Pumping 2010 property profits
Boom-time looming, or will overpriced homes get "lucky break"?
There is a lot of talk at the moment about the local property market starting to emerge from its slump. Let's face it, property owners and investors had it good for a long time in South Africa. They bought a property, hung on to it for a while, flogged it and made enormous profits. Investing in property was a no-brainer for those with cash or available credit looking to cash in. No more.
The property market has felt the recession keenly and the last year has been a tough one for property owners, particularly those who bought in the "boom times" and are now struggling to recoup what they paid for their properties.
The tide though, does seem to be turning, albeit slowly. As summer approaches and we enter the final quarter of 2009, the magical year, 2010 is almost upon us. Yes, WC 2010 is not far off; stadiums are receiving final touches, infrastructural changes continue apace and property owners are finally licking their lips at a possible big pay day come soccer time 2010.
But is this the reality? Should you be selling and buying something larger in anticipation of a world cup property boom? And will big money be made as well-heeled soccer lovers from around the world fall in love with Cape Town, Durban or even Johannesburg (stranger things have happened) and start snapping up properties still relatively cheap to them?
Well frankly, "no" is the only answer I can up with. While the WC will definitely have an effect on the market it doesn't necessarily translate into a mini property boom. Chances are many owners will expect unrealistic prices for their properties and price themselves out of the market.
Gavin Wright, owner of three Leapfrog franchises (Atlantic Seaboard, De Waterkant, and City Bowl) says." These are soccer fans coming here not property investors." He agrees that South Africa will of course benefit from the huge exposure an event of this nature brings and he also says many visitors do come here, fall in love with the place and land up buying property, "But only a very small percentage."
So sure, 300 000 people may arrive but there is no indication that they'll will be snapping up properties to go with the African curios they'll be lugging back with them. While the obvious rise in short term rentals might cause a few locals with available cash to buy properties and some speculators will definitely gamble on wealthy foreigners paying exorbitant prices for properties they probably don't need, the true impact is guess work.
The more obvious answers lie in how we sell ourselves to a foreign market. Many soccer fans will be visiting us for the first time and might well fall in love and purchase some real estate. This happened in Sydney in 2000 when they hosted one of the best Olympics ever. They didn't just punt Sydney but marketed the whole of Australia as a desirable place to visit, play, live and own property.
The spending on infrastructure will automatically increase the value of properties in some areas and, like France in 1998, certain neighborhoods may be completely rejuvenated leading to massive price increases.
Opportunity of a lifetime
Instead of speculating on massive price increases on properties countrywide, it is more practical to look at what is happening in SA today. We have a relatively strong economy, a growing middle class and a unique and once-off opportunity to host hundreds of thousands of visitors in our spectacular country. Not too mention a captive audience of millions watching on TV. The beautiful game set in a beautiful country: who can resist?
In real terms it all boils down to what kind of show we put on. This will be South Africa's biggest marketing opportunity since 1994 and if we succeed in drawing the crowds and pleasing them while they are here, the spin-offs not only for the property market but for the entire economy will be huge. This means local players need to look a little further down the line, past the world cup, making sure that new infrastructure benefits South Africans long-term and that the billions spent on new stadia provide us with magnificent new facilities and not just expensive white elephants blotting our scenic landscapes.
Property in South Africa is still relatively undervalued in global terms, particularly now, and some will definitely get lucky come the world cup matches, but a massive short term boom in property prices is unrealistic and while the WC may well be a good time to sell your property realistic pricing as always is crucial. Write to: firstname.lastname@example.org
*Property journalist Barry Washkansky is Realestateweb's newest contributor. Barry's first job was selling property in the Woodstock area of Cape Town where he sold to many a hippy, professor and first time-home buyer. He now sticks to writing, mostly about property, in particular auctions.
Article from: www.realestateweb.co.za