debt, consumer spending, believed that for every four houses built, one stood etc. On the whole there were many parallels empty. 25% of properties were unoccupied and between the USA in 2010 and the USA in the people didn’t care as they were just focusing on the Great Depression of 1929. Unemployment in the capital growth. It is estimated that there are Great Depression was 25% and if you compare as many as 10 million properties in oversupply. apples with apples, then unemployment in 2010 was 24.9%. The national debt rose to a position b. Te important thing to understand is that for over where the US technically went bankrupt on the fve years there has been no supply whatsoever. Te first of August 2011, as their debt repayments population continues to grow and so the demand exceeded 100% of their earnings. Te only hope for and supply are coming back into equilibrium. repaying this debt is when the ‘Y-generation” reach an infuential point in the economy (average age 35) c. Te fnal thing to be aware of is the ‘Shadow and this will not happen till 2025. Finally 70% of Inventory’ where the banks are holding back the US economy is based on consumption and with repossessed inventory to ensure they don’t food the ‘baby-boomers’ hitting retirement (10 000 per the market. One has to be very careful about this day) this spending is decreasing. and do one’s research as this can be a major risk in certain markets. However, taking the negatives of 2010 and even the fact that many of the problems remain, One needs to understand these challenges, but it American’s are much more positive that the economy is clear that things have changed, there is no more is recovering. Employment numbers have recovered, reckless lending (in fact, at the moment it is mainly the Dow Jones has gone above 15 000 and, most cash-only purchases) and the supply and demand importantly, the economy is growing. It is certainly graphs are back into equilibrium. In fact, in 2010, the leading developed economy at the moment and is IPS decided, although there was opportunity, there leading the optimism in the markets at the moment. was too much risk to invest (see the 2010 USA Property Report at www.ipsinvest.com), we now US property prices down 35% believe this is a market which investors need to Since 2007, property prices across the US has understand and take advantage of. Tere are three dropped by 35%. Now we understand that these reasons for this. prices were extremely inflated and that it also varies from area to area, with places like New York Three reasons we are excited about the losing nothing and Las Vegas losing 70%, but it is opportunity in USA interesting to understand if for nothing other than The story the physiological efect on the American people. When investing you always need to understand what is the story behind why you should invest. We believe Replacement values are 40%- 60% of cost price to rebuild that the US property at the moment offers a very compelling story for a number of reasons. 2007 prices were very infated, however ,a far better measure of value is what it would it cost to replace The US economy the same property today and in most areas you are You need to read the USA Property Report – 2010 buying property for 40% to 60% of what it would 16 Ofshore Handbook 2013 www.reimag.co.za

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USA cost to replace that same property. Along with the United States House Prices income yields which are possible, this provides a very $300, 000 $275, 000 compelling argument for intrinsic value in the property. $250, 000 $225, 000 $200, 000 Property fundamentals Price $175, 000 $150, 000 Te biggest lesson which was learnt from the Global $125, 000 $100, 000 $75, 000 Financial Crisis (GFC) was that those investors who $50, 000 $25, 000 invested for capital growth sufered losses – be it the $0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 biggest funds in the world or the individual ‘mom and Year pop’ investors - and those who invested for income have not only survived but thrived! Two factors underpinning strong rental 225 U.S House Prices vs. Owner-Equivalent Rent demand 200 175 House price index Owner-equivalent rent index • Psychological scarring – 8 out of 10 Americans we 150 Index 100 met had had one of their properties repossessed in 125 the last fve years. Everyone from property investors 75 to secretaries had gone through the pain of losing 50 25 their property. Not only had their properties been 0 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 repossessed, but the IRS (Internal Revenue Year Service) came after them, as the IRS deemed any write-ofs the bank gave their clients as gift on which the lenders had to pay tax. Basically they After supply and demand, all property – be it have had enough of property and are quite happy to commercial or residential – should be valued rent. More than 50% of Americans are now renters. based on the income it can generate. The good news is that the US property values are back in • Bank lending – even if Americans can get over the line with the long- term trends. psychological scarring and realise the opportunity, there is very limited bank funding and so Property opportunities prospective buyers can only buy cash. Te average These graphs all tell a story, but when Scott person does not have access to cash like this and so Picken asked Ian Fife, editor of the Financial they are forced to rent. Mail Property Section and very successful property investor, “How do you deal with uncertainty?” he Bottom line: strong rental demand and great explained: “Trough knowledge; by concentrating income yields. on the actual realities of the market we operate in. Property is a simple investment and it comes down to the An index is a theoretical fgure. A transaction is supply and demand. As explained already, this was one concrete and specifc. If you know how property of the underlying problems which caused the GFC and actually works, you’ll know that it remains the the over supply in the US. After fve years and no supply, biggest store of wealth in the world for ordinary it is believed the supply and demand is coming back into people. That is so because it remains the most equilibrium and in line with intrinsic value. Look at the predictable and conservative of asset classes. And long -term trends and how they are back in equilibrium. it is more often than not a home, too.” 18 Ofshore Handbook 2013 www.reimag.co.za

Scott Picken bought his frst home in London in 2002 at the age of 24 and used this same logic. At Price the time the UK was going to war with Afghanistan after 9/11 and everyone expected oil prices to go up, infation to go up and eventually interest rates to go Time up. Scott, however, focussed on the fundamentals of That being said, the market has definitely the opportunity. It was a 3-bedroom house, 5 minutes turned. From the mainstream newspapers to from Wimbledon tube station and with a £20 000 Warren Buffett and Donald Trump, all are saying investment he could renovate and turn the property that the market has turned and now is the time into a 5-bedroom house. With this he would net over to invest. £1 000 a month and decided that if interest rates went up he would be able to ride the wave. During a recent interview, Donald Trump said, that now is a great time to get into real estate in Unfortunately for the doom mongers, it never the US – and he specifically pointed to houses as happened. But in late 2008 the GFC came and the best investment in the US property market. Scott was very nervous about what would happen if all the tenants left. As it transpired, a good property Fellow billionaire, Warren Buffett, appeared in a good area, will sustain tenant demand. He on CNBC in late February 2012 and essentially might have lost £100 000 in capital value in the said the same thing. In fact, he said if there was GFC (although the market has now recovered), but an efficient way to do it, he’d like to buy 200 000 he doesn’t care as interest rates dropped to 0.5%. single family homes! “If held for a long period His passive income is more than £2 000 a month of time and purchased at low rates”, Buffett says and so he will logically ride the wave until the “US houses are even better than stocks.” market recovers. According to the Wall Street Journal more than Basically it is all about the fundamentals of the 50% of Americans now believe that property deal or opportunity. Te opportunity in the US at prices will rise and that the worst is behind them. the moment is the same with replacement values at The Case Shiller Index is up over 10% across the 40% to 60% and net yields ranging from 8% to 13%. whole country for the last 12 months. The timing However, the most important thing which has Although it is an incredible story, the next major changed the market is that Wall Street has moved component is timing. Sophisticated investors know onto Main Street. The hedge funds from Wall that timing is very important to ensure investments Street have now moved into buying US property generate the right returns, but they also understand and are really driving the demand, driving prices that the only time you can ‘call’ the bottom of the up and yields down. Funds like Colony Capital market is in hindsight. and Blackstone have deployed billions of dollars into residential property in the US. Most investors focus on the crash (the graph on the right) and yet they should focus on the Atlanta continues to produce the best overall fundamentals of the market, the values based on returns, Orlando has the best capital growth and income which can be generated. Memphis is the best income market for returns. www.reimag.co.za Ofshore Handbook 2013 19

