World Cup 2010 to inject life into the SA Economy

On the 15th of May 2004, at 12:21pm, an envelope was opened that changed the course of South African history: it was announced that South Africa would stage the world’s greatest sporting festival, the Fifa World Cup. It took only a split second – once the announcement was made – for the elated journalists, most donned with workman’s helmets, to blow their vuvuzelas and proudly sing “Shosholoza” to the packed auditorium. The proud spirit that the announcement unlocked was palpable.

Soon after the announcement the work began: all eyes are now on South Africa as over three million tourists are expected to visit the 2010 FIFA World Cup. It is widely anticipated that the event should also result in an anticipated injection of about R21.3 billion into the South African economy. It is claimed that over 415 000 jobs will be created in tourism, transport, construction and other industries. The result of the 2010 World Cup is expected to be a greatly improved tourism infrastructure with more accommodation, improved public transport, roads, airports, and tourism information; and the event is expected to make South Africa a better, more widely known and understood tourist destination.

Along with visitors come great opportunities for investors who are purchasing and promoting their hospitality companies during the run-up to the event. So will this event be what South Africa needs to turn its economy around?

‘’It will definitely support an economic recovery’’, comments Jacques du Toit, Senior Property Analyst for Absa Home Loans. ‘’Spending related to the event will be enormous and will benefit the business sector (small and large), and especially the hospitality industry.’’

Rael Levitt, CEO of South Africa’s leading asset sales and services company, Alliance Group, believes that the coming World Cup event has already had a fundamental impact on the South African economy. “ The Fifa World Cup is not about soccer, it is a moment in time when a large part of South Africa’s infrastructural programme needs to be complete and furthermore it is a date when our country opens itself up to the world and shows off our beauty, prowess and ability to deliver an international event”.

What effect will the current global economic turmoil have on the 2010 World Cup? ‘’I still think the event will have a positive impact,’’ comments Jacques du Toit,  ‘’Although one will have to see what the impact of the global economic conditions will be on the event – but then, it will only be a year from now. Hopefully, by that time, much of the current economic trouble will be a thing of the past.”

It is believed that the 2010 World Cup will present huge opportunities for businesses, especially emerging entrepreneurs, in South Africa’s tourism industry. Keen investors understand that now is the time to buy property in preparation for this event. Rael Levitt believes that next year’s event will naturally have an impact on the property market, especially the luxury market. Wealthy tourists will flood our country and see our stunning land and its beautiful properties.

“The price of property achieved at auctions is a real-time and true barometer of current market values”, says Alliance Group CEO, Rael Levitt. ‘’Our packed auction rooms are testament to the fact that people are taking full advantage of this once-in-a-decade opportunity to pick up residential and commercial property at good prices. With interest rates dropping and rentals strengthening, there could be no better time to get into the market.’’

The question on everyone’s mind is ‘’When will the property market recover?’’ Jacques du Toit believes that the Fifa World Cup will contribute to the recovery in the property market. ‘’We expect property prices and the market (residential and commercial) to improve during the course of next year on the back of an expected recovery in the economy and also the lagged effect of significantly lower interest rates.

Nelson Mandela has said that “the world cup will help unify people, and if there is one thing on this planet that has the power to bind people together it is soccer.” Let’s hope that Madiba’s words are as true as ever.

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