The role of second homes in local economic development in five small South African towns

Abstract

Local economic development (LED) is receiving greater policy prominence in a range of southern African settings. Strategic interventions often draw on tourism development to attain LED objectives. This investigation contends that second home development can serve as an additional focus for tourism strategies aimed at LED, and demonstrates that important LED objectives, such as developing and maintaining enterprises, generating employment and attracting capital inflows, can be achieved through second home development.

Keywords:

• second homes
• small towns
• tourism
• local economic impacts, local economic development
• South Africa

1. Introduction

Globalisation has come to dominate policy-making for local and regional development. In the context of development planning, ‘local economic development (LED) has emerged as a vital new planning focus particularly in the context of pervasive trends towards decentralisation – the deliberate and planned transfer of resources away from central state institutions – and shifting structures of government and governance’ (Rogerson, 2009:9). While in the developed world LED has become standard planning practice since the 1980s, its adoption has been more recent in southern Africa. Since being identified as one of six priority areas for action by the United Cities and Local Governments of Africa, an association representing local governments across Africa, LED is now afforded considerable policy prominence on the continent (Rogerson, 2009:9). However, some southern African countries, such as South Africa, have followed this route of planning for more than two decades (Nel, 2007).

Although LED has been defined in many ways, the International Labour Organisation sees it as having four principal needs: for participation and social dialogue, planning interventions anchored on territory, mobilisation of local resources and competitive advantages, and local ownership and management (Rodriguez-Pose, 2008:8). Rogerson (2009) points out that institutional planning approaches to satisfying these needs vary dramatically. Among these approaches are LED planning frameworks that stress the need to make localities more competitive as centres of consumption rather than production. There is evidence that a growing number of localities, from large cities to small towns, are beginning to undertake proactive interventions for LED using tourism as the lead economic sector. South Africa, in particular, has seen the expansion of local-level tourism initiatives as inseparable from the stagnation of South Africa's agricultural and manufacturing economies, in terms of new employment creation and the corresponding search for new local sectoral drivers for job creation and economic growth, not least including tourism (Rogerson, 2009:31). Rogerson goes on to emphasise that ‘against this background, an increasing number of the partnerships for LED which are formed between local stakeholders in the private sector, local government and communities are focusing upon the economic potential of tourism’ (2009:31).

Although the research literature highlights a range of successes and failures in deploying tourism activities as a tool for LED, second home development has not been remarked upon as a possible LED strategy. In the research presented in this paper, we argue that second home development can act as a LED strategy. The empirical material demonstrates that second home investment and use, in five small rural South African towns and villages, generates vital capital inflows, through local government rates and taxes, employment creation and elevated levels of consumption, in otherwise economically marginal regions where such income is limited or non-existent. We demonstrate that second home usage not only supports local businesses such as restaurants and shops but also has a regional influence through second home users accessing local farms and the surrounding areas for recreational purposes.

These arguments are developed through five sections of analysis and discussion. Section 2 that follows reviews the international literature on the economic impact of second homes. Section 3 describes the data collection and offers an in-depth analysis of the socio-economic profile of owners of second homes in the five study sites. Section 4 presents a potted history of these five towns and villages. Section 5 turns to the employment opportunities that second home owners create and the income they bring to local municipalities. Section 6 then provides an overview of patterns of spending by second home owners and their tenants on tourism-related products. The final section is a discussion of the potential LED implications, supported by the empirical evidence of this investigation.

2. International studies on the economic impacts of second homes

The impact of second homes on host regions and locations has been analysed from economic, social and environmental perspectives (Müller & Hall, 2004). Recent research has tended to take one of two different perspectives. The first, which could be argued to be a broadly neoliberal approach, focuses on the nexus between tourism and urban development, and especially the potentially desirable aspects of second home development, such as its economic advantages and its role in rejuvenating the post-productivist countryside (see Müller, 1999; Flognfeldt, 2004; Marjavaara, 2007).1 The second perspective is more Marxist in nature, focusing mostly on undesirable outcomes associated with second home development as a further expression of capital accumulation, such as uneven development, displacement of local communities, escalating property prices and housing shortages (see Gallent, 1997, 2007). One commonality of these two perspectives is an interest in smaller towns and villages. The reason for this is largely pragmatic: the size of small towns and villages makes data collection manageable. This is especially important where there is limited access to data, which has an effect on how researchers define ‘second homes’ for the purposes of a particular study (Müller, 2004).

