South Africa’s Expropriation Bill may only have a “minimal” impact on foreign demand for real estate, according to the country’s Banking Association.
The bill, which is going through parliament, will allow the government to expropriate property if it is in “the public interest” and in return for “just and equitable” compensation.
Concerns were raised by the Banking Association of South Africa, including the possibility that compensation could not reflect actual property values, a scenario that could potentially make foreign buyers think twice about investing.
Cas Coovadia, Managing Director of BASA, which has 32 local and international member banks, said that because the submissions have just been made, it is “premature and presumptuous to forecast the outcomes”.
He welcomed the proposals as a “vast improvement” on the 2008 bill and 2013 bill, albeit with some exceptions.
“We sought to influence the Parliamentary Portfolio Committee to increase governance in respect of expropriation matters so as to avoid potential abuse/arbitrary expropriations taking place,” he explained to OPP Today . “We further argued that real rights holders (mortgagees etc.) should not have their rights diluted.”
However, he added that the impact will likely be “minimal” upon foreign interest in South African real estate, instead citing other bills that could impact it, from the Promotion of Personal Investment Bill – currently under public consultation – to the potential introduction of a cap upon foreign ownership of agricultural property.