Cape Town - Estate agents have called on the government to clarify the issue of foreign land ownership which President Jacob Zuma alluded to in his State of the Nation Address last week, and which has led to confusion in property circles.
Zuma said last week that foreigners would be barred from owning land. Mike Greeff, chief executive of Greeff Properties, and exclusive affiliate of Christie’s International Real Estate, which is linked to 1 000 estate agencies in over 44 countries worldwide, said it was important not to allow panic to cloud the technicalities of the proposal, as it now appeared the president was referring to farm land and not residential property.
Greeff was referring to Rural Development and Land Reform Minister, Gugile Nkwinti’s comment on the SABC’s website that the government was proposing to ban foreigners from owning “productive land” as opposed to residential property.
“We’re watching the situation closely and we are aware that South Africa would not be the first to make a distinction between agricultural and urban land, and to disallow actual ownership of productive land, but still allow leasehold.
“Interest in South Africa and particularly Cape Town as a destination has been growing and should be cultivated as a priority. It’s so important to send out a clear message when it comes to government policy, particularly when foreign policy is involved.”
“CAUSE FOR DISMAY”
Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, said the decision to press ahead with the Regulation of Land Holdings Bill was “certainly cause for dismay”, in terms of what it would do to investor confidence in South Africa.
It would also add to the international perception that foreigners and foreign investment were not welcome here.
Geffen said foreign ownership of residential property in South Africa stood at less than 5 percent, but the calibre of ownership was exactly what South Africa needed – captains of industry, multinational corporations and international social influences. “With this proposed legislation, what we are effectively saying is they’re not welcome here at a time when we are facing numerous economic crises including a disturbingly low currency value and an energy catastrophe.”
Samuel Seeff, chairman of Seeff Properties, said further consideration and clarity were needed around the proposed land restrictions and what the objectives and implications were.
“Will it for example affect current ownership or only apply to future purchases? Is this going to be a ‘blanket’ restriction? Will this extend to commercial farming only?
What about the wine farms of the Cape that are as much about tourism as wine production? What about the game farms where foreigners want to invest and develop infrastructure?”
ECONOMIC EFFECTS
The announcement was significant in terms of knock-on economic effects and job benefits. He urged the government to consider very carefully what the plan was expected to achieve.
“Finally, there is the issue around the actual concept of leasehold. This is not common within our property law and needs clarification in terms restrictions would apply and how it would work in terms of the mechanics.”
Andrew Golding, chief executive of the Pam Golding Property group, said the announcement had created some confusion and resulted in the raising of a number of issues of concern.
“Every time the issue of foreign ownership rears its head, it further erodes confidence in the country as an investment destination – mainly as a consequence of uncertainty.
Furthermore, as very little detail or clarity was originally provided, the market was concerned that foreign ownership of residential property would be impacted.”
Adrian Goslett, regional director and chief executive of RE/MAX of Southern Africa, said the way in which it was announced, without clarity of all the facts, caused confusion.
“It has subsequently been explained by the office of the president that the ban is targeting farms and not residential land, according to Minister Gugile Nkwinti. But foreign buyers and investors at large will be wary of investing, given the apparent instability on display that evening.”
The Cape Argus was unable to get a response from Nkwinti’s office at the time of going to print.
Cape Argus