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Analysis, Uncertainty over foreigners’ land ownership

Well known political writer Roy Cokayne share his views and analysis on the subject on Independent Online’s website earlier this week. His insight paints a clearer picture of where foreign land-owners will stand when new legislation, prohibiting foreign landownership is approved.

Analysis Uncertainty Over Foreigners’ Land Ownership

This is what Cokayne wrote: The security of the ownership of properties owned by foreigners, including multinational corporations that have invested in South Africa, has been placed in doubt by comments made by President Jacob Zuma in his State of the Nation address.

Multinational companies that have invested in South Africa include mining houses and vehicle manufacturers.

Zuma said on Thursday that in terms of new proposed laws, a ceiling of land ownership would be set at a maximum of 12 000 hectares and foreign nationals would not be allowed to own land in South Africa but would be eligible for long-term leases.

Attempts to obtain comment on this issue via e-mail and telephone on Friday from presidential spokesman Mac Maharaj and assistant media specialist in the Presidency Hlomani Baloyi were unsuccessful.

Hayley Ivins Downes of Lightstone Property said foreign ownership of property accounted for about 3 percent of the total property ownership in South Africa and in the past year a larger proportion of foreigners were sellers rather than purchasers of property in the country. Downs said this could be linked to the world economy going through a dip and South Africa’s “own political landscape”.

Peggy Drodskie, the acting chief executive of the SA Chamber of Commerce and Industry (Sacci), admitted the chamber was concerned about the proposed prohibition.

Drodskie said there were multinational companies in South Africa that owned their own properties and that it was unclear how this proposal would affect them and whether they would be placed in the same boat as new investors.

She said the proposed measure could be a deterrent to foreign investment in the country and “very short-sighted” because South Africa desperately needed investment.

Drodskie said this proposed measure was also contradictory when taken along with the announcement about the immigration regulation problems experienced by foreign nationals and the requirement that they had to go back to their home countries to renew their visas.
Zuma said on Thursday a one-stop interdepartmental clearing house would be established to attend to investor complaints and problems.

Drodskie said it was illogical for the government to look at migration problems that were an inhibiting factor to foreign investors while proposing to prohibit foreign property ownership.


AJ Jansen van Nieuwenhuizen, a tax partner at Grant Thornton, said South Africa sent a delegation to the World Economic Forum in Davos to tell investors the country was open for investment and business, but then followed this up by stating that foreigners cannot own land.

Martin Jansen van Vuuren, an advisory services director at Grant Thornton, said the proposed measure raised concerns about how it would impact on foreign land ownership of game farms and foreign investments in hotels.

Mike Schussler, an economist at, said the announcement was “a bit unfortunate” because South Africa relied on foreigners to make industries in the country.
Schussler said in general there were two groups of foreigners: the very rich that bought land and helped bring money into the country and, more importantly, a huge number of foreigners, many of whom were Africans from countries like Somalia and Zimbabwe, who opened businesses and made a large contribution to the country.

He said 70 percent of revenue of the top 60 companies on the JSE by market capitalisation came from outside South Africa. The banning of foreign property ownership could lead to companies looking for other places to invest.

Chamber of Mines spokeswoman Zingaphi Matanzima said the banning of land ownership by foreigners would not have an impact on the mining industry because mining land was generally leased.

Azar Jammine, the chief economist at Econometrix, did not believe the proposed prohibition would have a dramatic impact in the short term because he doubted it had been seen as a source of major capital flows.

But Jammine said it would dissuade inflows of capital to source property and more importantly would repel investment psychologically.

Jammine said it was not clear what would happen with foreigners who already owned property, stressing this type of detail was lacking in the entire speech.

Nico Vermeulen, the director of the National Association of Automobile Manufacturers of South Africa, said the foreign property ownership ban would do nothing to promote investment confidence and confidence in the country.

Clarity needed

Vermeulen did not believe the ban would be retrospective but clarity was needed on this issue.

Jeanette Clark, a Mercedes-Benz South Africa (MBSA) spokeswoman, said the Mercedes-Benz South Africa group of companies included but was not limited to Atlantis Foundries, MBSA, Mercedes-Benz FINANCIAL Services and Koppieview and all South African property owned by any of these companies was owned by the locally registered companies.

Edward Makwana, a BMW South Africa spokesman, said BMW SA was an independent legal entity and its properties were held by the company itself as well as local subsidiaries and not by BMW AG in Germany.

Matt Gennrich, a Volkswagen South Africa (VWSA) spokesman, said the State of the Nation speech did not spell out in any detail what was meant by banning property ownership by foreigners or to whom this applied.

VWSA was therefore not prepared to comment on this issue at this stage, he said.
Neil Gopal, the chief executive of the SA Property Owners Association (Sapoa), did not believe the proposed prohibition was justified.

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