Speaking at the launch of SOLD, a new magazine for estate agents published by MortgageSA, Managing Director Saul Geffen says, “We can get an idea of what is likely to happen to our property prices if we analyse major global sports events like previous soccer world cups and the Olympics.

“For example, Paris property prices escalated by as much as 55 percent over a one-year period before and after the 2002 World Cup and properties across the city made astronomical gains with apartments close to some of the stadia rocketing by over 100 percent over the same period.

“And certain neglected neighbourhoods burst back to life too. We expect the same sort of phenomena will happen in SA despite the market’s good run, as our property is still undervalued in global terms and the long-term macroeconomic outlook is very stable and favourable.”

Geffen notes that hosting an Olympic Games or World Cup encourages city regeneration and is usually accompanied by an improvement in facilities and transport links.

“Property prices in Athens, Sydney, Atlanta, and Barcelona, all got a kicker as new transport and sporting facilities spurred regeneration plans and pushed them ahead of rival cities.

“On average, these four Olympic cities outperformed the national market by 19 percentage points in the five years leading up to the games, but in Barcelona the impact was even greater. Prices there raced ahead by 131 percent compared with 83 percent nationally to open up a 49 percent price gap over other Spanish cities. In Sydney the differential was 11 percent, in Athens 9 percent, and in Atlanta 6 percent.”

Geffen says that even the less prestigious Commonwealth Games in Manchester in 2002 provides another yardstick for South Africa’s potential.

In the five years leading up to the 2002 Commonwealth Games, house prices in central Manchester rose by 102 percent, compared with a 52 percent rise in prices in the North West and an 83 percent increase across the UK.

Gentrification the big prize
Geffen points out though that although there is much speculation on just how much prices will rise, urban upliftment and positive social impact is what really counts so that all South Africans benefit from this event.

“Well planned government expenditure aimed at local regeneration will give impetus to host cities in creating a more suitable and attractive inner-city environment — that’s because public infrastructure that would otherwise have taken years to complete due to bureaucratic red tape will now be fast-tracked.

“For instance, prior to the 1995 Rugby World Cup, Johannesburg International Airport was severely underfunded, today it’s world class. The R7-billion Gautrain high-speed service between Johannesburg and Pretoria will certainly be completed in time for the 2010 World Cup, creating a wealth corridor and increased property values across both cities.

“Other projects that stand to benefit from the event include Coega’s giant ‘signature bridge’, the Statue of Freedom in Port Elizabeth and Durban’s new international airport at La Mercy, North of Durban. All of these will be fast-tracked into reality by 2010.”

Geffen points to the R2-billion Greater Ellis Park Precinct Project as one of the shining examples of the positive impact the event will have.

“It will see the business, commercial and light industrial areas of surrounding Doornfontein, New Doornfontein, Troyeville and Lorentzville being given a welcome facelift. Property owners in these neglected suburbs, as well as nearby suburbs like Bez Valley, Judith’s Paarl and Bertrams, stand to gain significantly.

“Of course it’s not just the run up to the world cup that’s important, it’s that South Africa and its spectacular properties, people and lifestyle will be permanently etched on the minds of TV viewers and visitors alike and will establish us one of the best places on earth to buy property.”