Currency’s Bust Is Tourists’ Boon

New Yorkers Antoinette Cole and Avril Weekes were astounded when the waiter at a trendy restaurant in this cosmopolitan port city brought the check for lunch.

They had devoured generous portions of Greek salad, seafood salad, calamari, fish and chips and a variety of beverages. The bill was less than $12.

“One person couldn’t have eaten [that well] for that price in New York,” said Cole, 40, who was visiting South Africa with Weekes recently for the first time, taking a five-day package tour.

Although Cole, a bank employee, acknowledged that she typically takes at least one vacation a year in a country where the currency has depreciated against the dollar, South Africa offered the best value she had encountered in a long while.

Cole’s experience is being shared by thousands of foreigners who have visited South Africa in recent months. A plunge in the rand, the currency, is giving this nation the dubious distinction of being cheap to visit. The bargains have sent tourists, property buyers and filmmakers flocking to its shores.

The rand depreciated almost 40% last year. At one point, it hit a low of 13.85 to the greenback, compared with about 7 to the dollar at the beginning of 2001. The rand has recovered to about 11.5 to the dollar, but analysts said that has not repaired the image of this once-respected currency.

The rand’s fall has diminished the buying power of South Africa’s 43 million people, driving the price of imported and dollar-linked goods such as fuel, cotton products, fertilizer and equipment for growing maize--a staple in most black households here--out of the reach of the poor. Higher animal feed prices are likely to make meat and dairy products more expensive, analysts said.

However, for those in the businesses of tourism, film, real estate and exporting, the currency’s misfortune is bringing good fortune.

“The fall of the rand has created incredible value for money,” said Sheryl Ozinsky, manager of the Cape Town Tourism Bureau. “It’s incredible what people can have: accommodation, food, wine and electronics for ridiculous prices.”

From late December to mid-January, Cape Town received about 500,000 visitors, Ozinsky said. The figure would have been 10% to 15% lower if the rand had not fallen, she estimated. “We’ve generally had it better now than it ever has been before,” she said.

For those with foreign currency, there are ample opportunities to splurge. The Mount Nelson Hotel, a highly rated establishment in Cape Town, is charging $90 a night for a room that would easily cost $350 to $400 in the United States. Budget rooms for the backpacking crowd can cost as little as $6 a night, Ozinsky said.

And then there’s the food. At the equivalent of 82 cents, a Big Mac costs less in South Africa than any other place on the globe, according to the Economist magazine’s annual Big Mac Index. A three-course steak dinner at a top-notch Cape Town restaurant will set you back less than $10.

Government officials are at a loss to explain why the rand has dropped. Critics argue that the depreciation is a vote of no confidence in President Thabo Mbeki’s leadership.

The South African president has called for a commission to probe the rapid depreciation of the rand. The panel will investigate whether businesses--and specifically banks--have manipulated the rand for financial benefit.

In the meantime, major businesses such as the film industry are taking advantage of the currency’s decline.

“It has certainly made things a bit film-friendlier and more attractive to a lot of people overseas,” said Malcolm Calderwood, supervisor at the Cape Town Film office, which is responsible for issuing permits for photo and film shoots in the city.

In December, 300 permits were issued, Calderwood said. In January, that figure shot up to 600, almost double the number of January 2001. The permits cost $22 to $160 a day.

“The fall of the rand has been part of the reason some film companies that would normally go to Miami are now coming here,” Calderwood said.

Cape Town’s cosmopolitan atmosphere and other amenities, coupled with the ailing rand, have also led to a flurry of activity in real estate as foreigners with access to stronger and convertible currencies snap up prime properties.

“We’ve had a little bit of a feeding frenzy since September,” said Laurie Wener, an agent with Pam Golding Properties, the country’s largest real estate agency. “The sudden drop of the rand has given people with foreign currency an opportunity to purchase purely as an indulgence.”

In December 1999, for example, the agency took in between $7.7 million and $9 million worth of business, according to chief executive Andrew Golding. In December 2001, revenue was about $18 million.

“Normally, [foreign] visitors come back three or four times and then buy,” Golding said. “This year, we have many first-time buyers. There has definitely been a purchasing phenomenon.”

According to Golding, typical buyers are middle-aged Britons and Germans looking for a second home, and young professionals who purchase on impulse while vacationing.

Sales of commercial properties to foreigners also have increased, with four vineyards purchased in the past year, Golding said.

Wener, the real estate agent, and others believe that the terrorist attacks on the World Trade Center and the Pentagon ironically have put South Africa--notorious for its high crime rate--on the map as a safer haven to visit.

“After the Sept. 11 massacre, South Africa was no longer No. 1 on the violence list,” Wener said.

However, the influx of foreigners has aroused a degree of resentment among residents. Some are bitter about not being able to afford prime real estate on their own doorstep, and some politicians have suggested imposing regulations on foreign ownership of property.

As it stands now, nonresidents are not subject to exchange controls and can take any profit they make and repatriate it, Wener said. She noted that many local banks also make it easy for foreigners to acquire loans to purchase property.

But Golding and other businesspeople said the envy that some South Africans feel over the good fortune of those who hold foreign currency is far outweighed by the desire many have for global recognition. The overriding sentiment is that foreign visitors can have positive repercussions.

“What the country needs most are tourists to create jobs,” said Sanita Van der Merwe, who, since the rand fell, has seen a 30% increase in sales at her exclusive shop selling handmade linens in the historic winemaking town of Stellenbosch. “I’m not saying that I want the rand to continue to fall. But we really hope we get a lot more people coming this way.”