The Agency's Leadership Series: Tim Harris
Category Industry News
As the CEO of Wesgro - the official Tourism, Trade and Investment Promotion Agency for Cape Town and the Western Cape - few people are as well-placed to understand the local market as Tim Harris. Originally from Durban, Harris set up his home in Cape Town after his studies at the University of Cape Town, and he readily admits the city was easy to fall in love with. We spoke to Harris about the impact of Covid-19 on the local economy, the future forecast for investment and gauged his thoughts on the property market in the Western Cape.
Can you give us a brief introduction to Wesgro for those that don't know too much about the work the agency does.
Wesgro is the official Tourism, Trade and Investment Promotion Agency for Cape Town and the Western Cape. We are the first point of contact for foreign investors, local exporters, film-makers, and leisure- and business-tourism partners. We attract and facilitate investment into the Western Cape, nationally and internationally. Growing exports of products and services of the Western Cape through the development of export capability, demand and market access, we market the Cape Town and the Western Cape as a competitive business and travel destination.
Wesgro spearheaded the publication of the Western Cape Property Report last year. How important is the property market in terms of investment in the province?
The Western Cape property market has the highest growth rate in South Africa and is a good indicator of investor confidence and their view of future growth prospects in our region. In particular, fixed capital investment metrics are useful benchmarks to provide insights into investor confidence. They also provide an indication of the ease of investing into a destination - a proactive government can enhance fixed investments through policy reform, and by fast-tracking investor-friendly regulations.
The report can be viewed here.
How does Wesgro position Cape Town and the Western Cape as an investment destination?
Cape Town and the Western Cape region is a gateway to the rest of the continent, with Africa's market expected to grow from 1.1 billion to 2.4 billion by 2050. Our region has also welcomed 299 direct investments, attracting over US$7.6 billion worth of FDI, in the past 9 years. Furthermore, the number of non-stop international flights to Cape Town International Airport has doubled since 2015.
We are home to the top-rated universities in Africa, provide world-class infrastructure, and have a local and provincial government that successfully navigated one of the world's worst droughts, as well as the health response to COVID so far.
As a world-leading tourist destination, our region offers investors a high-quality lifestyle, which is particularly attractive to businesses in a COVID world. Examples of key sectors that have the ability to 'work-from-anywhere' include: Tech; Financial Services; Creative Industries and Business Services.
COVID-19 has obviously had a massive impact on all industries in South Africa, including the property market, what is the initial forecast in terms of SA's economy bouncing back from this pandemic?
It is expected that South Africa's economy will contract by around 8% in 2020. The recovery of the economy is dependent on a variety of factors including: the ability of exporters to maintain and grow markets; re-opening of international travel to revive the tourism industry; investment by both local and foreign companies; the ability of the unemployed to weather the current storm and find employment within the next few months; and many other factors. Certain sectors have been far more impacted than others. For instance the tourism and construction industries are still facing significant difficulties, while eCommerce and medical equipment companies are less impacted.
We are doing our best to engineer a "V"-shaped recovery, but it is likely to take longer to recover in full. Although it has been a difficult six months, local businesses have shown their resilience, with fewer companies closing than what was initially anticipated. No-one can say for certain how long it will take to recover, but with collective effort it should be possible for the South African economy to bounce back fully within 18 months.
You are originally from Durban. What drew you to Cape Town and what made you stay?
I came to study at UCT and never left! Cape Town is easy to fall in love with.
You have a background in investment banking. How do you historically view real estate in terms of an investment portfolio?
Each investment scenario is different but ordinarily real estate holdings are a good option to consider within a balanced and diversified investment portfolio. For Wesgro, real estate deals are particularly important because our most labour-intensive investments have often been those with large footprints and real estate requirements.
In your opinion, what is the greatest drawcard for investors looking to invest in Cape Town and the Western Cape.
What really sets apart the Western Cape as a premium investment destination is the fact that we are a gateway to the rest of Africa, boasting world class infrastructure and a knowledgeable workforce, all at often a fraction of the price of competitor destinations.
With our growing economy (500 000 jobs have been added to the province in the last decade), good governance boasting the highest level of clean audits in South Africa, access to skills, and exceptional quality of life - our province has an abundant of opportunities.
A region of the future - the Western Cape is home to the Cape Town-Stellenbosch Tech ecosystem, 61% of South Africa's international BPO clients and 70% of renewable energy manufacturing.
How is the tourism forecast looking? Can we expect to see an influx towards the end of year / beginning of next year?
It's impossible for us to forecast numbers with international travel still paused. The local tourism industry is resilient by its very nature, and, based on previous crises, has always bounced back relatively quickly. For instance, when the drought hit the Western Cape in 2018 it was anticipated that the tourism industry would shrink by between 15% and 20%. The industry showed marginal growth in 2018 and significant growth in 2019 with tourist arrivals increasing by 16%.
With South Africa recently awarded the Global Safety Stamp of Approval by the World Travel and Tourism Council (WTTC), and the local tourism sector already demonstrating how they are safe and ready for business, we are open and ready to welcome back visitors. Cape Town and the Western Cape is perfectly positioned for travel in a new COVID-19 world with our breadth and depth of world-class experiences synonymous with wide open spaces that accommodate social distancing practices - we believe as a country and province we are well positioned to bounce back.
Final thoughts on future of Cape Town and the property market?
The property sector is very often a barometer of long-term confidence in an economy because of the relative long periods of investment required to generate a return. However, the sector is equally impacted by short-term negative sentiment and as a result the current market is not as buoyant as one would like to see. Having said this, it is also true that the medium to long term outlook for Cape Town and the Western Cape remains positive. The region has a stable and responsible government, the economic fundamentals are pointing to long-term growth, many companies are considering Cape Town and the Western Cape as the headquarter for African expansion and its exports are on the increase. The current wave of negative sentiment will pass and the real long-term opportunities will remain.
The Agency Property Group will feature a number of local and international thought leaders in the coming months, keep an eye out for the next instalment, and find out everything you need to know about The Agency here.
Author: The Agency Property Group
