By Alek Jones
Property management companies are raising property prices
drastically to cater to the high demand of rentals during the
FIFA World Cup games this year, in an attempt to take advantage
of the huge number of tourists set to enter South Africa during
this time. While there is no doubt that the FIFA World Cup will
be of huge benefit to the South Africa economy as a whole, not
all property companies agree that price hikes are good for the
tourism industry.
Tarleys Trust Property Group advises property agents and
management companies against raising prices, and encourages
property companies to instead consider the disadvantages that
extreme price hikes could have on a long-term scale. Many
companies are solely focused on profits, and see the FIFA World
Cup as a potential to make increased sales and rentals. A large
majority of tourists will be entering South Africa for the first
time however, and excessive prices could prevent many from
considering rentals and sales on return visits. The price
increases also affects locals, as increased prices on any level
brings the overall value and market prices up significantly,
causing price increases across the board, for locals and
tourists alike. Commercial property rentals and residential
rentals both stand to be affected by price hikes, which could
have a huge effect on property prices in general if prices are
raised drastically during the months from April to July.
Another aspect that property companies need to consider is the
over-saturation of short-term rentals in the build up to the
World Cup events. The anticipated demand for rentals has led to
huge numbers of guesthouses, apartments, houses, villas and
other property available for rent, which more than adequately
meet the demands for accommodation – especially with a huge
increase in property renovation this year. Landlords are seeing
the chance to provide expensive but convenient property for
tourists, however with the large number of property options to
consider, tourists have more choice. This in turn may force many
property management companies to push prices down to bring in
more chance of their properties being rented out. Experts are
predicting that long-term rentals will be in higher demand, and
as many landlords are choosing short-term tourist rentals over
long-term, this is yet another factor that could affect property
rental prices during 2010.
The improved property industry growth has led to many agents
and landlords taking advantage of positive property price
growth, increased application volumes, increased approvals,
further expected relaxation of bank lending criteria, and
increased competitiveness amongst lenders. Price increases are
widespread to get the benefit from these factors, however on a
long-term scale; price increases may not offer a sustainable
solution, especially with a slow and gradual recovery from a
recession that has left a lasting mark on global economies.
The positive side of the 2010 World Cup is that the event is
set to have a huge impact on the residential property market,
showcasing the wide diversity of excellent properties across
South Africa. With reasonable prices, the lure of South African
property could be even greater, advises Tarleys Trust Property
Group MD Bradley Berman. Whether it is property sales or
residential rentals, all eyes will be on South Africa’s property
market over the next few months, which is why property companies
and landlords should ensure ethical property management as a way
to ensure that tourists return to South Africa year after year
to invest in property.
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About the Author: Tarleys Trust Property Group (Pty) Ltd is an
independent property management company which focuses on adding
value to clients’ property assets. http://www.tarleys.co.za
Source: http://www.isnare.com
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