Although South Africa has worked hard to overcome previous political and economic challenges, market performance appears to be looking up. According to Trading Economics global macro models and analyst expectations, a number of recently released forecasts predict how the South African economy will become stronger over the next six quarters.
Although a slight rise in unemployment is expected over the next year, in the long term experts predict the unemployment rate will drop by over 3.5 percent, coming in at the lowest rate in almost five years. In addition, thanks to an increasing number of global brands conducting business in South Africa, forecasts predict a rise in the labor force participation rate.
As more South Africans gain employment, forecasts also indicate that wages are expected to grow to as high as 21,703 ZAR/month, with much of that increase reflected among high-skilled workers. All of these trends are good for workers and great for the overall South African economy.
Growing Optimism in South Africa
Recent forecasts also suggest vastly higher long-term business confidence (jumping from 38 index points to 51 in less than two years), which will drive global demand and the economy. Within a global context, South Africa is expected to remain in the top 50% of countries on the World Economic Forum’s annual Global Competitiveness Index. According to the 2017-2018 report, “South Africa (61st) remains one of the most competitive countries in sub-Saharan Africa, and among the region’s most innovative.”
Lastly, forecasters looking at the export and import indexes have noted that terms of trade will continue to improve in both the short and long term. This means that for every unit of exports sold, South Africa will be able to buy more units of imported goods. Keeping in mind South Africa’s rich natural resources and favorable trade policies with a number of economic giants such as the United States and China, such positive numbers are to be expected. This is great news for local and foreign investors alike.
South Africa’s Real Estate Market Continues Upward Trend
Cape Town’s luxury real estate market was recognized in 2018 as being the second-fastest growing market in the world. So it’s no surprise investors are flocking to South Africa’s real estate market, especially since a number of factors indicate that now is a great time to invest.
Consistent or growing demand is key to a real estate market’s viability. In 2018, demand for South African real estate was solid and should continue into the coming years. Housing demand is particularly high in luxury markets across the country, as well as along the Western Cape. As South Africans have moved to the Cape in high numbers over the past few years, demand has risen in kind.
In addition, South Africa’s young population will soon be in need of homes. Currently about two-thirds of South African citizens are under 35 years old. In a 2018 interview, Sandra Gordon, Senior Research Analyst at Pam Golding Properties, noted that South Africa’s young population will generate “strong demand” in the foreseeable future, “providing a solid underpinning for the local housing market.”
In early 2018, the South African central bank cut lending rates for the first time in years, making it easier for individuals to borrow. Assuming this trend continues, more families and first-time homebuyers will be incentivized to join the market and purchase real estate.
Facilitating Growth in the Real Estate Realm
According to Global Property Guide, in previous years, the “weak performance of the housing market [in South Africa] was mainly attributable to the country's weak economy.” Now, as the economic climate shifts thanks to a new president, increasing attention from foreign investors, and a recently unveiled stimulus plan, we are likely to see further growth in South Africa’s real estate markets.
Real estate has proven itself to be a stable long-term investment and an important alternative to traditional stocks. In the past, only the wealthiest investors could enjoy the benefits of real estate investments. Thanks to institutional capital and our network of high net worth investors, JTOO Ventures is able to provide exclusive, highly profitable projects that are otherwise inaccessible to individual investors. In current market conditions, now is a great time to diversify your portfolio with long-term investments that can help you achieve your financial goals.
To learn more about how you can leverage our capital to benefit from South Africa’s rising real estate market, subscribe today.