The impact of second homes is most often analysed from the economic perspective (Atkinson et al., 2007; Hui & Yu, 2009). As return visitors, second home owners and their guests create a potential for economic development, not least in rural areas (Sievänen et al., 2007). The literature also suggests that second home tourism can be considered a good option because it contributes to more sustainable forms of development in rural areas, since it has little negative impact on the environment and host community (Müller, 2000). For example, Gallent et al. (2005) and Müller et al. (2004) highlight the restoration of land values, the increases in employment opportunities, the creation of a new economic base, the revitalisation of the local construction industry, the creation of service industries, the increases in municipal revenue through rates collected, the contribution towards maintaining existing local services, the establishment of entrepreneurial start-ups, the creation of business networks and opportunities, and the replacement of intellectual capital that may previously have been lost through rural depopulation and out-migration. Müller et al. (2004) suggest that the positive impacts of second homes are central to the decision-making practices of many rural planners and politicians who decide on land use and tourism development policies. Second home development is considered a possible economic stimulus for a rural area (and sometimes the only realistic possibility), especially after a period of economic decline and changes that specifically affect the area's traditional agricultural or service base (Clout, 1971; Müller et al., 2004). Furthermore, second home tourism can make an important contribution to the broader tourism industry by bringing in a steady supply of tourists and encouraging the creation of facilities for other types of tourism. It can thus help to expand domestic (and international) tourism to previously neglected rural areas.

Municipalities are mainly interested in second home tourism because it increases tax income and spending in the local economy (Müller et al., 2004). This does not mean that second homes necessarily create new employment opportunities, but at least they help sustain already existing jobs. Elsewhere, Müller (2000) suggests that second home owners and their visitors could serve as a stabilising force in peripheral rural areas.

The economic impacts of second homes are, however, not positive in all instances. For example, second home buyers often unwittingly exploit the weaknesses of the rural economy: they find ‘bargain’ properties, but rarely question why property commands such a low price in the local market (Atkinson et al., 2007). As Frost (2004) points out, second home tourism can lead to increased costs for municipalities, which have to provide additional infrastructure and services. Clout (1977) also suggests that in some areas the growing numbers of second homes have been blamed for accelerating rural out-migration and preventing schemes for plot consolidation and farm enlargement that could possibly have benefited permanent residents. Müller et al. (2004) have highlighted some further negative economic impacts, such as the increase of land values to levels beyond the means of local residents, and increases in the cost of local goods and services.

Taken as a whole, these observations suggest that the economic impact of second homes depends on the characteristics of a locality and particularly on the types of dwellings used as second homes and how they are used. Indeed, Müller et al. (2004) point out that in most cases expenditure by second home owners is too low to permit the economy to specialise only in the needs of this market.

It is noteworthy that the international literature, while acknowledging that second home development can benefit local communities, does not mention it explicitly as a means of LED. Similarly, despite growing recognition of the role of tourism in a range of development endeavours, second homes have not been identified as a LED strategy in the emerging field of second homes research in South Africa (Visser, 2006). In the analysis that follows, we draw on a range of debates about the economic impact of second home development.

