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Real Estate Investing

Agricultural Real Estate in South Africa – Why Now?

Here’s some news that may take you by surprise: South Africa’s agricultural real estate market is experiencing one of its best periods. This is especially unexpected, keeping in mind that there’s a virus out there, doing what wars and natural disasters haven’t managed to do to economies around the world. However, after analyzing the situation, this actually becomes very logical.

My name is Ofir Bar, and I’ve been investing in real estate for the past 25 years. Projects that I have been part of span across the globe, from North America, through South Africa and all the way to the Far East. If you’re thinking about investing in real estate at this time, let me tell you why you should keep South African agriculture in mind.

New horizons

In today’s global economy, a closing door usually means another door somewhere else is about to open. That is the case today with Brexit, and the South African agriculture sector is among the first to take advantage of it. True, a deal has been struck between the UK and the EU, but with the former no longer being part of the Union, it is going to need to open its horizons to new trade. Talks are already underway with South Africa since conditions in the UK do not enable the growth of many fruits and vegetables.

However, the big news here is a deal struck between the US and South Africa – a deal that will grant South African citrus growers a greater cut in the American market. South Africa today is one of the largest citrus exporters in the world, second only to Spain, and we’re talking about a market that was not as affected by COVID-19 restrictions as others.

All of that adds up to great potential, but a potential that should be seized now. Great growth is expected in value for agricultural land in the country, so buying now and leasing, in hopes of selling in a few good years, may be a wise choice.

South Africa’s famous lemons and limes. Once you taste them, you’ll understand why.
Source: https://unsplash.com/photos/WGWfuMWPOjk

Escape the concrete jungle

Like every other nation on the globe, South Africa is still trying to fight COVID-19 – and still counting its deceased every day. However, unlike many other countries, no remedy is in sight for South Africa anytime soon. While the richer nations have managed to secure enough doses of vaccines for their populations, the third world was left behind. This naturally means that the pandemic is going to be an issue in South Africa, even in 2021.

One thing that makes South Africa unique, though, regarding COVID-19, is the spread of the disease. We see a vast majority of the cases in the big urban conglomerations – Johannesburg, Cape Town, Durban and Port Elizabeth, to be more specific – but rural areas are considered much safer. This is just one reason why property value in the countryside is rising, in direct accordance with the decrease in urban property value.

Aside from that, the agricultural sector has been given a free pass to operate, even during restriction times. Hence, laboring hands were not at a shortage in the past year and the industry, even during harsh times, has been bearing fruit – physically and metaphorically. All of this can lead to a conclusion that it’s a good time to invest in agricultural land in South Africa, and a wise decision not to wait too long.

Times are changing

Up to now, we’ve discussed why agricultural property value is rising in South Africa. Now, let’s understand why it’s currently quite low. The South African government currently enables the country to seize agricultural land from white farmers and pass it on to black farmers, if the latter can prove their families had been owners of that land before the Apartheid regime came to power.

The South African Parliament building in Cape Town.
Source: https://pixabay.com/photos/cape-town-south-africa-historically-997524/

Unfortunately, this has created a big mess, since in most cases, the people claiming the land did not have the skills or experience to handle it properly. The result? The value of farms, orchards, fields and so on is not at its peak right now. However, as you can see from all that is stated above, this is a temporary situation, and prices are projected to soar in the near future.

Bottom line

All signs are pointing to something interesting happening to the South African agricultural real estate market. However, we need to remember that these are just signs. Things can go wrong, deals can be cancelled, policies can have substantial backlash, and so on. I am Ofir Eyal Bar and my recommendation would be first and foremost to keep an eye on South African agriculture. Property value may rise or not, but one thing is for sure – it certainly isn’t going to be boring in the southern tip of Africa in the next few years.