Foreign Investors: Beware of South Africa & Namibia by Jan Lamprecht
As a resident of S.Africa, I thought it would be apt, in our current climate to warn foreign investors of the potential dangers of investing here currently.
The first danger in investing in South Africa, is to beware of buying property. Since 1994, we have had something of a property boom here. Property prices are at an all time high. Many people in Europe buy holiday homes or other property here. These investments are relatively safe – although probably somewhat overpriced.
But the real danger lies in purchasing large tracts of land like farms. Recently a commission, set up by the minister of land affairs, recommended putting a temporary ban on the foreign purchase of: Farms, Golf Courses and nature reserves. This, no doubt is because of “Land Reform” and the seizing of land to “right past wrongs” which is going on here.
Foreign investors must not think that “Land Reform” only applies to local whites. Even in Zimbabwe, we have seen land being taken away which was owned by foreigners. In fact, foreign-owned farms are among the very first they look at to see if they can be confiscated. They are especially interested in farms which “are not being used”. There are few of those.
There have been some foreign investors who lost in a big way. I know a wealthy German industrialist who owned a large nature conservancy in Zimbabwe. The Government went after it.
A recent conference took place in South Africa. It was “decided” at this conference that the Government would not abandon the “Willing Buyer, Willing Seller” principle of Land Reform. This caused much consternation and panic in South African farming circles. This is nothing more than a reflection of what occurred in Zimbabwe.
In Zimbabwe, Land Reform started in the 1980’s. At first it was all amicable. It was based on the willing buyer, willing seller principle. But as the years went by, it cost the government more money than they could afford. So then they started paying the farmers less. They started out by not paying for the farm house, and later not paying for the barns. Eventually they only pay for the land. And even then, they only pay for it at Government dictated prices.
South Africa and Namibia are both following the same process. It is financially impossible for these Governments to actually pay for all the Land Reform at market-related prices. And now they are starting to cut corners.
In South Africa and Namibia we have seen the first farmers who have been forced off their farms – legally.
In South Africa there are 7,000 land claims which they want to settle in the next 3 years. Some land claims cover land owned by multiple people. South Africa’s agricultural output is now falling by 5% per annum due to the effects of land reform.
Here are two links to stories and photos on my website which show what can go wrong even with “properly run” land reform such as in South Africa:
A photo story containing 42 photos showing what happened to one farm.
And a photo story showing what happened to a farm worth R100 million at the time of handover:
These destroyed farms are the result of “organised” land reform in South Africa. But worse lies ahead.
This is one of only two maps I have which were compiled by the Transvaal Agricultural Union back in 1998 showing how much land is being claimed in S.Africa. The entire process has become highly secretive and these maps may not reflect the full extent of the claims since boxes full of "mislaid" land claims were discovered in 2005! What we do know is that the Northern Cape & Free State have less Land Claims than other provinces. KwaZuluNatal however has more Land Claims than its entire surface area! 1 million hectares more is being claimed there than its entire surface area.
The Map is of Mpumalanga Province. The Land Claims are marked in Pink. The Yellow areas are major towns & cities. The red lines are the main roads.
For those people who want to buy holiday homes and smaller properties let me say this: The prices are pretty reasonable by international standards. However, according to local standards the prices are very high. It is however unlikely that prices will drop a lot. The demographics of Africa are such that property prices tend to keep going up no matter what.
But potential investors should beware of Capital Gains taxes. There has been a lot of talk about implementing such wealth taxes on people who own more than one property.
So if you are thinking of investing in South Africa, tread carefully, and don’t put all your eggs in one basket.
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Original Investigative Journalism from the
Columnist Guild News Bureau
The first danger in investing in South Africa, is to beware of buying property. Since 1994, we have had something of a property boom here. Property prices are at an all time high. Many people in Europe buy holiday homes or other property here. These investments are relatively safe – although probably somewhat overpriced.
But the real danger lies in purchasing large tracts of land like farms. Recently a commission, set up by the minister of land affairs, recommended putting a temporary ban on the foreign purchase of: Farms, Golf Courses and nature reserves. This, no doubt is because of “Land Reform” and the seizing of land to “right past wrongs” which is going on here.
Foreign investors must not think that “Land Reform” only applies to local whites. Even in Zimbabwe, we have seen land being taken away which was owned by foreigners. In fact, foreign-owned farms are among the very first they look at to see if they can be confiscated. They are especially interested in farms which “are not being used”. There are few of those.
There have been some foreign investors who lost in a big way. I know a wealthy German industrialist who owned a large nature conservancy in Zimbabwe. The Government went after it.
A recent conference took place in South Africa. It was “decided” at this conference that the Government would not abandon the “Willing Buyer, Willing Seller” principle of Land Reform. This caused much consternation and panic in South African farming circles. This is nothing more than a reflection of what occurred in Zimbabwe.
In Zimbabwe, Land Reform started in the 1980’s. At first it was all amicable. It was based on the willing buyer, willing seller principle. But as the years went by, it cost the government more money than they could afford. So then they started paying the farmers less. They started out by not paying for the farm house, and later not paying for the barns. Eventually they only pay for the land. And even then, they only pay for it at Government dictated prices.
South Africa and Namibia are both following the same process. It is financially impossible for these Governments to actually pay for all the Land Reform at market-related prices. And now they are starting to cut corners.
In South Africa and Namibia we have seen the first farmers who have been forced off their farms – legally.
In South Africa there are 7,000 land claims which they want to settle in the next 3 years. Some land claims cover land owned by multiple people. South Africa’s agricultural output is now falling by 5% per annum due to the effects of land reform.
Here are two links to stories and photos on my website which show what can go wrong even with “properly run” land reform such as in South Africa:
A photo story containing 42 photos showing what happened to one farm.
And a photo story showing what happened to a farm worth R100 million at the time of handover:
These destroyed farms are the result of “organised” land reform in South Africa. But worse lies ahead.
This is one of only two maps I have which were compiled by the Transvaal Agricultural Union back in 1998 showing how much land is being claimed in S.Africa. The entire process has become highly secretive and these maps may not reflect the full extent of the claims since boxes full of "mislaid" land claims were discovered in 2005! What we do know is that the Northern Cape & Free State have less Land Claims than other provinces. KwaZuluNatal however has more Land Claims than its entire surface area! 1 million hectares more is being claimed there than its entire surface area.
The Map is of Mpumalanga Province. The Land Claims are marked in Pink. The Yellow areas are major towns & cities. The red lines are the main roads.
For those people who want to buy holiday homes and smaller properties let me say this: The prices are pretty reasonable by international standards. However, according to local standards the prices are very high. It is however unlikely that prices will drop a lot. The demographics of Africa are such that property prices tend to keep going up no matter what.
But potential investors should beware of Capital Gains taxes. There has been a lot of talk about implementing such wealth taxes on people who own more than one property.
So if you are thinking of investing in South Africa, tread carefully, and don’t put all your eggs in one basket.
Original Investigative Journalism from the
Columnist Guild News Bureau
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