USA Our partners in these markets are world class contacted a company they have worked with in and continue to impress our clients with their the UK since 2005. Tey had helped 1100 British and professionalism. Irish investors invest over six years in the US. Scott prefers working with this company as they have the Scott says, “Te interesting thing is that we have client’s interests at heart and proven to be trustworthy. researched over 14 markets including Las Vegas, New York, Phoenix, San Diego, Chicago, Detroit, It was a highly successful strategy as we experienced Orlando, Miami and Boston, to name a few. We an incredibly balanced view of the market, have spent over R1.5 million on travelling to all the best of the US property players and a great these markets, but the greatest thing is that along understanding of risks and opportunities. It was with our partners, our research has stood up as the these partners which were the catalyst for Scott markets we are investing in are getting the best to agree that he was now ready to invest himself returns in the US, and continue to be the best and help his clients. With this strategy we have performing markets in the whole country. Tis is successfully helped our clients get the right the advantage of working with the company who information and work with the best partners in our has helped more people in South Africa invest strategic investment areas. Te returns which the internationally than any other company (over 2000 clients have achieved to date, are testament to this. international investments to a value of over R1.6 billion) and also working with the best partners Conclusion in the US.” Bottom line is that the US is the best opportunity in the first world. With the rand devaluing so Great opportunities going fast dramatically, we have seen returns of over 50% in The partners under 12 months. Te bottom line is you can do it on your own, or you can work with tried and tested partners, work We assist 70% of our clients to invest without together and use the laws of nature. going to US and have the full solution – sourcing the property, renovating the property, managing and Do you know? maintaining the property, fnancing, structuring, Flocks of 25 birds can fy 70% further than a bird tax, bank accounts – everything you need. on it’s own. We also recommend our buyer’s trips on which In 2010, Scott met with a number of partners, you can join Scott on a visit to the US and meet including one company who was selling the partners on the ground in person, get the right property in South Africa. He went to the US to information, have lots of fun and most importantly investigate them and what they were selling and take advantage of the opportunity. We have done four he was horrifed by what he found. Due to that, of these trips and happy to share all the testimonials IPS decided that we could not fnd the partners from clients, as we get such amazing feedback. We on the ground we could trust, and as we know, offer complete transparency and the quality of our international property is only about two things – partners and their product sells itself. information and partners. RESOURCES IPS Invest In 2012, IPS adopted a different strategy and 20 Ofshore Handbook 2013 www.reimag.co.za

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LONDON BY MIKE SMUTS The Quick Fire Guide To investing in London he principle of letting out a property to paying tenants does not change, wherever you buy in the world. But the details do – and it’s often these small details in which the diference between proft and loss lies. TYou need to know where to look and what to buy to maximise your return on investment. In this article, we cover some of the main considerations. Have a detailed plan Tis is vitally important. Unless you have a clear goal and plan, you will easily be distracted once you start looking at diferent investments. Your emotions may take over, and before you know it, you may have bought a property that can’t produce the results you wanted. No entrepreneur worth his salt would start a business without a plan – you should be no diferent. You need to be crystal clear on what strategy you are going to follow to build your London portfolio. 22 Ofshore Handbook 2013 www.reimag.co.za

For some investors, price is all that matters. Tey will 1. Public transport voraciously snap up anything, anywhere and in any Unlike South Africa, car ownership in London is a condition, as long as it is cheap. Others are prepared luxury for most. Te vast majority of Londoners rely to pay that little extra, and to cherry-pick deals from on the public transport system to get around. Because new developments in up-and-coming areas. Tere is of this, people have a tendency to congregate around undoubtedly a market for both of these approaches. areas with good transport links. Tey are willing to Be sure to stick to your strategy, however. Too often pay a premium to be within walking distance from I see investors, who are not clear on what investment a station. If you want to ensure that your London strategy they want to follow, running all over London, property appeals to a large market of potential tenants, looking at 100 completely different opportunities and that it will beneft from good capital growth, it is in completely different areas, only to return home essential that you invest in an area with good public confused, empty-handed and disappointed. transport. Decide where to buy 2. Public amenities Location, location, location – it may be a cliché, Tis point seems so obvious that it’s often overlooked. but understanding where to buy your first London Another consequence of few Londoners owning investment property is of paramount importance. cars is that people don’t necessarily do bulk monthly London’s property market is like no other in the world. shopping for groceries – it’s a pain to lug it all back It moves faster and difers vastly from street to street, home on the bus or Tube. let alone area to area. There isn’t just one housing market, but myriad ones, responding to a variety of It’s far more common for the average Londoner to specifc factors, from factory and ofce closures to the pop into a shop on their way home from work and pulling power of local schools. pick up a few items for dinner, to pick up a take-away, or just to eat in a restaurant. Your tenants will want A local housing market may be made up of easy access to shops, restaurants and bars, so ensure commuters working in the city or those working for that these are close by. local companies or the government. Tere may be a demand for housing from students, their tutors and Keep in mind, however, that if your local rental professors, or even short-term corporate tenancies pool consists of mainly families, they will shun noisy for jet-setting consultants. All of these may fnd their high streets and bars in favour of parks, libraries and rental property within a small area, with certain types leisure centres. of property more in demand than others. From one street to the next, demand may vary from studio fats 3. Education through terraced houses to executive apartments. Tis is particularly important if the area has a high concentration of families. In London, competition is The local market will directly affect the type of ferce for places in the best public and private schools. tenant you attract, your rental return and the level Parents will go to great lengths to ensure that their of capital appreciation you can expect, so it could be children get into well-regarded schools, often paying argued that it’s the most important element to get ridiculous amounts of money for properties in the right. Tere are many tips and tricks you can employ right catchment area. Some even resort to renting a to fnd the right location for your London investment. home for the time their children are at school, despite But in the end, it all boils down to four fundamentals. owning their own property elsewhere. www.reimag.co.za Ofshore Handbook 2013 23

