World Cup’s impact on property market

Will private property owners profit from the 2010 Fifa Soccer World Cup in South Africa? Will property prices soar after the World Cup, and will private homeowners be able to make a small fortune by renting out their apartments, particularly in the larger metropolitan areas? There are no clear-cut answers to either of these questions.

Of the 151 South Africans who responded to an online survey by PropertyGenie, hosted on behalf of ooba (formerly MortageSA), more than 80% said they did not expect the World Cup to have a great impact on property prices, reported the "Weekend Argus" recently.

In all, 44.6% of the poll respondents said they did not expect the World Cup to have any impact on residential property prices. Altogether, 36.7% said they expected prices to fall after the tournament. A total of 18.7% said they would rise.

But Saul Geffen, chief executive of ooba, told the "Cape Argus" that although consumers are probably correct not to expect an immediate effect on property prices as a result of the World Cup, in the medium term it is likely to have a positive impact.

He said the big drive by the government to improve the country's roads, public facilities, transport networks and airports for the World Cup should contribute toward higher property values in surrounding areas.

"All over South Africa, the impact of the World Cup is evident. The stadiums are only one aspect. South Africans can see for themselves the improved road networks, airports, facilities and local government's investment into the restoration and beautification of the metros," said Geffen.

"These improvements in infrastructure were necessary, whether or not the World Cup was taking place; and the event has facilitated these upgrades being completed in a fraction of the time they were likely to take in the absence of the World Cup."

Geffen expected the improvements to result in further economic investment and development over time, which would have a positive effect on property values.

"With the sporting facilities we now have, there is also further potential for South Africa to host a number of high-profile sporting events in the future, with the consequent economic benefits these events would deliver.

"Regardless of the World Cup effect, there is still likely to be continued positive growth in property prices this year due to improving economic fundamentals," he added.

"We expect a demand-driven recovery, assisted by maintained low interest rates, a continued recovery in economic growth and a more stable job market. Further relaxation of lending criteria by banks and increased competitiveness among lenders should also help to stimulate the property market for the remainder of 2010."

Geffen said recent property indicators have shown the housing market is well into positive price growth.

"We expect the continued recovery in the property market to be gradual, with growth in excess of inflation over 2010," he added.

Whether private property owners could benefit from the Soccer World Cup and the expected 350 000 visitors providing a cash injection by renting out their apartments and thereby gaining relief from ‘mortgage stress’, is another matter altogether.

Gary Bailey, well-known football fundi and former England goalkeeper, has been giving presentations on business opportunities that the World Cup offers.
He told M-Net's "Carte Blanche" that a money-making opportunity was the renting out of private homes as accommodation in June and July.

"The country is just beginning to get positive, which is fantastic. But, in terms of grabbing the opportunities, there is still a sense that Fifa owns them all. They don't!... they own what is their right to own."

Swiss-based company MATCH Services is Fifa's official accommodation arm. It is the first time in World Cup history that non-hotel accommodation has been included in its hotel room inventory, said chief executive officer, Jaime Byrom.

Byrom told "Carte Blanche" that many of the very best accommodation options come from Bed and Breakfast apartments, guest houses, lodges and so on.

“So we felt that a World Cup in South Africa needed to include that in the mix. The area we didn't go to was private housing. Private housing... we feel that for an event of this magnitude and complexity, is not necessarily a perfect fit."

Dave Varney, CEO of Football Nights Accommodation, said it has recruited beds, private residential homes, right across the board from R200 000 in value all the way up to R88 million.

Not everyone like Varney is upbeat about private accommodation. Brett Dungan, CEO of Federated Hospitality Association of South Africa, does not support the idea of homeowners renting out their homes during the tournament.

“We didn't wake up now and start saying that we're going to be doing hospitality businesses. And that, in effect, is what people are doing when they are doing that to their homes.

“One, it's going to cost you a huge amount of money, more than likely [you] won't be graded in time, and a lot of the requests will be: 'Please make sure that the people you put into my house, if you can find someone, are nice people'," he says.

But the greatest risk for homeowners is not that they may not get bookings. There also could be legal implications.
Dungan asked what would happen if your guest were to get food poisoning?

What if they were staying with you and broke their leg on the stairs? What if you were transporting them and you had an accident? These are all the issues that now become legal matters.
When you rent out a room during the World Cup, your existing domestic policy is no longer valid.
Football Nights foresaw these risks and negotiated insurance coverage for its clients. But not all websites offer such a service and it is up to homeowners to arrange their own insurance coverage, Varney told "Carte Blanche" in April.
The Football Nights website was launched officially in December 2009 (planning goes back a couple of years) and Varney jumped in to fill a gaping hole left when MATCH Services relinquished booking rights for more than 450 000 room nights. That left many people, inside and outside South Africa, in the lurch.