Africa -  South Africa - Durban

South Africa remains a key trading partner for European and Asian countries, has comparatively low taxes, a clearly defined taxation system and a clearly regulated market for income investors. Following two quarters of negative growth, the South African economy expanded by 2.5% q-o-q and 2.0% q-o-q during the second and third quarters of 2017, respectively. The central bank reduced the prime interest rate by 25 basis points to 10.25% during July 2017, citing an improved inflation outlook, a faster-than-expected moderation in food inflation, continued subdued domestic demand and resilience in the exchange rate. Since then the prime interest rate dropped to 10% in March 2018 as the Rand reacted positively to recent political developments and the recent ratings announcement by Moody’s.

The improved outlook for the coming years is based on a recovery from the 2015-2017 drought, stronger mining production, and improvement in the country’s political dynamics. Cyril Ramaphosa was sworn in on the 18th February 2018 after former president Jacob Zuma was recalled by the ruling African National Congress (ANC) party. Ramaphosa, who was elected president of the ANC in December by a slim majority, has already begun changes to revitalize the South African economy which had been in decline under Zuma.

Durban experienced a rather meagre growth in room values last year. 2018 is expected to be a tough year for Durban as a drastic increase in fuel prices prevent domestic travellers to travel; however, the devaluation of the rand results in an increase in ADR in US dollars terms which offset the decrease in occupancy. Values are flat in 2018 and 2019 and then exhilarate again in 2020 when the values per room are anticipated to be the second highest since 2009. King Shaka International Airport experienced the highest growth amongst SA’s three major international airports, with passenger numbers increasing by 7.7% to 5.64 million for the past financial year 2017/2018. KwaZulu-Natal provincial government authorities met British Airways (BA) in Durban in February this year to make plans to secure a direct London-Durban route. With an increase in international flights through King Shaka airport and the great amount of planned developments between the airport and Durban, the Durban hotel market will be positively influenced and is anticipated to grow as the value per room performance indicates for 2020.

The Radisson Blu Group is currently involved in the R3bn Oceans uMhlanga development and Hilton confirmed in April this year South Africa's first Hilton Garden Inn as part of the R1.3bn uMhlanga Arch which is planned to open in 2020. 

Exchange Rate:

Exchange Rate 2016 Exchange Rate 2017 Change 2016/2017 Exchange Rate 2018 Change 2017/2018
US$ 1 0 0
South Africa - Durban 0.06812 0.07511 10.3% 0.08103 7.9%

Change In Value For Market:

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

South Africa - Durban RevPAR Change

South Africa - Durban RevPAR

Year RevPAR
2015 48.67
2016 48.37
2017 48.75
2018 (f) 50.55
2019 (f) 50.62
2020 (f) 53.50

For more information, please contact:

Tim Smith, MRICS
[email protected]
  • +27 797 342296 (w)
Rishabh Thapar
[email protected]
  • +27 0 792790584 (m)
Laura Dutrieux
[email protected]