LONDON 4. Employment to come over with preconceived ideas of what they City-centre living has become more popular in recent are going to buy to attract a certain type of tenant. years, with many professionals choosing to live close to where they work rather than to make the long I often hear variations of the following: ‘Well commute back and forth between home and work. Mike, we are only looking at two-bedroom Canary Wharf is a perfect example of this; many apartments because we only want to attract young investors have seen their rents increase substantially, professionals.’ thanks to new companies relocating nearby. Even if you are not buying in London’s city centre, it’s still The problem with this is that you are ignoring important to consider local employment prospects the local market – and, most importantly, your while keeping an eye on the news for expansion plans prospective tenant’s requirements. While it’s true or inward investment. that two-bedroom apartments in Wimbledon let well because there is a large demand from A large company arriving on your doorstep or a new professional shares, smaller properties, such as one- ofce block can spell an infux of prospective tenants beds and studios do better in Canary Wharf, where and boost rentals. Lots of empty retail units or closing people prefer to live alone. down signs in shop windows should ring alarm bells. If you are working alone and you need help with Decide on the size of the property deciding what size of property to invest in, there So, should you be buying one- or two-bed apartments, is only one place to start – the local letting agents. or opting for larger family homes? Truth is, this will Letting agents deal with enquiries from potential all depend on the area you decide to invest in. tenants daily. Tey can ofer a unique insight into potential tenants’ requirements and the amount One of the most common mistakes South African of rent they will be prepared to pay for specific investors make when buying property in London is property types. RESOURCES Smuts & Taylor 24 Ofshore Handbook 2013 www.reimag.co.za

Thinking beyond! Consumer protecton through efectve industry regulaton. Ensure you use the services of a registered estate agent. Tel: 011 731 5600 / www.eaab.org.za.

NEW ZEALAND BY ANGIE REDMOND Investing In New Zealand September 2012. Districts which also recorded strong annual house price rises include Central Otago Lakes (14.4%), Auckland(8.4%), and Nelson/ Marlborough (8.3%). There were also modest house price increases in Canterbury/Westland (5.9%), Wellington (5.3%), Waikato/BOP (3.5%), Manawatu/Wanganui (3.2%), Taranaki (2.4%), and Otago (2.2%). Only two districts recorded house price falls. House prices fell in Hawkes Bay (-2.9%) and Northland (-1.5%) during the year to end-September ew Zealand is an island country in the 2012. South western Pacifc Ocean. Te county Ngeographically compromises two main Auckland has the most expensive housing in landmasses – that of the North and South Islands, the country with an average price of NZ$515000 and numerous smaller islands. New Zealand is (US$422228) in September 2012 while Southland situated roughly 1 500 kilometres east of Australia. has the cheapest housing with an average price of With a mild and temperate climate, temperatures NZ$200000 (US$163972). range from 10 degrees Celsius in the south to 16 degrees Celsius in the north. This was supported by data released by the government valuer Quotable Value Ltd., showing the Te northern and north-eastern parts of the South national residential property price index increased by Island are the sunniest areas in the country. 5.3% during the year to end-September 2012. Over the same period: Residential property prices in New Zealand have continued to rise in the third quarter of · In Auckland Area, the average sales price soared 2012. The national housing median price rose by 7.2% to NZ$575797 (US$472073) 6% to NZ$371000 (US$304168) during the year · In Wellington Area, the average sales price rose to September 2012, according to the Real Estate 2.3% to NZ$445679 (US$365394) Institute of New Zealand (REINZ). · In Main Urban Areas, the average sales price increased 6.1% to NZ$478404 (US$392224) Locally, Southland registered the biggest annual house · Te average sales price is now NZ$428308 price increase, with a 17% year-on-year (y-o-y) rise in (US$351153). 26 Ofshore Handbook 2013 www.reimag.co.za

During the housing boom from 2001 to 2007, New Zealand’s economy was projected to expand by house prices rose 123% (87% in real terms), 2.2% in 2011, and 3.1% in 2013, partly due to the including 24% in 2003, 12.5% in 2004, 14.5% in rebuilding plans in Canterbury, according to the IMF. 2005, 9.6% in 2006, and 7.7% in 2007. Non-residents are generally allowed to buy houses House prices started to fall in early 2008, as in New Zealand. However, purchase of property the global crisis spread to New Zealand. During does not give the buyer the right to live permanently 2008, house prices fell 8.95% (-11.93% in real in the country. terms). Then in 2009, house prices rebounded by 5.42% (3.4% in real terms). However in 2010, TEN FUN FACTS house prices fell by 1.65% (-5.45% in real terms). ABOUT NEW ZEALAND: In 2011, house prices recovered slightly, rising by 2.8% (0.93% in real terms). 1 New Zealand is the frst place on earth that receives the frst ray of light. It specifcally glints frst on the small town Te median days-to-sell of dwellings declined to 33 of Rangitukia in North Island. days in September 2012, from 37 days a year earlier, and total dwellings sold increased by 8%, to 5356 2 New Zealand established a state-run tourism department in 1901 – the frst units. Residential mortgage loans were up 3.2% y-o- in the world. y, according to the Reserve Bank of New Zealand (RBNZ). More than 58% of the total outstanding 3 The world’s smallest marine dolphin and the rarest sea lion thrive only in New residential mortgages had foating interest rates in Zealand’s waters. August 2012, up from just 12.36% in August 2007. 4 The heights of Mount Everest were frst conquered by Sir Edmund Hillary, a New Property prices are expected to continue rising. Zealander. “With the strong, sustained period of growth recently, and the typical expected lift over the 5 The frst Rugby World Cup in 1987 was won by the New Zealand All Blacks. coming months, property values are not expected to slow,” said Kerry Stewart of Quotable Value, Ltd. 6 Vineyards located in the southernmost tip of the world belong to New Zealand’s Central Otago region. 7 Wellington’s old Government Building is the biggest wooden structure in the southern hemisphere. 8 In 1893, New Zealand gave women the right to vote. It was the frst country to do so. 9 Only three countries in the world have two ofcial national anthems – Denmark, Croatia, and New Zealand. 10 New Zealand has a ratio of 400 golf courses for every four million people. It has the greatest number of golf courses in the world. www.reimag.co.za Ofshore Handbook 2013 27

