Many serious property investors are always on the lookout for the next best real estate market to invest in. Africa has in some instances proven to be a viable investment destination with profound financial gains and substantial returns. The following insights will aid you in the event you are considering buying property in Africa.
The real estate market in Africa
In the first instance, it is important to note that the majority of African countries do not have any restrictions on foreigners buying and owning real estate. However, this varies on a country by country basis. As such, it is vital to undertake significant research on the requirements of the country you intend to purchase a property in. On average foreigners are typically subject to lower mortgage limits. In addition, property transactions involving foreigners are usually on a cash basis. You can buy a property at a relatively cheap price in Africa. But, you need to be fully aware of the procedures and associated costs.
Most African countries have been doing well economically, resulting in stable house prices. To help you put things into perspective, you can buy a decent medium-size house for around USD 75,000. However, this is dependent on currency exchange rates, as well as the location of the property. A major setback though for foreign buyers is that mortgage options are quite limited for non-resident buyers. In the cases where mortgage facilities are available for non-resident buyers, they are limited to just 50 percent and less of the property purchase price. In addition, you should also factor in the transaction costs associated with buying real estate. These also vary significantly on a country by country basis. Property taxes are also another major consideration.
Considerations
In the first instance, houses in certain suburbs and in particular African countries make sound financial sense. This is more so considering that rental costs can be high, chiefly in the large urban cities.
Secondly, keep in mind that currency performance and exchange rates are major contributing factors.
Due to the poor performance of most African currencies against major currencies, foreign currency buyers find buying property in Africa affordable.
Although you can buy property at a relatively affordable price in Africa, you must keep in mind that other countries have capital gains tax. These usually do not work well for those planning short-term stays. Capital gains tax can in some instances be exponentially high and significantly eat into profits. Subsequently, this is not a viable scenario for property investors.
