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How tourism affects property market

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Industry boosts national employment figures and property market

Millions of tourists pass through the gates of South Africa’s airports every year, and while this is an integral contributor to the country’s economy, it also has spin-offs for the property market.

In April this year, 3.58 million local and international travellers used the airports, or travelled around the country by road or sea, according to Stats SA data. For Cape Town International Airport, the number was just over 196 000.

Although many flight passengers are locals commuting or attending to business, more than 194 000 were overseas tourists. According to Gerhard Kotzé, managing director of estate agency group RealNet, there are two main reasons why tourism is so important for the property market. The first is that tourism creates jobs directly, which in turn affords more people the opportunity to become tenants, home buyers and property investors.

Using Stats SA figures that show almost 700 000 people to have been employed in South Africa’s tourism sector in 2016, compared to just over 500 000 in 2006, he says: “This means more people are employed in tourism now than in mining, and that tourism has proved to be better at creating new jobs over the past few years than manufacturing.”

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In 2016, total formal and informal employment in South Africa amounted to 15.8 million people, of which 4.4%, or one in every 23, were directly employed in the tourism sector, including road and air transport, food and beverage, accommodation, tourism-related retail and travel agency services.

“White South Africans accounted for only 9% of the tourism workforce, indicating the sector is a leader in transformation and empowerment.”

Kotzé says the second reason for the real estate sector, and the country, to get excited about tourism is due to the amount of money tourists spend, and what can be done with this to expand the economy and create more jobs.

“The StatsSA figures show the sector contributed a total of R186 billion to the economy in 2016, with R144bn coming from domestic tourism and R42bn being the net gain from inbound spending, less the amount spent by South African tourists in other countries.”

Furthermore, 15% of the country’s tourism offering was made up of accommodation for visitors. 

Weekend visitors fuel activity in the property market in Dullstroom in Mpumalanga, says Anton Greeff, Pam Golding Properties area principal.

“With many people coming in for events such as mountain bike races, the Whisky Festival, Arts Festival, Harleystroom Rally and the like, weekend trade in B&Bs, guest lodges, retailers, pubs and restaurants has improved exponentially, boosting the local economy.”

He says Dullstroom is an “ideal weekend” getaway for residents in the greater Gauteng area because it is not far from the main centres.

“Each hour it takes you to travel to reach your destination is the equivalent comfortable number of days you would tend to spend there over a weekend. A two-hour travel time would be a two-night stay, while three hours would equal three nights, and so on.

“As a result, we find many buyers are Gautengers looking for weekend getaway properties such as houses and leisure farms, as well as B&Bs for income generation.”
Wedding tourism has become big business for properties across the Winelands area as investors look to capitalise on the vineyard and country landscapes by developing guest farms and lodges with chapels, wedding facilities and guest accommodation.

Seeff estate agent Nelia Retief says it is not only locals who are flocking to the region for their wedding celebrations.

The favourable exchange rate, in addition to the beauty of the Winelands, is also attractive to a rising foreign market which is known to book out entire venues, including overnight accommodation and often even nearby properties too.

In the Tulbagh Valley, Retief says there is high demand for scenic wedding settings. Indicative of this is the fact that all of the area’s 12 wedding venues are fully booked for “wedding season”.

Retief says the Cape Winelands and Boland are popular for the mountain and vineyard landscapes, in addition to the “stunning” Cape vernacular building styles that all make for a “fairy tale’ setting and stunning photo backdrops.

Investing in a wedding tourism product could cost upwards of around R17.8 millon to R26.95m (plus VAT). One example is the 153ha Welbedacht Game and Nature Reserve on the slopes of the Winterhoek Mountains.

The recently released second annual Wine & Food Tourism Study in the Western Cape, conducted by Wesgro last year, shows that 99% of tour operators in the Western Cape include wine tours in their itinerary, which has helped wine tourism in the province grow by 16% in the past year.

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