MALTA ADVERTORIAL Malta launches its new Global Residence Programme ituated in the heart of the Mediterranean, the is- In order to qualify for the Global Residence Programme, lands of Malta and Gozo are ideally located as life- investment in immovable property has to be at least Sstyle and investment destinations. With a history Euro275,000. while the minimum value for property dating back to the time of the Crusaders this ancient bought in the South of Malta or in Gozo is Euro220,000. land is steeped in culture with a heritage spanning over Applicants will also be eligible for residence benefts 7000 years. if they rent property on an annual basis to the value of Euro9,600 in Malta and Euro8,750 in the South or in Gozo . The cosmopolitan, crime free environment, warm friend- ly people and fantastic weather year round make Malta Other attractive benefts in this programme include a a popular tourist destination and a highly sought after reduced minimum tax advance payment or threshold country in which to reside. Crystal clear seas ofer world of Euro15,000 with a tax of 15% on any further untaxed class diving, sailing and other water sports while the long income remitted into Malta - capital or capital gains stretches of white sandy beaches are a popular draw- would be untaxed. The previous requirement to place a card to holiday makers. Euro500,000 bond with the government and an additional Euro150,000 per dependent has also been removed how- English is an ofcial language and the language of busi- ever a standard processing fee of Euro6,000 is applicable ness in Malta. In recent years Malta has been accepted in- when a property is purchased in Malta and Euro5,500 if the ternationally as a reputable international business, fnan- property is bought in Gozo or South Malta. cial and maritime centre and has an excellent reputation and track record. It has the largest free port in the Medi- There are no minimum stay requirements however resi- terranean and although an on-shore low tax jurisdiction, dents under the Global Residence Programme and their Malta is not included among the black listed tax havens. dependents, have to be covered by health insurance. They will not be entitled to free state health services. When Malta frst joined the EU in 2004 and signed the There are also no employment restrictions under the Schengen treaty, their residency programme became new programme. highly attractive to non-EU nationals wishing to beneft from visa free travel within all EU countries. However the Malta has ranked 2nd out of 193 countries in high level of interest in the programme resulted in the International Living’s: “Quality of Life Index 2011” government introducing the High Net Worth Investor programme and raising the requirements for would be and ranked 1st for Best Climate in the World. investors thus making it a less attractive proposition. Monarch & Co, in association with Malta’s leading estate The new Global Residence programme launched in June agents Frank Salt Real Estate and EMD legal and tax ad- 2013 replaces the High Net Worth Individuals Scheme visors will be hosting seminars showcasing all that Malta and eligible applicants can once again beneft from at- has to ofer to South African nationals interested in the tractive investment opportunities. This new option of- Programme. These will take place on the 20th and 22nd fers non-EU nationals great advantages and favourable August in Johannesburg and Cape Town respectively. thresholds with a similar programme being made availa- For more information or to register for the seminars one ble to EU nationals shortly. may visit www.malta-residency.com.



AUSTRALIA BY ANGIE REDMOND Earn An Income In Australia he major cities such as Sydney, Perth, in a more rural area – just remember that rural in Brisbane and Melbourne are seeing the Australia could literally mean remote, so do your Tbiggest rises in property prices. Since the research thoroughly frst. majority of buyers tend only to purchase as a result of a permanent move, these cosmopolitan centres Once you have had an offer on an Australian provide the best potential for work – especially property accepted you would exchange contracts for those on a ‘Skilled Migrant’ visa. Having straight away. You are entitled to a cooling off said that, the booming tourist industry provides period (usually fve to ten days), and the contract a great way to earn an income in a coastal area in will be conditional on certain clauses (such as a popular destinations such as the Gold Coast and mortgage approval), but basically you are now tied Cairns in Queensland. If you are looking to make into the purchase and will be required to pay a your money stretch further, then you could look ten per cent holding deposit. Please note that the 30 Ofshore Handbook 2013 www.reimag.co.za

Transfer Registration fee, which varies from state to state; legal fees, which generally range between AUD$500 and $1 200 (£250 and £600); mortgage application; local tax, which again varies from state to state; survey, which will cost in the region of $500 (£250) and buildings insurance. Some states will also demand that you have a termite and pest inspection, and if you are buying an apartment it is advisable to commission a strata inspection, which determines whether the building as a whole has had any structural problems – or been subject to any administration concerns. Australian taxes also vary depending on which state you live in. However, if you spend more than six months in a year in Australia, you automatically become liable for income tax. Capital gains tax is payable on any property apart from your principal residence, but the amount you pay varies depending on your personal circumstances. But what about the legal stuf? Foreign persons should notify the government and get prior approval to acquire an interest in certain types of real estate. An ‘interest’ includes buying real estate, obtaining or agreeing to enter into a lease or licence, or financing or profit sharing arrangements. Regardless of value, foreign persons generally need to notify the government and get cooling of period does not apply if you purchase at prior approval to take an interest in residential an auction. Your solicitor will run local searches, real estate, vacant land or to buy shares or units in similar to those in South Africa, and will check Australian urban land corporations or trusts. the title deed before you are able to complete the transaction. Completion occurs six weeks after the Foreign persons also need to notify for prior day of exchange. approval if they want to take an interest in developed commercial real estate that is valued at $54 million Know the relevant fees and taxes. As in any or more – unless the real estate is heritage listed, country, buying a property in Australia is an then a $5 million threshold applies. An exception expensive business – on average you should budget for developed commercial real estate applies to New around fve per cent of the purchase price to cover Zealand investors and United States investors, where the red tape. This is broken down into a Land a $1. 078 million threshold applies instead. www.reimag.co.za Ofshore Handbook 2013 31

AUSTRALIA Foreign persons should also notify for review if Australia (Commonwealth, State or Territory, or they have any doubt as to whether an investment local) or a statutory corporation formed for a public is notifable. purpose. Further information about buying real estate Other exemptions may apply if you are: The government has decided that some types · A company, trust or managed investment scheme of investment in real estate are contrary to the (primarily) for the beneft of individuals ordinarily national interest. This section outlines these resident in Australia; prohibitions as well as the types of real estate · An Australian corporation that is owned by that foreign investors may buy and whether they individuals who are exempt15 or an Australian need government approval to do so. If you are trust for the beneft of such individuals; intending to buy real estate in Australia, you · A corporation that is providing custodian should make your purchase contracts conditional services; or on foreign investment approval, unless you · Buying shares in certain Australian urban land already have approval or you are exempt from the corporations that are publicly listed on an Foreign Acquisitions and Takeovers Act 1975. · Australian Stock Exchange, or units in certain Significant penalties may apply to ineligible Australian urban land trusts, owners of real estate. · Buying residential real estate in Integrated Tourism Resorts. Who is exempt? You do not need government approval to buy You do not need the government’s approval to residential real estate if you are: buy residential property that is within the bounds of a resort designated as an Integrated Tourism · an Australian citizen (living at home or overseas) or Resort prior to September 1999. For resorts you are ordinarily resident in Australia; designated from September 1999, the exemption · a New Zealand citizen; only applies to developed residential property · a foreign national who holds an Australian that is subject to a lease of 10 years or more to permanent resident visa; or the resort operator and that is available as tourist · a foreign national buying a property as joint tenant accommodation when the owner does not occupy with an Australian citizen spouse. it. Te normal foreign investment rules apply to all other property within the resort, including vacant Regardless of your citizenship or residency, land for development. Conditions must be met to you do not need government approval for: qualify for designation. · New dwellings bought from a developer that has pre-approval to sell them to foreign persons; WHEN SHOULD YOU APPLY? · An interest in a time share scheme that allows you (and any associates) to use it for up to four weeks You should lodge an application in advance per year; of any transaction, or you should make your · Certain residential real estate in Integrated purchase contract conditional on foreign Tourism Resorts – see below; investment approval. A transaction should not · An interest acquired by will or devolution by proceed until the government advises you of the operation of law; or outcome of its review. · An interest acquired from a government in 32 Ofshore Handbook 2013 www.reimag.co.za

