Economic framework

 

Here you will find out more about the economic conditions when buying property in Cape Town, South Africa. Learn about the country's economy and politics, as we discuss the following topics:
 
- economic situation
- investment opportunities
- investment protection agreements
 

Economic framework - General Conditions - Economic Situation in South Africa

Economic Framework South Africa

 
South Africa is a country in transition
 
South Africa has the largest economy on the African continent and is the only African member of the BRICS group and the G20. The country boasts many key advantages such as a good infrastructure, world-class financial sector, substantial raw material reserves, scientific excellence, and a reliable and independent legal system. On the other hand, the legacy of apartheid has not as yet been entirely overcome despite significant progress. 
 
Future investments in excess of 60 billion euros -particularly in major infrastructure projects in the fields of transport, energy and water - have been confirmed with which the South African government wishes to further improve economy conditions and thus increase private investments from home and abroad .
 
South Africa remains a strong market for German companies, particularly in the areas of renewable energies, water and infrastructure. Numerous companies value South Africa as a gateway to other African markets in the region.
 
Germany was South Africa's second largest trading partner in 2013; South Africa was ranked 29th on the list of most important trading partners (before Norway and Finland) and the European Union remains South Africa's closest trading partner before China and the USA.
 
Approximately 600 German companies have together invested over 6 billion euros in South Africa and employ about 90,000 people. Many of these companies support employees as well as their families in areas such as education, training and health.
 
The reputation of German companies is consistently high and areas of interest are automotive, chemistry, mechanical engineering and electrical engineering. This makes Germany the most important foreign investor in the manufacturing sector.
 
Investments - Opportunity for lucrative properties with appreciation potential - Investment opportunities
 
For years, South Africa and Cape Town have been one of the most popular destinations during the European winter. With Table Mountain as a profound city landmark, this metropolis is also surrounded by endless gardens, interesting museums, beautiful avenues and old-fashioned houses. In contrast to many other large cities, Cape Town is very centrally located and still to this day the seat of government, great shopping malls, the business district, prime hotels and 5 star restaurants can be found in the original city centre. The city centre can be reached in a maximum of 20 minutes by car from all the major suburbs.
 
Above-average improvement - Best location in Africa
 
The holiday paradise is easily and quickly accessible from many European airports, and a holiday resort with a comparable price performance ratio is hard to find. With  only a one-hour time difference, settling in Cape Town is  even more of a breeze. 
 
In 2010, the World Cup was successfully held in South Africa and many visitors from all over the world came to know  South Africa at its best. the hotel and restaurant industries as well as  various travel agencies had never faced such an unprecedented demand. The year of 2013 saw  an increased demand in the travel industry, whereby villas, holiday houses, guest houses and hotels in the coastal towns were already fully booked out four months prior to the main season. From January to April 2014, the travel industry continued to excel and holiday properties in all price ranges were booked out by tourists from all over the world.
 
In recent years, the South African real estate market has gone up steeply with a growth of 28% per annum. One can certainly not assume that prices will continue to rise on this scale, but increases of 10% to 20% pa are quite realistic.
 
Investment protection agreements between the Federal Republic of Germany and South Africa
 
Since April 1, 1998, there has been a capital protection agreement in place between the Federal Republic of Germany and the Republic of South Africa.
 
Important extracts:
"Article 4 1. Investments by nationals or companies of a contracting party shall enjoy full protection and full security in the territory of the other Contracting Parties. ...
 
contracting parties
Article 5 Each Contracting Party shall ensure the free transfer of payment connected with an investment, in particular: (a) the capital and additional amounts for the maintenance or expansion of the investment; (b) the proceeds of the repayment of loans; In the case of complete or partial liquidation or disposal of the investment ... "
 
For further information please don't hesitate to contact us.

Your Cape Town real estate team