WORLD NEWS TOMORROW – Johannesburg- South Africa– Many European investors whom has invested into the property markets of South Africa, are now souring in losses after buying the Old African Illusion. All is not what it seems as some European experts say. The typical Fishing Game of South African business markets has caused many European investors who bought into the properly and commodity markets since 1994, to fail and lose billions in cash reserves, and yet, few learned the lesson.
Every few years, the South Africa property market is booming, and suddenly, without any warning, the property values will begin to drop and panic will break loose among Europeans that cause them to pack-up and sell, to return to Europe. There are a number of factors at play, such as media, violence and propaganda from time to time that are very well calculated and precisely executed by fearless economist to create the fear thing , “It’s Time to sell!”
Losses of up to 60%.
At first glance, the property investment opportunity in the South African Property Market seems very attractive for many low income Europeans, but once caught like a fish , the economy pulls in through its federal reserve system and choke the investors like fish who can’t breath. If you bought a property in Cape Town during 2004 and sold it today, your average loss would be in the region of 46.6% . You still have to take in account the 24.5 % true inflation and 31% currency fluctuation in the country.
The South African Rand dropped from R6.8 / $1 during 2007 to R9.8 / $1 in 2013 and lost about 31 % of its value against the Euro since 2009. This 5 year cycle has caught many investors and ordinary people of Europe and China especially. Few knows and understand how this cycle works and is implemented.
Since 1994 there seems to be a constant cycle in currency fluctuation of the South Africa Currency fluctuating several times above the 50% mark or below. It is like fishing, you know you lose 20% of your catch, but if you net is big enough, you can catch more fish. This is known as Calculated Risk.
Who is at risk?
The majority investors buys property in the $200 000 price, just under R2 Million price tag. What a lot of European don’t know, ares that they are carefully selected according to the rules and regulation to take residence. The average income of a professor in Europe or middle class are about 90 000 Euro. thus those who is looking for greener pastures are highest at risk.
Most people who has immigrated made a small reserve and is looking for a better life. Once in South Africa they soon will find out that that is not the case. It’s like selling your soul to the devil. The constant violence, rape and murder exposure on TV, radio and media will soon find its way into the psychy of the European. There is a good reason for this, and it must be added, that this is very well understood and calculated in Africa.
Many Europeans are not used to constant public exposure to violence and murder cases as European are relatively safer than most countries in the world. South Africa boost with a staggering 13700 murder cases during 20011 alone, the highest in the world making constant media exposure to murder and Rape cases daily exercise of media in South Africa.
Thus even the strongest gets effected over time. psychological behavior modification tests done by the CIA and the former KGB during the mid 1958, concluded that psychological warfare is a very effective tool if used in several methodological application. The most effective results, were those found in testing of economical warfare and perception diversion of people over time.
Thus the use of the US Conspiracy theory has found its way deep into the economical chain of South Africa and can turn anybody into a fearful candidate, exposed to such crime and violence advocated in the South African Rainbow nation.
How much do you really lose in South Africa ?
Thus, even if you sell your South African property investment today , you are still facing the additional loss of currency devaluation of about 31% making your average financial loses on any property investment about 59% as an European investor.
200 000 Euro can buy you a lot but you will never see the return on your money it seems. Even though there is a catch to this property investment scheme, few actually knows how it is done. The use of the federal reserve bank trick is at play.
A weaker South African rand forces interest down, however is foreigners continue to invest in the Economy of South Africa then the rand would get too strong. Thus a balance need to be strike to keep money coming into the country.
So, The old fishing line trick has made many go off track and still don’t know what it is all about. You lend money , and when currency gets too strong you push up interest rates, one value markets come down you relax the interests of bank loans. There is only one catch, foreigners are only allowed to borrow 50% from any public banks in South Africa. Now why is that we should ask. ? Well , the story goes as follow, once the property markets go down, the top end of property markets will unlikely drop more than 50% in value and since the majority of high end properties are not owned by south Africans, the banks stands little change to loose a penny if anything at all.
Thus a good balance has been stroke against investment versus losses. This has kept the system floating for the last 19 years but some expert predicts that that is near to end. Since the interest is manipulated according to the rand / dollar peg and Europeans are paying the price without knowing their proper risks.
If you are going to buy a property in South Africa, make certain that you get it at far below the cost and then you have a back-up plan in case you fall into the same trick. The majority of luxury property is sold to Europeans, Russians and Chinese are following. The Fishing Expedition of South African Property might soon come to an end and return on investment is predicted to be slim with the countries down grading by Moody last year of its economical risk factor.
Kevin Brenan exclusive for World News Tomorrow USA