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FRANCE BY ANGIE REDMOND Before You Buy Consider your long-term plans 34 Ofshore Handbook 2013 www.reimag.co.za

et’s put property investment marketing may start a family, and young families may in France into context f irst. It is need to move nearer to secondary schools or Limportant to realise that it has developed universities as children become teenagers. dramatically over the last ten years, particularly Able-bodied pensioners will find themselves as far as British buyers are concerned. As growing becoming less active, or a surviving granny numbers of overseas buyers have stepped onto might need to come and live under the the property investment ladder to buy property family roof. Money invested in a property for sale in France, so the number of bargain leaseback scheme in France may be needed to properties in France suitable for renovation and fund urgent healthcare or other unforeseen farms with outbuildings ripe for gîte conversion financial demands; the job that prompted a have dwindled. On the other hand, new build move to France may fall through, the business developments have continued to f lourish and opportunity that seemed so clear cut may fail to buying off-plan has become commonplace for transpire… the list goes on and on. purchasers who like the comfort and convenience of a truly modern home. In addition, the growing So then it’s time to trade up, trade down, number of Brits relocating to France has resulted or just move on. Some will want to buy a new in the increasing popularity of large family-sized property for sale in France more suited to their character homes, while investors have found that needs, others may prefer to cut their investment buying property in France can give better returns losses and return to their country of origin. than stocks and shares or pension funds. But it is not always that simple, particularly if you’ve invested in a property leaseback scheme Over the last decade, more and more buyers in France and are selling up before the contract have been investing in a variety of property for (usually 9-11 years) and the 20 year qualifying sale in France, in line with the trends outlined period for the 19.6% VAT discount has run above, and in accordance with their personal its course; or if you’ve “over-specced” your circumstances. Downshifting couples and property to the point where you cannot recoup families looking for a better quality of life have your investment; if you’ve bought a home that been purchasing permanent residences, and some has limited appeal to others due to its location, have chosen to buy larger properties that provide layout, size, condition or decoration. them with both a family home and an income stream, offering B&B accommodation. Holiday- Obviously, it pays to take a long-term view makers have bought older, rural cottages or before committing yourself to a property newer, coastal apartments, investors have opted purchase. Ask yourself if what suits you so well for ski chalets and seaside property developments today will still be the right choice five years (often bought via a leaseback scheme), and city hence? Will it be possible to adapt, extend centre apartments, while older folks have been or convert your property investment to meet investing in villas of a manageable size and your changing needs? And if not, how easy retiring to the sunny south of France. will it be to trade places? Current needs and wishes have to be balanced against likely future However, what some purchasers fail to take developments. It can be wise to plan your exit into account is that personal circumstances route, or at least have an idea of what your next inevitably change over time. Childless couples move might be. www.reimag.co.za Ofshore Handbook 2013 35

FRANCE Here are some hints for buying property in Fact 2 France: French cuisine is considered one of the best cuisines in the world and there is an average of two cooking Trading places books being published every day. · Avoid buying property for sale in a poor location of France – it’s the one thing that cannot be Fact 3 changed France is famous for having many castles, palaces and · Consider the size and layout; if there are manors. It’s said to have around 40 000 castles. drawbacks, can they be remedied? · Properties in habitable condition ofer obvious Fact 4 advantages; deal with the essentials to secure a Tere are more than 300 kinds of cheese made in quicker sale France. · Avoid over-speccing; those gold bath taps may not be to everyone’s taste, and you are unlikely to Fact 5 recoup the cost of your investment One of the most popular symbols in France is the · Steer clear of unusual colour schemes and Eifel Tower which is a famous tourist attraction that famboyant décor stands at 300 meters tall. · Modernising an ancient bathroom is a must · Freshen up a dingy kitchen to add instant appeal Fact 6 · Do some DIY - deal with any obvious defects that Te French state was established in 843, breaking up would put of purchasers from the Carolingian Empire. Fact 7 Selling your property for in France? Here’s what France is the largest Country in Western Europe and you need to know… has seven mountains and fve major rivers. Avoid selling in the early years after purchase, when you will probably make a loss; allow at least fve years Fact 8 to recoup your buying costs Te French national anthem is called la Marseillaise because it was first sang by soldiers from the Is the local property market in a slump? Unless you Marseille marching to Paris. are obliged to sell, it can be wiser to rent out your home long-term and wait for the market to pick up. Fact 9 The Statue of Liberty was made in France and If you need to sell your French property before then gifted to the US in 1886, in celebration of its buying a new home, this should be included as a centennial. conditional clause in the purchase contract. Fact 10 Fun Facts About France The word “France” means “land of francs.” The Fact 1 Franks are Germanic tribes who lived in Northern Wine has been made in France since the Roman empire. Europe after the fall of the Roman Empire. 36 Ofshore Handbook 2013 www.reimag.co.za

CYPRUS BYJENNY ELLINAS Forging Ahead With prosperity in Cyprus fter reeling from the harsh “bail-in” · Tourism: 2.4million tourists; actual revenue requirements imposed by the Troika (the €1,8 billion AIMF, EU and ECB) in March this year; Exports: pharmaceuticals, wines, fruit and the truth is that Cyprus has already dusted itself of vegetables. €1.53 billion. and is focusing on all of the existing elements that make it so appealling on so many levels; as well as So what went wrong? In 2010 the IMF and EU new prospects. announced they would assist Greece and other EU countries in respect of fnancial collapse/difculties; Setting the scene to the bail-in and despite its small size, Cyprus stood by its EU On 01 January 2008 Cyprus adopted the Euro partners in 2011 to bail these countries out. All EU after coming of the very strong Cypriot Pound (on countries were forced to take a haircut on Greek 31.12.2007 it was R19,92 to CY£1 !), the economy was private sector debt; as well as to assist in the bailout fourishing and it was the peak of Cyprus’ property of other European countries. Two of Cyprus’ largest boom. It took a couple of months’ lag after the USA banks (Laiki Bank and Bank of Cyprus) were the Lehman Brothers investment bank’s bankruptcy highest exposed and gave away almost €5bn in Greek on 15 September 2008 for the efects of the global Government Bonds in an EU-led efort to restructure economic decline to hit the island. the Greek national debt. This of course had direct knock-on efects last year as both banks were then But where they were fortunate is that the Cypriots had themselves faced with financial difficulties which – and continue to have – a very high GDP per capita affected the normal financial arrangements of the (in 2009 the IMF ranked them 30th at $29,427 p/p). Cypriot government. Te government was forced to In 2009, the island enjoyed income from many diverse request a loan from Europe until its natural gas and industries: oil reserves are realised in the next two to four years. · Ship management and registrations - the largest in the world Where we are now? The Troika responded · Financial services - lowest corporate tax rates in positively – although harshly! – and in March agreed Europe (then capped at 10%) to a ‘bail-in’ which included lending Cyprus €10bn www.reimag.co.za Ofshore Handbook 2013 37

