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The Garden route has long since been one of SA’s quality
tourist and holiday destinations. More recently, though, it appears
to have become a popular semi-gration destination according to an FNB
special survey, as quality of life in the larger metros deteriorates.
Many of these semi-grators commute long distance to the larger
cities. However, rapid growth in the economy of this region suggests
that an increasing number of skilled people may be attracted to the
region by its own economic opportunities. All of this is great for
residential property in the area, and we see the Garden Route as one of SA’s
top performing property regions in the years to come.
It is old news that the deterioration in quality of life in some
of SA’s major metropolitan areas is becoming a key issue. While
crime is a major problem for metropolitan suburbanites, especially in
Gauteng,
the deterioration is probably about more than just crime. SA’s
improved economic performance since the early-1990s has driven up the
middle class numbers, fuelling higher demand for housing as well as
for consumer items such as motor vehicles.
Higher demand for property has fuelled higher property values,
which in turn are fuelling densification of living and working
patterns, while far more rapid new vehicle sales than a decade ago
means that congestion is becoming more problematic at a steady pace.
The cumulative result must be a rise in average human stress
levels, and for an increasing number of people the search for a more
relaxed lifestyle begins. Many people emigrate, with crime the key
driver in many instances, but many prefer the newly-termed semi-gration
option, which involves moving within the country to escape some of
the problems that confront them.
One of the well-trodden semi-gration routes has been from Gauteng in the direction of Cape Town, a city that prides
itself in having a great lifestyle. While this assertion still holds
merit, Cape Town also finds itself densifying and becoming steadily
more congested and polluted, its crime rates are not low, and in
years to come we believe that an increasing number of semi-grators
will take their lifestyle search to far smaller urban areas as a
result.
One such area that really stands out as a potential semi-gration
destination is the Southern
Cape/Garden Route region, which includes
the major towns of Plettenberg
Bay, Knysna, George and Mossel Bay.
The region has an enormous amount going for it due to its natural
beauty, along with man-made beauty in terms of some of the country’s
top golf resorts, and thus its attractiveness as a tourism region. It
is relatively unspoilt, but yet has enough critical mass to have good
services such as schools, hospitals and retail. George also has an
airport to and from which most of the major airlines fly regular
flights, providing the services for those individuals needing to
commute regularly to and from the major cities.
FNB SURVEY POINTS TO STRONG SEMI-GRATION RATE TO THE GARDEN ROUTE
REGION
Not surprisingly, therefore, a special FNB survey of Estate Agents
operating on the Garden
Route has supported the anecdotal
evidence of the increased significance of semi-gration. Approximately
one in two Estate Agents report that they have noticed an increase in
semigration to the Garden
Route recently.
The survey was conducted by FNB in addition to its quarterly
Residential Property Barometer in the first quarter of 2008. The
Estate Agents surveyed were from the larger, well established
agencies along the Garden
Route.
Crime rates, traffic congestion and the hectic lifestyles
experienced in the larger cities are cited as key reasons for this
movement. Gautengers are the predominant group semi-grating to the Garden Route,
followed by migrants from the Western Cape
and the Free State.
An interesting emerging trend is that of the Commuters. Estate
agents claim that they are also noticing an increase in buyers who
have opted to live on the Garden
Route, but who commute weekly for
businesses purposes to the larger cities. While the Garden route
residential property market has not escaped the downturn, and has
slowed significantly in recent years, it may have held up slightly
better than many other areas in the country. About 72% of Garden Route
properties sold for less than their asking price in the first quarter
of 2008, whereas this level was 83% nationally. This may be due to
the increased popularity of the region, rapid long term economic
growth, as well as buyers generally being more affluent and less
affected by the current economic conditions that hound the average
national buyer.
In the less holiday-driven towns of George, Mossel Bay
and Oudtshoorn, average house price inflation still appeared
relatively healthy as at the first quarter. The holiday-driven towns
of Knysna and Plett fared more poorly, but this should be expected
during times of rising interest rates and general property downturns.
Property sellers along the Garden Route are also less
likely to emigrate from South Africa. The
national average for emigration as a reason for selling property is
12%, compared with 7% for the Garden Route.
Understandably, first time home buyers account for only 5% of
property sales along the Garden
Route, while this figure was 14%
nationally for the first quarter of 2008. The relatively high prices
of properties in this area make it difficult for the first time home
buyer. Therefore, the FNB survey supports the notion that the
traditionally holiday-oriented Garden Route may be becoming
sought after as a haven from the stresses of the larger cities, with
some even prepared to commute extensively between home and work. This
may positively influence property price inflation in this region, as
well as help to generate a demand for rental property in the larger
cities.
But far from being just a long distance dormitory region for high
income services sector employees who are prepared to take on weekly
commutes, the Garden Route is rapidly developing an economy of its
own, which in time will attract people in larger numbers to increased
job and business opportunities locally.
The region may well have become the most rapid economic growth
region in South
Africa. Whereas the Western Cape
and Gauteng provinces have succeeded in growing their real economies
in excess of 5% per annum on average over the past 5 years,
Globalinsight estimates that the Eden District (including former
magisterial districts Heidelberg, Riversdale, Mossel Bay, George,
Oudtshoorn, Calitzdorp, Ladismith, Uniondale, and Knysna) grew its
real economy at an average of above 9% from 2003 to 2007, far above
the national average or any of the provincial averages. The main
drivers of growth in this region are believed to be the districts of
George/Knysna and Mossel
Bay.
CONCLUSION
In a nutshell, therefore, the Garden Route region is arguably
one of the most promising residential property regions in South Africa.
Not only does its natural beauty lend itself to a thriving holiday
and tourism industry, but its accessibility also promotes it as a
long distance commuter region for the affluent. In addition, its
rapid growth economy should create solid employment and purchasing
power growth in the region, driving local primary residential demand.
The region’s challenge? Its rapid growth may mean that its
economic size doubles in less than a decade. Its authorities need to
plan its development well, and to ensure that it develops in a less
haphazard way than SA’s major metros, so as to preserve it as
the lifestyle attraction that it is.
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