2010 World Cup = Euphoria for the South African Property Market

South Africans in all sectors must now work together to ensure that this opportunity is fully utilized for the long-term benefit of the entire country. Hosting the 2010 Soccer World Cup will be a massive boost to our economy and it is expected that almost R 30 billion will flow into South Africa, projecting economic growth to go up between 5 and 6 percent, while creating an estimated 150 000 jobs. The impact on the property market will be enormous.



South Africa is currently enjoying a strong position and consumer confidence is high. International buyers, locals and expatriates are major buyers of South African properties.


The property market will do well to use the 2010 Soccer World Cup as a platform to aggressively market property in South Africa, which is still undervalued in global terms and offer exceptional value for money.


South African property is likely to receive a major boost from 2010 - if the World Cup is a success. Paris "France" property prices escalated by as much as 55% over a one year period before and after the 2002 World Cup and property across the city made astronomical gains with the prices of apartments close to some of the stadiums rocketing by over 100% over the same period .


Some neglected neighborhoods in Paris were completely rejuvenated. The same will happen in South Africa, because although we have had a good run, in global terms our property is still undervalued and the macroeconomic outlook is very favorable.


Hosting a World Cup encourages urban regeneration and is usually accompanied by an improvement in facilities, transport links and overall infrastructure. A lot of more work needs to be done - especially in marketing South Africa as a destination.


We need to sell South Africa as a desirable country so that we as South Africans will stick into the minds of tourists and investors for a long time to come. We must capitalize on the fact that we are hosting the Soccer World Cup, to promote our country and its property as we do not want to lose out on some of the benefits of hosting a major international event.


The key is that we need to make ourselves outsider investor friendly and strongly promote ourselves through a fantastic marketing effort as a great place to buy a second home. This can result into massive job creation and social upliftment through increased tourism and a very favorable country perception.


Just think if South Africa could increase its visitors by tens of millions a year, we would have an incredible success story for job and wealth creation. When Sydney hosted the Olympic Games in 2000, they pushed not just Sydney as a city but the whole of Australia as a desirable place to tour, live and own property. There was a unified strategy between the government, the tourist board and the property industry.


In South Africa we can´t afford to just promote the cities that will host World Cup Soccer games. We also need to promote the true spirit of South Africa as a highly desirable investment friendly and stable country. Well planned government expenditure aimed at local regeneration will give impetus to host cities in creating a more suitable and attractive inner-city environment - that´s because public infrastructure that would otherwise have taken years to complete due to red tape will now be fast-tracked.


For example, the R 20-billion Gautrain high-speed service between Johannesburg and Pretoria will certainly be completed in time for the 2010 World Cup, creating a wealth corridor and increased property values across both
cities.


2010 is also having an effect on building costs. Many building contractors are holding out for money spinning 2010 World Cup contracts, creating a shortage of builders. However, most of the benefits from hosting this event come in the form of multiplier effects of each rand spent on all goods and services in the economy leading up to, during and after the event. The increased health of the economy will have the biggest overall effect on property prices.

Time to consider purchasing property in South Africa

I know at a time like this it sounds crazy purchasing property in South Africa? At a time when prices are falling rapidly, the economy is struggling and many economists are quietly softening their previous estimates of recovery. Ladies and gentlemen it may be a shocker but yes it is time to consider purchasing property in South Africa.
So why would you consider purchasing property? The truth is that that we are finally seeing realistic prices returning to the property market. Now one doesn’t have to pay a presidents random to buy a home in a good location here in South Africa.
Think about it the rates of decline reported are understating the extent at which prices are falling, while ignoring how a strong buyer can negotiate a discount onto a seller. Consider that since 70% of home loan applications are being rejected by banks currently therefore fewer buyers in the market and that per Economics means decline in market demand causes market prices to fall.

Buyers

Individual Buyers are now thinking differently & entering the market with a different approach which is just wonderful especially for them. Gone are the days of talking about how much capital appreciation yesterday’s buyers were looking forward to getting for their property in however many years, how they repeated that property can only go up, how you’d better get in now or you’ll miss out and be cursed forever. Instead the logic for individuals now buying is, people want to buy a place to enjoy living in it. If people are going to buy a property as an investment they’re after those increasingly juicy rental yields, which is far stronger justification for investing rather than living on the prayer of impossible rates of capital gain, thoughts & prayers like that certainly belong in the dark ages.
True, the property prices declines of 10% a year still seem bland when compared against the huge 40% increases in previous years and many still feel shut out.
It’s admittedly hard to judge just when the market will bottom out, let alone return to positive growth: especially seeing how the economists who were closest to calling the market correctly were actually those who didn’t try calling it at all. So declines and below-inflation growth may be the norm for years to come, but despite that individuals are committed to buying and the justification goes back to the reason why as individuals one would buy a property in the first place – namely to live in it keeping in mind that the strength buyers enjoy now will also not last forever.

In Conclusion

Yes, property itself remains a good investment in the long term for individuals provided it’s in the right location, they’re not buying at the peak of a bubble and they’re not leveraging themselves to the limit on a property they can’t afford without any support against potential financial shocks. Many did just that and there are some still hoping for the prices to quickly return to what they paid at the peak of the bubble. That may take a while longer than they’d like unless there is the addition of some considerably unpleasant inflation into the economy, which would ultimately be unpleasant for everyone.

South African Property Market – What’s Happening, kwenzakalani?

The South African Property Market is hard to define, turbulent at times; and yet in the long run, proven to be astoundingly prosperous for the future investment.
Let’s have a look at some of the contributing factors that are forcing this market to be in such a state of flux….
By far the most prominent factors are that of the National Credit Act, our sea- saw like inflationary figures & the dark cloud that is this current economic climate.Although these factors are certainly the harsh realities of the day, you will probably need to look at more than just those to have a better understanding about what is happening in the property industry in South Africa at present.

Let’s take a look at the current Economic snap shot

Although at times we tend to think that we are the only country battening down the hatches & weathering this global economic storm, you will find that South Africa is in much the same ocean as the rest of the world. Countries such the USA, the UK and Australia have all been reporting varying degrees of reduction in property pricing growth. Although the slowdown in South Africa started taking place well before the US mortgage market crisis, resulting in a confusion and disturbance which has somewhat contributed to a steeper drop in our property pricing growth during October, November and December last year.

The South African Economy: In spite of economical growth, our inflation rate has remained above (and sometimes well-above) the 6% edge since April last year, with soaring oil prices, quoted as some of the culprits. In order to bring inflation back down to within the targeted range, the Reserve Bank tightened up on their financial policies and increased the repo rate.

Through the Investor’s eyes

A Buyer’s Market: 2008 hailed the return of the Year of Good Bargains. With 2009 being the year of re-strengthening and growth, still abundant with good deals to be sought.
As a result of the existing economic factors, the supply of property is greater than the demand. This means that you are likely to find yourself in a position to drive really good bargains what is of essence is that the property is in the right location and that there are no land claims pending.Where you choose to battle also holds true in the property industry. According to the experts, there are some property classes that could produce excellent yields in the coming years for those investors with the insight to board the bandwagon early enough.

In Conclusion

2009 could see the birth of a brand new cycle. Until then, it will probably get a whole lot worse before it gets better. If you can ride out the storm and use the window of opportunity it presents to your advantage rewards that may be waiting when the skies eventually do clear.