World Cup Increases International Investor Sentiment

The World Cup has come and gone and there is no doubt that South Africa stunned the world by hosting one of the most successful World Cups in history. Now the question on everyone’s mind is, ‘‘Have we actually benefited from this magnificent event?’’

There was much talk of a post World Cup ‘hangover’ but many believe it to be merely sentimental. From an economic perspective the financial markets had factored the post-World Cup hangover into its forecasts for months. I believe that any post event babelaas was thus always going to be purely sentimental.

The exposure received during the World Cup undoubtedly boosted investor sentiment across the country. FNB recently commented that by most credible reports, the World Cup was a resounding success and far exceeded the expectations of many “Afro-pessimists” abroad. While the sentiment of the World Cup can be felt immediately, the economic benefits may take longer to materialise. FNB also pointed out that the World Cup improved international opinion of South Africa and its global image saying the success of the event will no doubt draw greater long term foreign interest to the country, be it in terms of doing business with SA, investing in the country or arriving as tourists.

The improved perception of South Africa and the exposure the property market received during the tournament resulted in a flood of interest from foreigners in the local commercial property market. This was evident at Alliance’s July national commercial auctions where a 70% confirmation rate was achieved. There was particular interest in the retail and hospitality markets. The Western Cape saw record results with the PE auctions showing a 80% confirmation rate and the turnover for the Western Cape region confirmed at R87 million. We noticed a huge increase in enquiries from international investors who were in the country for the World Cup. Their presence and activity on our auction floors clearly shows that international investor confidence is on the rise and we expect this to continue into 2011.

It appears that foreigners wish to do more and more business with South Africa as we continue to impress international markets. This, combined with the expected increase in tourism, is positioning the country as a prime destination for both business and leisure.

The real test now is to see whether government, business and general society can build schools, hospitals and institutions like it built soccer stadiums, airports and roadways. We all know that if a FIFA court can convict a person in three days for encountering David Beckham in a change room, then our criminal justice system can deal with murderers, hijackers and xenophobes on the same basis. It is obvious that if we can timeously build stadiums and airports with better-than-Germanic efficiency, then we can put up schools, toilets, houses and municipal facilities at the same pace.

With the distraction of the World Cup past us, economists’ focus has once again returned to the instability in global markets. South Africans in particular have been watching the Reserve Bank’s interest rate policies closely and the announcement last week that the bank would keep its repo rate on hold should be good news for property investors in South Africa.

The combination of a stable interest rate environment and a good supply of quality properties means there will be more opportunities for both domestic and international property investors.

What do you think?

One thought on “World Cup Increases International Investor Sentiment

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