Stocks, property or foreign assets: Where are South Africans looking to invest in 2016?
Almost half (45%) of South Africans have no money in any investment assets, according to a recent survey commissioned this year by property investment firm, IP Global.
The survey was conducted in January among a representative pool of over 1,000 online South Africans aged 18 and above. It forms part of a global assessment with similar polls taken in Hong Kong, Singapore, UK and UAE.
In South Africa, 28% of those polled indicated they have invested in local property, while 25% have money in stocks, shares or bonds. Foreign exchange products (8%) and commodities (8%) are the next most popular investment assets. Only 3% of respondents have investments in property abroad.
Survey participants were also asked which foreign countries they are most likely to consider when investing in property. The majority (36%) indicated the UK, followed by the USA (34%) and Australia (29%). However, almost half noted that the costs involved in making foreign transactions, as well as the tax considerations, would most likely prevent them from investing in property abroad. Currency fluctuations and a lack of understanding of foreign laws were also strongly indicated as deterrents.
According to George Radford, IP Global’s Africa director, of all the markets that took part in the survey, South Africans are the most concerned about costs and currency fluctuations due to the country’s current economic climate. However, he added that people are likely to consider investing in more stable asset classes, such as property, during times of economic uncertainty. Many of the firm’s South African clients have liquidated their local share and property portfolios to invest in assets offshore. Some of the reasons behind this include South Africa’s poor economic outlook, rising inflation and a weak rand.
“I think people are just very nervous of having all their eggs in one basket. So what we are finding is a lot of clients now want to [diversify] that investment portfolio and assets into international markets – whether it be property or international fund investments or a share portfolio.”
On the other hand, South Africa ranked poorly as a destination for foreigners to consider investing in property, according to those surveyed in UK, Singapore, UAE and Hong Kong. Of the eight countries suggested to respondents in these markets, South Africa was considered least desirable.
“There is a pretty negative sentiment about investing money in South Africa. And also, when you try and externalise funds again, South Africa is a very regulated and often cumbersome market in terms of redeploying capital offshore. So once people have put money here, and then need to liquidate an asset and send the money back offshore, again that could be quite a laborious process.”