2010 property impact will be muted
2007-11-26 · Property Related Events
As 2010 Soccer World Cup fever continues to mount, South Africa may be wise to temper its expectations as Germany comes to the realisation that the event was not the pot of gold predicted.
That's the only conclusion to be drawn from a report just released by the German Institute for Economic Research (DIW), which notes that expectations before the event were overly optimistic.
"One month of partying can't be a long-term rainmaker for the entire economy and while there is little doubt there will be economic benefits for the country, it's wise to be realistic about their lasting effect," says Gerhard Kotzé, CEO of the ERA South Africa property group.
"Having said that, however, the report specifically addresses the property aspect, saying that on this front Germany may well benefit in the long-term from the exposure it received during its recent World Cup.
"That's good news for a country that failed to join in the global housing boom of the past 10 years. In fact, the 2006 European Housing Review reported that Germany was the only country where residential property prices had actually dropped in the previous year."
Broadly, though, Kotzé agrees with property economist Erwin Rode that should house-price growth in Germany improve, it will most likely be the result of the economic recovery that is currently underway in that country, rather than the belated impact of the World Cup.
"Mr Rode also describes the positive impact of the few new stadiums in South Africa as a drop in the ocean. His conclusion is therefore that South Africa is unlikely to experience notable house price growth as a result of the 2010 World Cup."
Of far greater significance for the property market, says Kotzé, is the impact of major infrastructure investment by government and the private sector right now, of which the Soccer World Cup expenditure forms a part.
"Longer term, more concrete benefits for property are likely to flow from increased tourism to this country in the wake of the soccer showcase. Investors in World Cup-related property opportunities should take note."
That's the only conclusion to be drawn from a report just released by the German Institute for Economic Research (DIW), which notes that expectations before the event were overly optimistic.
"One month of partying can't be a long-term rainmaker for the entire economy and while there is little doubt there will be economic benefits for the country, it's wise to be realistic about their lasting effect," says Gerhard Kotzé, CEO of the ERA South Africa property group.
"Having said that, however, the report specifically addresses the property aspect, saying that on this front Germany may well benefit in the long-term from the exposure it received during its recent World Cup.
"That's good news for a country that failed to join in the global housing boom of the past 10 years. In fact, the 2006 European Housing Review reported that Germany was the only country where residential property prices had actually dropped in the previous year."
Broadly, though, Kotzé agrees with property economist Erwin Rode that should house-price growth in Germany improve, it will most likely be the result of the economic recovery that is currently underway in that country, rather than the belated impact of the World Cup.
"Mr Rode also describes the positive impact of the few new stadiums in South Africa as a drop in the ocean. His conclusion is therefore that South Africa is unlikely to experience notable house price growth as a result of the 2010 World Cup."
Of far greater significance for the property market, says Kotzé, is the impact of major infrastructure investment by government and the private sector right now, of which the Soccer World Cup expenditure forms a part.
"Longer term, more concrete benefits for property are likely to flow from increased tourism to this country in the wake of the soccer showcase. Investors in World Cup-related property opportunities should take note."
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