Will new visa regulations affect the property market?

Private Property South Africa
Lea Jacobs

South Africa's new visa requirements for visitors entering the country have been detrimental to the tourism industry. Will they affect the property industry too?

South Africa's new visa requirements as well as the documentation required for children entering this country have caused a fair amount of panic - and for good reason. The number of international tourists visiting our shores has dropped significantly since the new legislation was introduced earlier this year.

Although the Minister of Home Affairs, Malusi Gigaba is adamant that the strict regulations will stay in place, it appears that someone in Government is listening and the recent announcement by President Zumba Jacob Zuma of a ministerial review of the controversial new requirements has undoubtedly seen tourism stakeholders breathe a sigh of relief. And it's not the only sector that should appreciate the investigation.

Ronald Ennik, CEO Ennik Estates, says the residential property sector should also welcome the review.

“The President’s announcement follows the welcome news last week of a Cabinet-appointed task team to assess the harmful impact of the controversial new requirements on tourism,” he says.

He notes that tourism has always been the biggest propellant of foreign direct investment in South African residential property, and points out that 28 percent of South African homes sold for R20-million or more were reportedly bought by foreign investors.

“However, since the Home Affairs requirements for unabridged birth certificates and biometric visas began to bite towards the end of last year, South Africa’s Tourism Index has plunged to its lowest level since 2011.

Put another way, in the first quarter of 2015, South Africa lost 150 000 international visitors (all potential residential property buyers) together with their R1,6-billion in direct spending power compared with the corresponding quarter in 2014.

Dr Andrew Golding, CEO Pam Golding Property group, raises a valid point when he says it is too early to tell empirically whether the visa regulations are having an effect on property sales as yet.

"This is because of the nature of property transactions which generally take a considerable length of time from the first inkling of wanting to buy, to making the decision to purchase and finally taking transfer of a particular property.

"However there is no doubt that anything that negatively affects sentiment has a directly negative effect on the property market, and so I can find no reason why the new visa regulations should be positive for the property sector."

“The sorry scenario is reinforced by the first decline in international air travel to our country since the 2009 recession, with North American and Asia Pacific traffic both down by almost 11 per cent, together with a four per cent reduction in visitors from Europe,” says Ennik.

“All these factors together have clearly diluted the current and potential flow of offshore buying of South African residential real estate – and this at a time when the country should be welcoming any form of foreign investment.

“Ironically, this all coincided with a fall in the Rand/Dollar rate to its most foreign investment-friendly level in 14 years.

“It is therefore vital that the ministerial review and Cabinet task team’s findings on this controversial visa/birth certificate issue results in the reversal of a Home Affairs immigration policy that is seemingly globally unprecedented,” Ennik adds.

The impact of the current visa regulations will probably only become evident in the coming months and years. However, even in the unlikely event that it doesn't affect foreign buying power, it is going to have severe repercussions for the hospitality industry and for small businesses which earn a living from revenue generated from people visiting this country. One can only hope that Government takes a balanced view, and allows foreign tourists to visit this country with relative ease.

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