South Africa has emerged from the stigma of apartheid as a paradise for snowbirds fleeing the frosty winters of northern Europe. Its tourism slogan, “Alive with Possibility,” reflects the optimism that more and more citizens are feeling.

The real estate market is a big reason for that optimism. During apartheid’s bleakest days, a home on a large plot of oceanfront land near Cape Town could be had for a pittance. No more.

Real estate prices more than tripled between 1999 and 2005, skyrocketing 40 percent annually for three of those years. The hottest real estate market in the world over the last eight years has seen the median home price nationwide jump from $50,000 to $113,000.

Just when things were starting to slow down, with predictions of only a 15 percent increase this year, the country has begun preparing to host the 2010 World Cup, the most watched television event in the world, with viewers numbering in the billions. To a country that has only begun to emerge from pariah status, the marketing value of hosting World Cup cannot be overestimated.

Readers might wonder how this stunning turnaround happened.

“Ten to 15 years ago, people paid 100,000 rand ($14,000 U.S.) for huge houses with big, beautiful gardens,” says John Retief, a 29-year-old English teacher from Cape Town. “I’m talking about really awesome places. That’s what my parents paid for their home, and recently they turned down an offer of 8 million ($1.1 million).”

Even now, after an unprecedented eight-year rise in prices, South African real estate is still cheap by European and U.S. standards, says Peter Gilmour, senior vice president of franchise sales, brokerage and international development at Denver-based RE/MAX International. He expects South African housing prices to increase this year by 10 percent to 15 percent.

A native South African, Gilmour oversees 1,800 real estate offices outside the United States, including 180 in South Africa. (RE/MAX is the largest real estate outfit in the country.) He says government job-creation programs have enabled thousands of low-income South Africans to enter the home market for the first time. As they bootstrap themselves up the income scale, it’s expected that one day they’ll move up to better homes as the country continues to develop.

The government under President Thabo Mbeki is priming the economy with $2 billion investments in infrastructure and transportation projects, including a new international airport near Durban and a high-speed rail linking South Africa’s major cities. All of this investment is spurring a flurry of private real estate development, especially near the sites of 10 stadiums across the country where the soccer games will be played – including the new 70,000-seat, all-weather, multipurpose Green Point Stadium in Cape Town.

South Africa has emerged from the stigma of apartheid as a paradise for snowbirds fleeing the frosty winters of northern Europe. Its tourism slogan, “Alive with Possibility,” reflects the optimism that more and more citizens are feeling.

The real estate market is a big reason for that optimism. During apartheid’s bleakest days, a home on a large plot of oceanfront land near Cape Town could be had for a pittance. No more.

Real estate prices more than tripled between 1999 and 2005, skyrocketing 40 percent annually for three of those years. The hottest real estate market in the world over the last eight years has seen the median home price nationwide jump from $50,000 to $113,000.

Just when things were starting to slow down, with predictions of only a 15 percent increase this year, the country has begun preparing to host the 2010 World Cup, the most watched television event in the world, with viewers numbering in the billions. To a country that has only begun to emerge from pariah status, the marketing value of hosting World Cup cannot be overestimated.

Readers might wonder how this stunning turnaround happened.

“Ten to 15 years ago, people paid 100,000 rand ($14,000 U.S.) for huge houses with big, beautiful gardens,” says John Retief, a 29-year-old English teacher from Cape Town. “I’m talking about really awesome places. That’s what my parents paid for their home, and recently they turned down an offer of 8 million ($1.1 million).”

Even now, after an unprecedented eight-year rise in prices, South African real estate is still cheap by European and U.S. standards, says Peter Gilmour, senior vice president of franchise sales, brokerage and international development at Denver-based RE/MAX International. He expects South African housing prices to increase this year by 10 percent to 15 percent.

A native South African, Gilmour oversees 1,800 real estate offices outside the United States, including 180 in South Africa. (RE/MAX is the largest real estate outfit in the country.) He says government job-creation programs have enabled thousands of low-income South Africans to enter the home market for the first time. As they bootstrap themselves up the income scale, it’s expected that one day they’ll move up to better homes as the country continues to develop.

