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The Rand is strong - so why aren't you buying property offshore?

by Andrew Rissik | Feb 21, 2017
  • Buying and owning a property offshore exposes owners to currency-related costs, especially when there is market volatility. Having some knowledge of the currency market may just help in avoiding getting into a situation where poor rates can affect what you can afford.
    Rand offshore investment

    Purchasing and maintenance costs will require settlement in another currency, meaning a Rand-based buyer will need to do a currency exchange and an international transfer. In these situations one is often faced with exchange rate risk and the possibility of poor rates of exchange and high transactional costs as well as long delays in settlement.

    Using a broker that is reputable and regulated can save one thousands of Rands on a single transaction.

    Don’t just accept the first rate you’re given

    Never assume all providers offer similar rates or fees. Shop around before you commit, especially if you normally use your retail bank. Rates differ extremely from broker to broker, to the extent that you can pay up to 4% more than you need to. In context, this could mean an extra cost of R40,000 on a property costing just R1 million.

    Many brokerages will be happy to negotiate a better rate with you, especially if you are repeatedly sending large amount of funds offshore. It never hurts to ask!

    We can help you get the most competitive rate

    Finding an international money transfer specialist is the best way to ensure you get the ideal rate. At Sable International we have teamed up with Investec Specialist Bank to ensure we offer our clients as close to possible to the wholesale rate of exchange. In addition to this, our transfer fees are much lower than any retail bank.

    Currency markets are volatile, let a specialist mitigate your risk so you can invest with peace of mind

    Exchange control specialists are a valuable partner when making capital investments offshore. Their knowledge of compliance and their understanding of the complex exchange control and cross-border tax framework is vital.

    Owning undisclosed offshore assets can pose future risks for an investor and their heirs. We’ll always ensure that you understand the movement of your funds. Our broker will also always report all transfers correctly with the South African Reserve Bank, which means you’ll never have to worry about being stung by unexpected problems in the future.

    Currency markets, especially in South Africa are extremely volatile and can be influenced within minutes by economic or political headlines, whether positive or negative; remember Nenegate? With so much liable to wrong at any given time it’s wise to have an dedicated currency expert in your corner. With a specialist you can not only mitigate risks, but you can also take advantage of opportunities as they arise.

    Lock in today’s rate for tomorrow’s investment

    With Sable International you will have your own personal broker who can assist you in navigating the wild world of currency markets. If you are a company or an individual who knows what currency commitments you have in the coming months, we can assist you with forward exchange contracts where you can literally lock in today’s rate for settlement at a given time in future.

    So, if you want to buy a property offshore in the future, why not hedge now whilst the Rand is relatively strong? This way if the Rand does one of its spectacular crashes in future or if South Africa receives a credit downgrade, at least your plan to invest offshore will not remain a dream.

    Offshore Capital Investment Allowances

    If you’re planning to make a serious offshore investment from South Africa you will probably have heard of your capital investment allowances. There are, broadly speaking, two types: Your discretionary allowance and your capital allowance.

    South African residents who have a valid green barcoded ID can avail themselves of their R10 million per year capital allowance as well as a further R1 million discretionary allowance.

    If you plan to just use your discretionary allowance you do not require any tax clearance. However, one needs to acquire a foreign tax clearance certificate from SARS for any capital investments that exceed R1m per year.

    We can help take the admin applying for these clearances to make sure that you take full advantage of your offshore allowances.

    Where is the Rand going in the next 6 months?

    We all know that trying to figure out where the Rand is going is notoriously difficult. It is often considered one of the world’s most volatile currencies, and for good reason too. However, a successful offshore investment requires one to occasionally assess prevailing winds and decide which way to go.

    In 2017 the Rand has firmly returned to pre-Nenegate levels and the Pound has weakened substantially because of the fallout from Brexit. The Dollar, thanks to reality TV-star-turned-President Donald Trump, is volatile too. All this means it’s an excellent time to prepare to externalize funds from South Africa for investment purposes.

    In my view, and looking at the fundamentals, the Rand could well break into the R12/USD range in the short term. However, we believe that heading towards the end of 2017 we could see it weaken back into the R15/USD.

    So, how can we help?

    Sable International’s forex division is a well-established specialist money transfer agency. We have been doing business for 21 years, are registered and authorized in South Africa, the UK, Europe, Australia and Hong Kong. Client funds are safeguarded in segregated call accounts and it takes two working days to complete a transaction. We have more than 40,000 registered clients.


    If you're thinking about externalising your wealth from South Africa give me a call on +27 21 657 2155 or send our team an email on saforex@sableinternational.com. We'll handle your unique situation and requests with discretion and efficiency.

    We are a professional services company that specialises in cross-border financial and immigration advice and solutions.

    Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you’ll do so with the backing of experienced local experts.

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    South Africa

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    Sable International is a trading name of 1st Contact Money Limited (company number 7070528) registered in England and Wales. Sable International is authorised and regulated by the Financial Conduct Authority in the UK (FCA no. 517570), the Financial Services Conduct Authority in South Africa (FSP no. 41900) and holds an Australian Financial Services License issued by ASIC to deal in foreign exchange (AFS License number 335 126).

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