Avoid a World Cup property own goal
Property investors must avoid being caught up in the hysteria of the Soccer World Cup as the kick off draws ever nearer.
Colleen Gray, CEO of the CENTURY 21 property group, says there are unfounded expectations that the event will be an unlimited money-spinner for landlords.
Press reports of homes on the market to World Cup visitors for exorbitant rentals have only fuelled these expectations, but killings such as this are bound to be few and far between.
Nevertheless investors continue to be lured by what can only be called market hysteria aided and abetted by ads along the lines of Fantastic World Cup Opportunity and so on.
She says that sensibly, short-term Soccer World Cup opportunism should not be the main driver for a property buying decision. The long-term financial viability of the property, post World Cup, has to come into the equation.
In this respect, its relevant to quote an analysis by the German Institute for Economic Research (DIW), which found that the German property market would indeed benefit from its exposure to their World Cup, but only in the long term.
The report implied that visitors to Germany would be exposed to local property opportunities and that this would ultimately lead to buying decisions.
And I would expect to see a similar scenario here, particularly in terms of Cape Town and Durban, where property is world class and exceptionally good value in terms of Sterling and Euros for example. This would apply selectively, however.
Gray says that this may all appear to be self evident, but that many property buying decisions are being taken now for the wrong reasons.
There has also been controversy surrounding the fees the FIFA organisation is asking for participation in their accommodation booking programme, which would reduce available profits to any investor/speculator, and recent media comment by the insurance industry have also warned property owners about the soccer hooligan risk.
On the other hand there are right reasons for using the World Cup as a springboard for sensible property investments. For example, an apartment close to one of the new stadiums could well have a World Cup afterlife. Its a question of doing your homework and applying common sense business principles.
Article from: www.century21.co.za