Emotion costs South Africans on cross-border investments – Andrew Rissik

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According to the latest estimate by Rand Merchant Bank 23,000 people leave South Africa each year but that figure is probably a lot higher as many leavers do not become part of official statistics. The push factors are well-known in South Africa; crime, corruption and rolling blackouts, but the violence in July last year and self-reflection during the Covid restriction has led to another wave of South Africans leaving the country for good. Andrew Rissik, the International Director from Sable International has warned that South Africans should ensure that their decisions about cross-border investments or moves should not be clouded by emotion. He told Biznews that about the pitfalls of cross-border investment decisions.

You need a cool head when you consider cross-border investment or emigration

What I like to get across in this conversation today is things we see with South Africans coming off a very emotional and quite a vulnerable state making a lot of irrational decisions when investing offshore…

More South Africans make bad cross-border investment decisions than South Africans making good decisions. And the reason is simply, if you look at our currency business, we move money from the UK into South Africa and we move a lot of money from South Africa outwards. Over the years’ I’ve been very involved in that business.  Remember the days when Pravin Gordhan was fired and we had Des van Rooyen, the rand went to R24 to pound; I think it was 20 to a dollar.  I have friends and clients phoning saying, ‘I want to get my money out of South Africa’ and you know, it is absolutely the worst time to do it when the rand is highly, highly undervalued and you are overpaying.

To date, and we’re talking about five or six years further on; the rand has never been that weak again. So, the rand will always tend to track back on to a long-term trend line. But in that moment of watching the currency and feeling all of the political pressure in South Africa, there’s a lot of negativities amplified by social media and the press. People become emotional and dinner party talk; everyone’s talking about a Plan B, let’s get out of SA. So, it’s certainly something people should be doing, but it’s really about timing, and it’s about taking very considered steps and planning how you’re going to either hedge yourself off-shore through investment. If you’re looking to relocate; these are all things that have very different implications and potentially very large, unexpected costs if you do it wrong.

For Golden visas, Cyprus is out, Portugal and Malta still going strong

Historically, there had a lot of the programmes that have had a quite bad reputation for letting unsavoury wealthy people in the back door of Europe, it is also very political. In October 2020, it was Al Jazeera that lifted the lid on the scandal going on in Cyprus, where officials would be bribed by predominantly investors from Russia and they were essentially buying European passports. And within a week, that programme was closed down, and I don’t think it’ll ever come back again.

Countries like Portugal, Malta, they’re still running very interesting programmes and the due diligence on the investors is very strict, the source of funds. So, people like ourselves, who work in this space, it’s up to us to prove to those authorities the source of where the clients’ funds come from. In the South African context, it’s quite easy because South Africans can’t remove large amounts of capital out of the country without having a taxpayer clearance from SARS. And generally, if you’ve got a SARS tax clearance to move your money, then the money is being taxed as legitimate money. So, in our world, it’s actually quite easy, but that is putting a lot of pressure on the industry as a whole.

Lockdown led to ‘let’s lockup and go’

It’s been an amazing period for self-reflection. I think in the early parts of COVID, when it first happened, the entire world was in a kind of state of shock for two or three months when nobody spent money, nobody did anything. Nobody made far-reaching decisions in the time that followed. I think everybody sat down and thought, what life was all about.

I think there is sort of a sense in every country that their government has handled COVID quite badly and maybe the grass is greener on the other side. I’ve had the privilege of travelling a lot during Covid and every country has handled it well and badly along the way. But yes, people have used the time of COVID to reassess what is life about. Is this where our future is? And we see a massive pent-up demand for South Africans to leave. And I was chatting to my manager in our investment migration business the other day and she said there’s been a marked change in  enquiries from people investigating a Plan B as opposed to people now talking about physically leaving. And I think to an extent, the riots last year have played quite a big part in that and the highly publicised Zondo commission [report], where no real big hitters have gone to jail yet. I think people are quite disillusioned. South Africans are definitely on the move at the moment.

Saffers heading for Anglo-Saxon world  … but not lockdown Australia

People come in with a sort of a wide scope and they will look at whatever’s available. What we tend to see in the end, is that people like to go to places where English is spoken and English is understood. So really the Anglo-Saxon world. We have a business down in Melbourne and Australia but as you know, New Zealand and Australia have been particularly harsh in the handling of lockdown, of any foreign travel. So, it’s quite funny; people are now turning around and saying even if Australia would take us; we’d never go there because they didn’t like the way the Australian government handled it. People have family and friends that they haven’t seen for two years. And so, there are all sorts of other considerations that have crept in. But the UK is very, very popular. There’s no doubt; that’s our biggest immigration desk. We handle all sorts of immigration, the UK skilled visas, sponsor visas and student visas. The UK is still definitely our business number one.

Greece has become a compelling overseas property investment destination

International property has been something that’s quite close to my heart for a long time and through the investment migration business, Portugal, Malta, et cetera, I’ve got to work with a lot of overseas real estate developers, and we do have a lot of clients that have actually invested in Portugal, for instance, where it was purely from an investment perspective who had no need for a golden visa. But I think that if you look it from a South African perspective, there are a couple of markets that we really like.

We always like the UK. I just think that the UK offers you rule of law as a business and a legal system that I think we really understand… I think the UK post-Brexit is going to do some magic stuff in the future. And I personally think that at the moment they’re still having that post-divorce stress and post-COVID. But in three, four or five years; time, I think the UK will be sailing well.

We like Germany as well and we think that Germany is the leading light in the EU; it’s a different currency zone. I think that the euro as a currency is a great currency. To be invested in Germany is always going to be, I think, for the foreseeable future the engine room of the EU and there are cities that we’ve selected and found some really interesting investment stock.

We’re looking at Greece, funny enough at the moment, because Greece, if you invest in real estate in Greece, you can also get residency. I don’t think necessarily that will ever translate into citizenship because it’s very difficult to become Greek. But for somebody who possibly wants to go and live six months a year in Greece or retire; there are some very compelling opportunities there as well.

UK property market, overheated in the South, London cooling down and opportunities in the North

I think you have to be very careful where you invest in the UK. I think the general sort of talk is that London is cooling down because London’s probably been the property market that’s been most affected by Brexit because there’s been high profile businesses that have moved to position themselves in the EU. But if you look at Unilever and Shell, for instance, they’ve both recently gone through the process of delisting from the Amsterdam stock market and moving their legal headquarters to the UK. So, the UK will fight back in time and create incentives for corporates to either move to or remain in the UK. They’re not going to just lie down and let it happen. So, I think at the moment you could probably pick up some good deals in London. So when the markets are under pressure, is a good time to look at investing. And then the northern cities, the government has long-term incentives for British companies to try and decentralise and move population from the southeast corner of England further north. And I think that’s going to be a long-term play as well.

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