CYPRUS to refinance its debt; as well as to provide as much and maritime activities. Cyprus has a highly educated liquidity to the Cypriot banks as is needed during this workforce, is a global player ofering true ease-of-doing- period: €2.5bn will recapitalise the Cypriot banking business platforms and has a track record of adopting and sector, €4.1bn will redeem maturing government debt implementing solid macroeconomic strategies. Being and €3.4bn will cover the government’s fscal needs in conveniently located at the crossroads of three continents the next three years. (Africa, Asia and Europe) gives Cyprus a distinct advantage for businesses wishing to be exposed to every The Cypriot president has been commended by market – all the while ofering access to top facilities, European finance ministers on the government’s services, amenities and infrastructure. Rounding of the swift reaction to restructure Laiki Bank to be split appeal is Cyprus’ low corporate tax rate, capped at 12.5%. into two banks – a “good bank” taking the good loans and deposits up to €100 000 which are guaranteed Cyprus’ vast natural gas reserves by the Cypriot government; and a “bad” bank which Cyprus identifed 13 sectors in their Exclusive Economic will go into liquidation. Te Bank of Cyprus will be Zone (in the seas that exclusively belong to them) and in recapitalised using a percentage of the money from late 2011 Cyprus entered the natural gas game in a big deposits over €100 000 in exchange for shares in the way. Te US company Noble Energy was contracted to bank. do initial exploration in the furthest South sector (sector 12) and the initial fndings there excited not only the EU Te government also imposed capital controls (which but energy industry as a whole. seven trillion cubic metres are now virtually lifted) to ensure there was not a run of natural gas (conservatively worth €100bn per annum) on the banks thereby preserving Cyprus’ reputation as was discovered in this sector alone; with over €100trn per a reliable banking hub. annum anticipated for all 13 sectors! Tis is the largest fnd to date in Te Med; and the implications for Cyprus Cyprus’ global appeal in the short, medium and long term are enormous. Not As a corporate investment destination, Cyprus is widely only will Cyprus now become a supplier of natural gas recognised as strategically being a very important to Europe and Asia but will also be a signifcant player business centre excelling in fnancial services, shipping in this space globally. The gas liquefaction terminal 38 Ofshore Handbook 2013 www.reimag.co.za

(power plant) is expected to be completed in 2016 with and/or business plus physically live in the country for a the frst oil extraction scheduled for late 2019. So, in prescribed minimum number of days per annum for a the short term the construction and engineering felds set number of years. will be given a boost; in the medium term all of the peripheral services will beneft and in the long term As a South African passport holder, there are currently huge amounts of revenue will be realised. three ways to secure Cypriot citizenship and therefore a Cypriot passport: Tourism remains buoyant and year-on-year growth 1. Marriage to a Cypriot citizen – after completing in tourist numbers cements Cyprus as a preferred three destination in Europe. Ryan Air, EasyJet, Aegean years of marriage and harmonious cohabitation, Air and all of the European airlines all have Cyprus living permanently in Cyprus: or on their routes; and Air France recently signed an 2. Trough naturalisation - living in Cyprus agreement to increase their fights to Cyprus due to permanently for 5 - 7 consecutive years (ie a high demand. Outdoor sports are in abundance - from minimum of 183 days every year, for 5 – 7 years); or skiing in the mountains in winter to horseback riding 3. Investment as an ultra-high net worth individual on the beach in the summer; and all of the extreme and (HNWI), investor and entrepreneur. team sports are on ofer too. Because of the incredibly beautiful weather (320 days of sunshine every year!) But, to acquire permanent residency (which is the Cyprus remains a firm favourite for weddings and legal right to reside in a country) is a diferent process honeymoons. Te crystal clear waters and stunning altogether; and the permanent residency opportunity in beaches in Cyprus continue to rank in the top 10 Cyprus is completely unique. in Europe; and the latest accolade for this country is that they have just been voted number 1 for having the Cyprus is the only English-speaking country cleanest beaches in Europe! in Europe offering permanent residency without requiring that you physically live in Cyprus for a Te president’s strategy to create jobs and stimulate minimum prescribed number of days per annum. In the economy has been widely afrmed as a solid action other words you can acquire permanent residency, carry plan to get Cyprus back on track to growth within the on with life as it is in South Africa and then when you’re next few years. He recently commented “…if new fscal ready to move across to Cyprus, as permanent resident measures are needed, there will be no new taxes but you have the legal right to live in Cyprus. rather better management of state expenditure.” He also announced that Cyprus would be awarding casino With regards to acquiring permanent residency in and golf estate licences to spur the construction and Cyprus, the basic requirements are as below: services industry. 1. Purchase a residential property 2. Pay 66% of the purchase price What is the appeal for EU residency and the 3. Prove income associated lifestyle aspects? 4. Remit funds to Cyprus 5. Secure a medical policy Citizenship and residency in Europe 6. Have a clean police record To acquire an EU passport (ie become a citizen of the EU) is not a short and easy process – each country The spouse and all children under the age of 18 requires the applicant to invest in a residential property automatically qualify under the main applicant’s www.reimag.co.za Ofshore Handbook 2013 39