The government under President Thabo Mbeki is priming the economy with $2 billion investments in infrastructure and transportation projects, including a new international airport near Durban and a high-speed rail linking South Africa’s major cities. All of this investment is spurring a flurry of private real estate development, especially near the sites of 10 stadiums across the country where the soccer games will be played – including the new 70,000-seat, all-weather, multipurpose Green Point Stadium in Cape Town.

Anyone who predicted such a turnaround in 1990 – the year Nelson Mandela was released from prison, signaling the symbolic end of apartheid – would have been called delusional. Back then, fear and uncertainty gripped the financial community. Capital fled the country so fast that the government enacted tough laws to halt the flow. With a mass exodus of longtime residents, real estate prices tanked.

But then in the late 1990s, affluent Europeans seeking a second home discovered that South Africa offered incredible bargains, sparking a frenzy of buying. Seeing this, a large number of expatriate South Africans scooped up second homes in their native land.

After a few years, the influx of cash and investment generated enough tax revenues and jobs that money began finding its way to the lower economic rungs. Today, entry level homes in Johannesburg are getting snapped up for the same price that grand estates sold for in the early 1990s.

Ultimately, South Africa hopes to see massive economic development for its many poverty-blighted townships. The future of the state depends on it.

Economists describe South Africa as a Third World country inside a First World country. Classified by the United Nations as a middle-income country, it has abundant natural resources and a stock exchange ranking among the top 20 in the world. South Africa’s gross domestic product places it among the world’s 50 wealthiest nations.

Fortunately for the home buyer, the system of buying and selling real estate is sophisticated, transparent and organized. “We list and sell very similarly to the way it’s done in the United States,’’ Gilmour says. “Transfer and closing are also similar. Commissions, while negotiable, are about 5 percent to 6 percent, with cooperating agents each getting about 3 percent. The mortgage products are basically the same as those available in North America.” Interest on a mortgage is not tax-deductible, however.

Classified as “non-residents,” foreigners can borrow 50 percent of the purchase price from a South African bank. The remainder must originate from outside of South Africa. Should a non-resident sell his house in South Africa, he may withdraw his money plus his capital gains from the country, minus taxes.

Resident owners wishing to sell and emigrate are guided by rules restricting the outflow of money from the country – a stopgap solution to the capital drain South Africa still faces. While the government says it intends to deregulate the outflow of capital, progress has been slow. RE/MAX advises its clients to consult a lawyer for information and advice on money repatriation.

Most foreign home buyers choose to live in the Cape Town area where they enjoy an urban sophistication unequalled in Africa. One million international tourists a year spend an estimated $3 billion to enjoy Cape Town’s lively arts scene, exceptional golf courses, world-class wineries, fine dining and shopping. Compared to Paris, London, Vienna or Milan, houses in Cape Town are still cheap. Then there’s the romance of living in Africa, a visceral sensation for many Europeans.

In Cape Town, they get all the romance they could possibly want. Flat-topped Table Mountain looming majestically over the landscape gives the city a visual drama. With its mountain wilderness, rich floral kingdom, sandy beaches and Mediterranean weather, Cape Town is considered to be among the world’s most glorious cities. Anyone with a car is within an hour of the Garden Route, a 1,000-kilometer scenic drive that encompasses lovely coastal towns, forests, wetlands and national parks where lions, leopards, rhinos and elephants roam freely.

Buyers can choose from Dutch-style homes, seaside condominiums, picturesque farmhouses and golf estates, says Gerlinde Moser, founder of RE/MAX City Living Real Estate. Much of the new development takes the form of compounds with 24-hour security.

An Austrian who migrated to South Africa in the 1960s, Moser loves the multicultural charms of her adopted country, with its 11 official languages, and numerous ethnic groups, including Zulus (21 percent of the population), Xhosas (17 percent) and Sotho (15 percent).

As one way of paying back for all the success and pleasure she has enjoyed there, Moser devotes time and money to a soup kitchen serving indigent Capetonians. Naturally where there’s poverty, there’s crime, and Moser counsels clients to be streetwise, just as they would in a city like Washington, D.C. “Anyone taking normal precautions can enjoy a happy and peaceful life in Cape Town.”