3. Research methods and a profile of second home owners

This investigation forms part of a larger survey of second home development in South Africa and draws on empirical data gathered between 2007 and 2009. The larger project started as an exploratory investigation in 2003, focusing on second homes in Cape Town's De Waterkant, Clarens in the Eastern Free State and Zinkwazi on the KwaZulu-Natal north coast (Visser, 2006). A range of impacts was identified during this project. However, the economic dynamics behind second homes drew particular attention. Subsequently the investigation has been broadened to small towns in four different provinces, with a view to examining the role of second homes in creating and maintaining a post-productivist countryside (Hoogendoorn et al., 2010). Drawing on suggestions that this is a central role, the current investigation shifted to regions in South Africa where the transition from a productivist to a post-productivist state has become very evident (Halseth & Meiklejohn, 2009; Hoogendoorn et al., 2010). This inquiry focuses on five rural sites: the small towns of Greyton in the Western Cape, Dullstroom in Mpumalanga and Clarens in the Free State, and the villages of Rhodes and Nieu Bethesda in remote parts of the Eastern Cape (see Figure 1). All second home owners in these study sites were identified through the rates-based address listings of the relevant local municipalities. Postal survey methods were used in all five case studies (see Pienaar & Visser, 2009, for a fuller discussion of this method). The questionnaire sought to gain insight into the general biographical characteristics of second home owners, why they invested in second homes and why they chose to invest in a second home in a particular location. It also sought to establish how these properties were used, their financial implications for the owners, and how the owners engaged with the area where their second home was located. Table 1 shows the number of second home owners and permanent residents in the case study areas and the response rate to the questionnaire.

Figure 1: Location of study sites

Table 1: Number of second home owners, permanent residents and general response rates

	Second home owners	Permanent residents	Response rate
Rhodes	70	450	27% (n = 19)
Greyton	250	2 500	35% (n = 88)
Dullstroom	130	3 500	39% (n = 51)
Clarens	100	3 750	38% (n = 38)
Nieu Bethesda	29	1 000	45% (n = 13)

4. A short history of Rhodes, Greyton, Dullstroom, Clarens and Nieu Bethesda

Rhodes Village, situated just above South Africa's Great Escarpment, at the southern end of the Drakensberg mountain range, is accessible only by narrow dirt roads. It was founded in 1891, originating with agricultural activities in the region. Between 1918 and 1974 a boarding school was established and Rhodes began to develop as a small agricultural centre. From the 1950s the village benefited from what was known as the Wool Boom, which created an upsurge in the region's agricultural economy that continued until the late 1960s. However, the village economy declined gradually as the country's wool market became saturated and Rhodes became almost derelict by the late 1960s (Walker, 2004). The village later became a popular venue for permanent family homes and broadly followed the ‘back to the land’ movement seen at the same time in the USA. This period is referred to in local parlance as the ‘Hippie Era’. Since the 1980s Rhodes has gradually become better known as a tourist destination for professionals from South Africa's main metropolitan regions, primarily Johannesburg and Pretoria.

The town of Greyton, 150 km east of Cape Town, was laid out in 1854 and its architectural character remains predominantly nineteenth century, with thatched cottages being typical. Its economy remained fairly stable during its first century, but Donaldson emphasises that it has changed dramatically in the past 40 years, in three distinct phases. First, South Africa's notorious Group Areas Act, which enforced strict racial segregation in settlement patterns, was promulgated in Greyton in the 1970s, forcing residents classified as ‘non-white’ to relocate to a new township outside the town, called Heuwelkroon, which spatially fragmented the built environment (Donaldson, 2009). Second, during the 1980s and 1990s the predominantly Afrikaans-speaking white community started selling their properties to city-dwellers and roads were tarred, which encouraged further development, especially for tourism (personal communication, JT Kemp, retired resident, March, 2008; Donaldson, 2009). Third, physical developments had increased by the end of the 1990s as the town became a retirement haven for residents from Cape Town. In fact, one-third of the permanent residents are now retirees (personal communication, JT Kemp, 2008). During this period the town also developed further as a tourist destination and weekend getaway for second home owners (Donaldson, 2009).

Dullstroom, 250 km to the west of Johannesburg, was settled by Dutch immigrants in the early 1880s and proclaimed a town in 1882. In May 1900 it was occupied by British soldiers fighting in the South African War (1899–1902) and partly destroyed. Trout was stocked in the rivers of the Dullstroom area in 1927 and it became a recreational fishing destination, while remaining primarily an agricultural service centre (Urban Dynamics, 2007). By the 1970s, tourism had developed further in the town and it was seen as a gateway to the tourist attractions of the Lowveld region and the Kruger National Park (personal communication, M Vaid, business owner, September 2008). At present, Dullstroom is one of the country's main trout-fishing destinations and a major tourism destination in the Highlands Meander route (Rogerson, 2004). The town's architecture is a mixture of nineteenth-century and twentieth-century styles.

