The location and the nature of Airbnb listings in Johannesburg and their impact on property prices and the availability of long term rental stock Tehillah Yocheved Niselow 755057 Supervisor: Professor Michelle Williams Research report submitted in partial fulfilment of requirements of Master of Arts in Development Studies, in the Faculty of Humanities, University of the Witwatersrand, Johannesburg. Johannesburg, 15 March 2019 1 DECLARATION I declare that this is my own unaided work. It is being submitted for the requirements of the Degree of Masters in Development Studies (by coursework and research report), at the University of the Witwatersrand, Johannesburg. It has not been submitted for any degree or examination at any other university. ----------------- Tehillah Yocheved Niselow ------------------ Date 2 Table of contents DECLARATION...................................................................................................................... 2 TABLE OF CONTENTS ........................................................................................................ 3 List of Abbreviations………………………………………………………………………………… ……………………………………………….4 ABSTRACT .............................................................................................................................. 6 ACKNOWLEDGEMENTS .................................................................................................... 6 CHAPTER ONE ...................................................................................................................... 8 INTRODUCTION ................................................................................................................. 8 RESEARCH QUESTIONS .......................................................................................................... 12 OUTLINE OF REPORT ............................................................................................................. 12 RESEARCH METHODOLOGY ................................................................................................... 14 ETHICAL CONSIDERATIONS ................................................................................................... 17 CONCLUSION......................................................................................................................... 17 CHAPTER TWO ................................................................................................................... 19 LITERATURE REVIEW..................................................................................................... 19 Introduction...................................................................................................................... 19 Digital economy dilemma ................................................................................................ 19 Airbnb: The International Case ....................................................................................... 24 Airbnb’s Regulatory Environment ................................................................................... 27 Tourism: A New Arena for Growth .................................................................................. 31 Conclusion ....................................................................................................................... 34 CHAPTER THREE ............................................................................................................... 35 JOHANNESBURG: A CITY IN TRANSISTION ............................................................... 35 Introduction...................................................................................................................... 35 Johannesburg: from Gold to Banks ................................................................................. 35 Johannesburg: A Divided City Still ................................................................................. 37 Johannesburg: A City of Plans ........................................................................................ 40 Conclusion ...................................................................................................................... 42 3 CHAPTER FOUR ................................................................................................................ 44 AIRBNB: A JOHANNESBURG STORY ....................................................................... 44 Introduction .................................................................................................................... 44 Unequal sharing in Johannesburg ................................................................................... 45 Divided standards of living .............................................................................................. 50 Conclusion ....................................................................................................................... 58 CHAPTER FIVE ................................................................................................................... 59 AIRBNB: HOUSING PRICES AND RENTAL STOCK .................................................... 59 Introduction...................................................................................................................... 59 Airbnb: The Johannesburg Effect ................................................................................ 59 Conclusion ....................................................................................................................... 62 CHAPTER SIX ...................................................................................................................... 64 CONCLUSION .................................................................................................................... 64 REFERENCE LIST…………………………………………………………………………………………… ……………………60 List of figures and tables…………………………………………………………………..73 4 List of Abbreviations CBD- Central Business District CoJ- City of Johannesburg CPI- Consumer Price Index FEDHASA- The Federated Hospitality Association of South Africa FNB- First National Bank MEC- Minerals and Energy Complex NDP- National Development Plan RDP- Reconstruction and Development Programme SAPOA- South African Property Owners Association SDF- Spatial Development Framework TBCSA- Tourism Business Council of South Africa TMR- Transformation, modernisation and reindustrialisation UK- United Kingdom USA- United States of America USD- US Dollar WTTC- World Travel and Tourism Council 5 ABSTRACT The popularity of the digital or the ‘shared economy’ has become almost ubiquitous amongst the middle and upper classes in developing and developed countries. Many people wonder how they managed before ride hailing applications such as Uber and short-term accommodation rental applications such as Airbnb. These technologies have changed the face of commuting and travelling within cities as well as travel for business people and holiday makers. Despite the relative novelty of these technologies, there have been concerns raised about their impact on labour rights and housing prices in some countries. Regulators in several of the world’s tourism hotspots such as London, New York and Amsterdam have stepped in to create controls around Airbnb to mitigate concerns about rising property prices affecting locals. In South Africa, there has been anecdotal reportage in the media about the link between the popularity of Airbnb and rising property prices in Cape Town. While Cape Town has received more attention, the number of Airbnb listings in Johannesburg is growing, though still relatively small compared to other metropolitan cities in the world. No large-scale study has been undertaken into the phenomenon in both cities by government authorities or academic scholars. This research report looks at the nature and location of Airbnb listings in Johannesburg as well as data on rental and property prices in Johannesburg and nationwide over the last five years. In the report, I also make use of interviews with real-estate agents and city planning authorities to consider whether Airbnb has impacted housing prices or spatial patterns. This report concludes that most Airbnb listings are located within areas in Johannesburg that are already well connected to economic opportunities and infrastructure. In addition, the research shows that Johannesburg, a city in a state of flux and ever evolving, is not like cities within developed countries with relatively stable economies. Due to difficult economic conditions in recent years and weaker property prices as well as rental incomes, it is not possible to find a correlation between the rise of Airbnb and property prices. 6 ACKNOWLEDGEMENTS I have eternal gratitude to my supervisor Professor Michelle Williams who warned me in March 2018 the research year will fly by. I did not quite believer her then but it has. Thank you, Prof, for the deadlines and the patience with the missed deadlines, for always pushing me to refine my argument and expand my thinking about the aims of my research (and calling out run-on sentences). To my parents, Dov and Shoshana, siblings Sarah and Avi, siblings-by-marriage and in name Warren and Haylee and nephew Aaron. You encouraged me to keep writing, when I wanted to give up and made me feel supported and loved, no matter what. To my late brothers, Sam and Michael, I think about you every day. Thank you to the ‘Thursday Dinner’ group, Tasneem Essop Uyanda Mabece Pearl Pillay Chulumanco Nqadala, Tokelo Nhlapo, Tsydy Motsoeneng and Naadira Munshi for