CYPRUS application. With qualifying as a shareholder in a legal · Europe is on your doorstep entity the house purchase will be accepted even when · Freedom of association. made in the name of the company and not in the name of the applicant, provided that the company is registered in Investigating the property opportunities in Cyprus the name of the applicant and/or the name of applicant When investing in bricks and mortar it make sense and his spouse and he/they are the sole shareholders. to work with professional, accredited and reliable companies and individuals. And in Cyprus it is no The visa itself diferent. All reputable developers will be members of As Cyprus has not signed the Schengen border the Cyprus Land & Building Developers Association agreement (this is imminent as they are a full member (the association’s aim is the protection and service of of the EU and one of the requirements is to sign this customers and the profession); and all regisered estate agreement), the permanent residency permit currently agents will be members of the Cyprus Real Estate gives a long-term, multiple-entry Cypriot visa. Tis Agents Association - which is a semi-governmental means that as a non-EU passport holder you will still body that regulates the industry. need to apply for a Schengen visa to travel to Europe. However as a permanent resident of Europe to apply It is important to check the following with the local Lands Ofce for a short or long-term Schengen visa directly at one of the embassies in Cyprus is a lot easier as they look · that the vendor is the legal owner of the property; at your application diferently than if you are a South · that the vendor has obtained the agreed town African applying. planning and building permits; · that the sale contract is deposited with, stamped and the benefts of a Cypriot (European Union) registered by the local Lands Ofce. permanent residency permit · Te legal right to live in Cyprus, at any time Lastly, ensure that your agent or developer has a · No prescribed minimum days per annum to credible reputation and an impressive track record to physically live/be in Cyprus except two days every ensure that you are dealing with a professional and two years (ie continue to live and work in South ethical company. Africa while still retaining the permanent residency permit) Taking the time to check things out for yourself · The permit is for life (if still visiting Cyprus) and In this day and age researching properties online therefore does not need renewing before making a financial decision makes perfect · Bypass strict visa requirements sense. But to invest in a property without having seen · Access to top universities and education facilities if for yourself is investment suicide! Te best way to · High standard of living make a decision about buying a property abroad is · Low cost of living by taking the time to view it for yourself. Cypriot · Access to frst world medical facilities Realty ofers customised property inspection trips · Entitlement to basic health care to Cyprus to investigate opportunities. We’ll be · Access to the largest trading block in the world there with you as you explore Cyprus, experience the · No import duties on goods and services within EU warm hospitality from Leptos Estates (the company · Powerful tool for international tax and legacy Cypriot Realty exclusively represents in Cyprus) planning and of course look for your new home, making · Low personal tax regime – you keep your wealth! your “Plan B” a reality! The property inspection 40 Ofshore Handbook 2013 www.reimag.co.za

Official South African marketing agent for LEPTOS ESTATES www.LeptosEstates.com CAPE TOWN SANDTON Ground floor, Liesbeek House, River Lane, Mowbray 2nd Floor, West Tower, Nelson Mandela Square, PO Box 23644, Claremont, 7735 Sandton, PO Box 785553, Sandton, 2146 Tel: +27 21 680 5272 | Fax: +27 86 670 6490 Tel: +27 11 881 5706 | Fax: +27 86 670 6490 Contact: Jenny Ellinas | +27 83 448 8734 | [email protected] | www.cypriotrealty.com

CYPRUS FACTS AND FIGURES trip itself is personalised, so you will have your own Total Size 9, 248km2 representative from Leptos Estates host you during Government Controlled Area 5, 456km2 the trip in order to make your time both an enjoyable Population 840, 000 and rewarding experience. Your agent will be at your Permanent Expats 250, 000 disposal to address any queries that you may have on South Africans Living In Cyprus 1, 370 (2011 census) a one-on-one basis. VAT Standard Rate 18% Accessing Europe / the Schengen States Reduced Rate 1 8% Currently a Cypriot visa is required for anyone Reduced Rate 2 5% wishing to enter Cyprus excluding UK, US and EU Zero Rate 0% citizens and passport holders. Although Cyprus PERSONAL TAX is a full member of both the EU and the Schengen Up to €19, 500 0% Agreement, they have not yet signed the Schengen €19, 501 - €28, 000 20% border/passport control addendum; however this is €28, 001 - €36, 300 25% imminent. Acquiring permanent residency in Cyprus €36, 301 - €60, 000 30% equates to automatic entry into Cyprus; and when the €60, 001 + 35% Schengen addendum is signed, access will extend to the other Schengen States. CGT 20% Exempt : transfer on death; gifts between spouses, parents, children & relatives up to 3rd degree etc. As a permanent resident in Europe, staying in st Deductions 1 €85, 430 any country in the EU is limited to 90 days at a ESTATE DUTY Nil time. Tis is a border / passport control requirement to monitor movement and is applicable to all EU PROPERTY TAX Annual Immovable Property Tax (rates) permanent residents. VALUE OF PROPERTY % TAX CUM. TAX Looking ahead €1 - €40, 000 0.6% €240 €240 Cyprus’ real estate environment hasn’t been as €40, 001 - €120, 000 0.8% €640 €880 dramatically afected as the rest of Europe because of €120, 001 - €170, 000 0.9% €450 €1, 330 its small size in comparison and the limited supply of €170, 001 - €300, 000 1.1% €1, 430 €2, 760 land. On the contrary, the lifestyle aspects of the island, €300, 001 - €500, 000 1.3% €2, 600 €5, 360 strong tourism industry, stable economy and booming €500, 001 - €800, 000 1.5% €4, 500 €9, 860 natural gas industry make this island an investor’s €800, 001 - €3, 000, 000 1.7% 37, €47, 260 900€ paradise and an ideal place to acquire residency. €3, 000, 001 and over 1.9% In Cyprus the lifestyle really is the best of the best. TRANSFER DUTY Living is laidback - you set your own pace. And what VALUE OF PROPERTY % TAX CUM. TAX better place to do this, than where the blue skies €1 - €85, 000 3% €2, 550 €2, 550 meet the Mediterranean Sea: on the beautiful island €85, 001 - €170, 000 5% €4, 250 €6, 880 of Cyprus. €170, 001 + 8% CORPORATE TAX 12,5% RESOURCES Cypriot Realty 42 Ofshore Handbook 2013 www.reimag.co.za