Clarens, in the eastern Free State, 321 km to the southwest of Johannesburg, was established in 1912 and subsequently developed as a retirement town for farmers. Its main economic purpose was to service the agricultural sector. The retirement culture was disrupted in the mid-1980s when a Gauteng businessperson started to buy properties in the town and slowly developed its tourism potential. Significant changes in the town came from a different source in 1990 with the Lesotho Highlands Water Scheme, which necessitated the construction of a tunnel from the Katse Dam in Lesotho to the Ash River just outside Clarens (Hoogendoorn & Visser, 2004) and Clarens was chosen as the living quarters for the construction workers. In the process the infrastructure of the town was substantially upgraded and subsequently most of its economic focus turned to leisure tourism and related activities (Hoogendoorn & Visser, 2004). The architecture of the town is predominantly nineteenth century, characterised by sandstone bricks, a style common in the region.

Nieu Bethesda, like Rhodes, is only accessible by narrow dirt roads, one of which links it to the nearest town, Graaff-Reinet, 60 km away. The village was established in 1878 with the intention of starting an independent church to service the local farming community (Sheard & Sheard, 2009). Nieu Bethesda subsequently declined during the 1930s depression. Improved transport systems meant that it was no longer necessary to pass through the village and it became increasingly isolated. The town was put back on the map in 1987 by Athol Fugard's play The Road to Mecca, based on the life of Helen Martins of the now famous Owl House (Sheard & Sheard, 2009). Because of this attention, Nieu Bethesda was reborn as a unique tourism destination in the Karoo.

5. The socio-economic profile of owners of second homes in the five study sites

This section outlines the personal characteristics of the second home owners in the five study sites, explaining why they have invested in these areas and how they use their properties. Although their socio-economic profiles are similar, their ways of using their second homes differ significantly, which in turn has diverse economic impacts on the towns and their hinterlands, as is explained in Section 6, below.

The general demographic profile of the second home owners in these towns is similar to that of owners of second homes in other second home areas in South Africa (cf. Visser, 2006), with the survey participants being white South Africans, mostly married (79 per cent) and male (68 per cent). This reflects the inequalities in the distribution of South Africa's national earning power and the gendered nature of both income and property ownership in South African society. In the main, these second home owners speak English as a first language (65 per cent). Their level of education is high, with 44 per cent having completed postgraduate training. Many second home owners are retired services professionals (architects, engineers, entrepreneurs, accountants). Their households are predominantly established family units in which the adults are middle-aged or approaching middle age. Given their economic profiles and high levels of education, it is not surprising that the majority are upper-level income earners (> ZAR400 000 per annum, equivalent to US$40 000).2 The economic dominance of Gauteng is also reflected in the permanent residences of the second home owners in the other study areas (see Table 2).

Table 2: First home origins and average travelling distances to second home

	First home origin	Average travelling distance (km)
Rhodes	Gauteng Province (48%)	800
Greyton	Cape Town Metropolitan Area (80%)	150
Dullstroom	Gauteng Province (73%)	250
Clarens	Gauteng Province (66%)	321
Nieu Bethesda	Gauteng Province (31%)	293
	Nelson Mandela Metropolitan Area (23%)
	Durban Metropolitan Area (23%)

The purchase dates of second homes in the study sites vary. However, from the data collected it is evident that second homes only became an important factor influencing the structure of these towns and villages after the demise of apartheid in 1994, although it does seem that Rhodes has a better-established second home owner base than the other four sites.

Reasons for investing in a second home vary according to site. Motivating factors include the natural beauty of the surroundings, the diversity of leisure activities available in the area, such as horse riding and hiking, and the promise of a lifestyle associated with the countryside. Collectively, the main reasons for buying a second home that can be discerned from the survey are the possibility of retirement to the area in the future,3 investment return and, more generally, a desire to escape the major metropolitan regions to access the amenities of the countryside.

