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Local tourists boosting SA holiday property sales

11 Jan 2016

It may only be a thin silver lining, but the steep decline in the rand exchange rate over the past year has given a boost to South Africa’s tourism and the leisure property market.

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This is according to Rawson Property Group Managing Director, Tony Clarke, who says the low value of the rand against major currencies like the dollar, pound and euro discourages South Africans from travelling abroad, and encourages them to ‘rediscover’ all their favourite local holiday destinations.

He says this has certainly been evident this festive season."

“The beaches were well frequented this December all around our coastline, from Lambert’s Bay on the Cape West Coast right around to Zinkwazi on the KwaZulu-Natal North Coast,” he says.

“And hotels, guesthouses, restaurants and other tourism-related businesses all felt the benefits as thousands of upcountry visitors enjoyed holiday hotspots like Camps Bay, Hermanus, Mossel Bay, Knysna, Plettenberg Bay, Margate, Scottburgh and Umhlanga, as well as many less well-known towns and villages."

He says the Rawson franchisees who manage holiday homes to let also report that most were fully booked for the school holidays, which is of course good news for the investors that own them.

What is more, Clarke says the group’s offices in the coastal regions have experienced much higher levels of interest in both family holiday homes and leisure property investments this year than in the previous two summer holiday seasons.

He says actual sales volumes are also up significantly, and many of those who viewed properties during the season are expected to return as buyers over the next few months.

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“We have seen this before, when there is increased interest in property investment, but prospective buyers don’t feel they can afford to invest overseas, or are uncertain about doing so,” says Clarek.

“They will decide to buy locally instead, starting with a property in a favourite leisure location that they plan to use for their own holidays, let the rest of the time, and eventually retire to.”

And at the moment, Clarke says this trend seems to be gaining strength from two other factor.

Firstly, an increasing number of people are choosing compact homes close to urban centres as their primary residences, and also buying second homes in the countryside or at the coast as leisure-time retreats.

“This has become particularly evident again over the past couple of years from the increasing property sales in small towns and villages within easy reach of the major metros, for example those in the Cape Overberg region the KZN Midlands, as well as better-known destinations such as Clarens and Dullstroom,” he says.

“And now this trend is spreading to smaller coastal towns which still offer great property value.”

Secondly, Clarke says local investors are catching on to the fact that SA leisure properties, whether on the beach, in the bush or in the mountains, are rapidly gaining renown among the world’s wealthiest and most discerning buyers.

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“SA’s climate, lifestyle and tourism infrastructure are attracting increasing numbers of savvy property investors from Africa, Asia, Europe, and the US, and this is encouraging local investors to take a second look at what is on offer here before deciding to go offshore,” he says.

“And what they are finding is that, quite apart from the weakness of the rand, SA leisure and resort properties offer extremely good value compared to similar properties in other parts of the world."

In short, Clarke says it is not really surprising that property prices in the most popular coastal and country areas have shown good growth in the past year, albeit off a low base induced by the market collapse of 2008/2009.

“According to the latest available statistics from First National Bank, for example, house price growth in SA’s major coastal regions was well above the inflation rate in the year to end-October, reaching 7.5% in the Eastern Cape, 7.4% in KZN and 7% in the Western Cape,” he says.

“More specifically, the latest Absa Housing Review shows that prices on the KZN South Coast, which was arguably the leisure property market worst hit by the recession, showed year-on-year growth of almost 31% in the year to end-September.“

However, Clarke says people investing in a holiday property should never rush into the purchase, as there are many financial and other factors to be considered.

“It is also really important to work with a specialist estate agent who is very experienced in this type of purchase and can help you find exactly what you are looking for,” he says.

“And if you are planning to let the property either long-term or to holidaymakers in season, you would be well advised to appoint an agent to manage it for you.”
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