South African investors look to the UK market

The current South African economic outlook has many similarities with that of 1990’s Zimbabwe, where inequalities with the distribution of wealth caused national unrest, several industries to collapse and the Zimbabwe dollar to lose value.

The outlook for 2016 and 2017 in SA is uncertain, and economic activity will remain subdued as investor confidence weakens, exacerbated by SA facing drought and potential power shortages. The government continues to adjust spending levels and tax rates in addition to creating a spending ceiling in an attempt to reduce public debt. The potential increased inflation and weakened economic outlook could mean any further changes to the monetary policy has to be very slight, and it can be testing to get it right.

Eugene O’Sullivan, Managing Director at Morgan Pryce, said: “The impact of uncertainty over the South African economy was noticeable in the UK during 2015, and we’ll continue to see its influence throughout this year.”

Reports from a number of leading property companies state that four of the 10 largest acquisitions in UK retail were completed by South African investors. This includes the largest deal of 2015 – the takeover of global fashion retailer New Look for £1.9 billion, by Christoffel Wieses’s investment vehicle, Brait SA.

Other SA takeovers include Office, Phase Eight and a potential £1.3 billion takeover of Home Retail Group. South African investors are also becoming major shareholders in real estate companies, such as Hammerson, Intu Properties, Capital & Countries, and many are directly buying assets in the UK.

Some analysts say that the activity possibly suggest that South African investors are preparing for an economic crash by putting their money in the safer UK markets.

This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.