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AFRICA BY GAYE DE VILLIERS Botswana Demand is high ormerly the British Protectorate currently accounts for more than one- of Bechuanaland, Botswana BOTSWANA third of GDP, 70-80 percent of export Fadopted its new name earnings and half of the government’s upon independence in 1966. The revenues. Botswana’s heavy reliance economy, one of the most robust on a single luxury export was a on the continent, is dominated by critical factor in the sharp economic diamond mining. Te country has contraction of 2009. Tourism, an area of 600 000 sq km and is fnancial services, subsistence farming bordered by Namibia, Zimbabwe and cattle raising are other key sectors. and South Africa. Te country has Although unemployment was 7.5 • Population: 2.0 million warm winters and hot summers; percent in 2007 according to ofcial • Language: English / Tswana the landscape is predominantly fat reports, unofcial estimates place it • Currency: Pula with gently rolling tableland, with closer to 40 percent. Te population • Main Export: Diamonds the Kalahari Desert located in the of Botswana is estimated at a little • Capital City: Gaborone southwest of the country. Natural over two million. Debra Albers, • Infation: 7.5% resources include diamonds, copper, manager of Pam Golding Properties nickel, salt, soda ash, potash, coal, office in Gaborone, Botswana says iron ore and silver. residential property market trends are driven by economic factors. Currently De Beers, 15 percent Botswana has maintained one of the world’s highest owned by the Government of Botswana is moving economic growth rates since independence in 1966, its subsidiary, Diamond Trading Company (DTC) though growth fell below 5 percent in 2007-08, and from London. “Approximately 60 families will be turned sharply negative in 2009, with industry down relocating to Gaborone of which roughly 50% have by nearly 30 percent. Trough fscal discipline and already arrived and the rest should relocate by October sound management, Botswana transformed itself this year (2013) and will need high-end executive from one of the poorest countries in the world to a accommodation,” she says. “We are also experiencing middle-income country with a per capita GDP of demand for top end properties from the Diamond $13 100 in 2010. Two major investment services rank Sight Holding companies.” Botswana as the best credit risk in Africa. Diamond RESOURCES mining has fuelled much of the expansion and Pam Golding 44 Ofshore Handbook 2013 www.reimag.co.za

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AFRICA BY GAYE DE VILLIERS Residential KENYA Development In Kenya • Population: 41.6 million • Language: English / Swahili • Currency: Kenyan Shilling • Main Export: Black tea • Capital City: Nairobi • Infation: 10% xisting and new residential development Good buying opportunities properties are currently in demand in Kenya, “At present, from a local home buyer perspective, areas Ereports Kunaal Samani, a director of Pam such as Athi River and Syokimau, which are located in Golding Properties in Kenya, which has an office in the outskirts of Nairobi, ofer afordable prices for two Westlands in Nairobi, and is looking to expand soon in to three bedroom apartments starting from about Kes the Mombasa area. 5 million (approximately US $ 58 000).” “Te most sought after properties are located in areas He says middle income buyers are attracted to such as Muthaiga, Kileleshwa, Runda, Gigiri, Loresho, areas such as Nairobi west, Langata and South C, Lavington and Kitisuru, and are mainly in the price range where prices range from Kes 10 million to 20 million from approximately Kes (Kenyan shilling) 20 million (approximately US $ 117 000 - $235 000), while for to 100 million (approximately US $235 000 – US $ 1.2 higher income buyers, areas such as Lavington and million). Positively, the development sector is presently Brookside are popular, with a price range of Kes 25 experiencing the most growth in demand as many million - 50 million (approximately US $ 295 000 apartments and townhouses are now coming to fruition – US $ 588 000). High net worth buyers purchase and becoming available for purchase, helping meet a high in areas such as Runda and Muthaiga, where pent-up demand from the domestic market,” he says. properties start from Kes 50 million upwards (ie from approximately US $588 000). Samani says there is a high demand among business executives and young professionals who seek to boost their Samani says areas with high appeal for South standard of living and experience a more luxurious lifestyle. African home purchasers are those such as Gigiri, 46 Ofshore Handbook 2013 www.reimag.co.za

Trident Heights Riara, which is an apartment complex consisting of 24 units in three- to fve-storey blocks with each unit comprising three bedroom apartments priced from Kes 21.5 million and four bedroom penthouses with en suite master bedroom priced from Kes 37 million.” Commenting on the market in general, Samani says key factors which are currently impacting on market activity and the demand for homes include the following: · Location - this is the most important factor driving the property value and determines how much appreciation would take place to attract investment and other buyers. · Infrastructure - well-maintained road networks are attracting purchasers of property. Properties that have been developed with access to good road networks experience a strong demand from buyers as opposed to those without such access. Muthaiga, Runda, Nyari, Kitisuru, Brookside and Riverside. Says Samani: “Tese are the most suitable for · Construction - construction of the building impacts South African purchasers due to their vibrant, upbeat on the value of the building, and elements such as neighbourhoods with access to international schools, architecture, design and materials used determine shopping malls, restaurants, bars and other amenities. the worth of the property. Buyers seek properties In addition, rental yields on residential apartments range with a long life span and sound and appealing up to 7.5 percent for buy-to-let investors. Foreigners can architecture. acquire property or land on a leasehold basis (99 years) in Kenya and mortgages are easily available. · Land availability - if there is scarcity of land, the value of properties will increase in specifc areas. “Activity in the property market is gradually picking Areas situated in the heart of the city are much more up as most buyers and investors had put on hold decisions expensive than those on the outskirts. Most buyers until the aftermath of the elections. We expect to see are therefore more inclined to acquire land that prices rise now that the elections have taken place, and costs less. already we note an increase in stock coming onto the market as well as a good demand for property. · Amenities - properties that have amenities such as swimming pools and gyms ofer a better price “From a development perspective we have sold out appreciation as they mostly attract new buyers who two projects namely, Trident Park Langata - which want to experience a luxurious lifestyle. comprises 45 very appealing maisonettes, each consisting RESOURCES of four en suite bedrooms priced at Kes 20 million, and Pam Golding www.reimag.co.za Ofshore Handbook 2013 47

AFRICA BY DENISE MHLANGA Retail Hits The Mark In Ghana t a time when Western economies are faltering, points out. Te value of the Cedi has plummeted from positive statistics make particularly attractive below 1.5 to the Dollar to almost 2 Cedis to the Dollar Areading, says Florence Menson, JHI Ghana’s over the past year. centre manager of Marina Mall in Accra, the capital city of Ghana. Current retail real estate environment GHANA “International investors persuaded William Bobie, executive director, of the merits of African investment Assenta Real Estate Investment will still be careful to minimise their Managers says according to a World risks, which leads us to Ghana.” Bank classification, on 1 July 2011 Ghana moved from a low-income to Menson explains that the death lower middle-income status. of President John Atta Mills in July 2012 was mentioned in news bulletins A gross national income of $1 around the world but did not become a 571 was achieved in 2011, up 44 • Population: 25 million cause for political unease. percent from 2009 levels per a Ghana • Language: English Statistical survey. • Currency: Ghana Cedi In August 2011, the Ghanaian • Main Export: Cocoa parliament approved a USD3 billion Te new phenomenon of a middle • Capital City: Accra loan from the China Development class, plus the country’s reputation •Infation: 9.8% Bank. Tis facility is the largest ever for political and economic stability secured by Ghana and will be used to and cultural tolerance have rapidly fnance its infrastructure gap. “Tis infux of funding will revolutionised the retail property market in recent years. need to be spent wisely and governed by a framework. And while foreign investment is increasing to record “Dedicated modern retail malls still account for a highs, there are, however, bumps in the road ahead,” she relatively small proportion of the retail market.” Bobie 48 Ofshore Handbook 2013 www.reimag.co.za