Real Estate News - Relax permit rules to attract talent, says Geffen

CAPE TOWN — A leading South African property expert has urged government to change its “stringent” work-permit regime to assist with luring skills needed to boost growth and make SA an investment-friendly destination.

Barak Geffen, executive director of Sotheby’s International Realty, said yesterday it would make macroeconomic sense to attract the best skills to the country by allowing foreigners to work and invest in property in SA.

In a climate where government has indicated it wants to restrict ownership of foreign property, Geffen said SA could follow the example of Australia, which was a far more investment-friendly destination “that reflected 14 years of uninterrupted economic growth”.

The country was rated number one in the world competitiveness year book, and was ideally placed in the Asia Pacific rim, the fastest-growing regions worldwide, he said.

“Australia has allowed foreigners to invest and work in Australia and 25% of its work force is foreign, which adds to the country’s skills pool and is a reason it is one of the fastest growing economies in the world,” he said.

Geffen said it would make sense to attract the best pool of talent from throughout the world to make SA’s economy more productive.

“But you can’t attract the best pool of talent if you don’t allow them to get work permits, which in SA are stringently regulated,” he said. Geffen said the cooling of the local property market over the past year was worrisome.

Despite the soaring prices of recent years, however, the affordability of local housing — as measured by the ratio of house prices to income —- remained well below 1980s levels, whereas in the US it had risen quite steadily.

Reserve Bank data shows that household debt as a percentage of disposable income rose to just more than 60% recently, high by historic standards, but far lower than levels in the US and many other countries.

“This demonstrates that SA is less risk-tolerant in using debt to finance investments in real estate outside of primary residences, and so there is less of an artificial boom effect on the property market,” said Geffen.

When comparing SA internationally, it still offered some of the most affordable prime property in the world, he said.

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