In all five sites, an average of 80 per cent of the respondents were sole owners of their second homes, while 20 per cent were not. Of the latter, an average of 55 per cent shared their properties with relatives. However, it should be noted that there are some differences between the localities.4 Property prices differed from town to town. The sites closer to the main metropolitan regions were more expensive. Consequently, in Rhodes and Nieu Bethesda, the most distant and remote locations from South Africa's main metropolitan regions, acquisition prices were below R500 000 at the time of writing, while the majority of second homes in the other locations were acquired at prices significantly above R500 000. The main observation here is that accessibility from the major metropolitan regions and therefore the frequency with which second homes can be visited is a factor that elevates property prices.

In most cases second homes were not newly built on an open lot of land, but rather existing housing stock was purchased, although in the case of Dullstroom and Clarens it was recorded that a significant number of new residences had been erected as second homes. A key contribution that second home investors make to the local economy is in the form of renovations and alterations to their properties. It is also important to note that most renovation and building work drew upon labour from the town themselves, which is important in creating and maintaining local employment opportunities.

Renovation costs varied but were largely proportional to the costs of acquiring the properties. The respondents in Rhodes and Nieu Bethesda who renovated their properties spent on average R25 275 and R29 846, respectively. The amounts in the cases of Greyton (R175 000), Dullstroom (R99 812) and Clarens (R52 993) were substantially higher. This could be attributed to two factors: Rhodes has been declared a heritage area, which means that houses in the village may not be altered on the outside, while owners of houses in Nieu Bethesda do not visit these homes as often as home owners in Greyton, Dullstroom and Clarens. The main point is that frequent occupation necessitates regular renovations.

The regional economic impact of second home ownership was determined by establishing which towns were visited while home owners were at their second homes and the reasons for these excursions (see Table 3).

Table 3: Towns visited while at second home and reason for excursion

	Towns and resorts visited	Reason for visit
Rhodes	Barkly East (37%)	Groceries and fuel
	Tiffendell (16%)	Skiing
Greyton	Caledon (29%)	Groceries
	Hermanus (22%)	Leisure activities
Dullstroom	Lydenburg (37%)	Groceries
	Belfast (30%)	Groceries
Clarens	Bethlehem (38%)	Groceries
	Fouriesburg (33%)	Sight-seeing
Nieu Bethesda	Graaff-Reinet (70%)	Groceries

An important finding of the research is that many of the participants own more than one second home: 57 per cent in the case of Rhodes, 33 per cent in Greyton, 49 per cent in Dullstroom, 38 per cent in Clarens, and 38 per cent in Nieu Bethesda. This raises questions about how these owners divide their time between their various residences (see Chaplin, 1999; Gallent et al., 2005) and their economic impact in each place.

When it came the temporality of second home use, it was found that owners mostly visit Rhodes and Nieu Bethesda during December. In the case of Greyton and Dullstroom, the second homes are used on a weekly or bi-weekly basis, while in Clarens they are used monthly or bi-monthly (Table 4). Fifty-two per cent of the Rhodes respondents let their properties during periods when they do not occupy them, as do 38 per cent in Clarens, 31 per cent in Greyton, 28 per cent in Dullstroom and 23 per cent in Nieu Bethesda. The lower frequency of renting out of properties in Greyton, Dullstroom and Clarens is because these homes are used more regularly by the owners themselves. The reason that properties in Nieu Bethesda are not let out as frequently is because this is not yet such a popular destination that it attracts large numbers of tourists; rather, it attracts a specific type of tourist who is interested in the history and unique heritage of the Owl House or the recent discovery of dinosaur fossils in the area.

Table 4: Time spent at second home by owners and guests, per year

	Second home owners (days)	Guests (days)	Total (days)
Rhodes	22	45	67
Greyton	51	120	171
Dullstroom	41	65	106
Clarens	38	133	171
Nieu Bethesda	23	91	114

6. General economic impacts of second homes in the five study sites

6.1 Employment creation, municipal services and second home owners

Given the general demographic features of the second home owners and their usage patterns, the question arises as to what economic impacts these supplementary accommodation units, privately owned for the purposes of leisure for family members and for paying and non-paying guests, have on the regions in which they are situated. The purchase of a second home is usually a one-off investment. However, maintaining them is a recurrent expense, as are municipal rates and service charges. These offer, in our view, a significant local economic benefit for the towns, their local authorities, and the surrounding areas.

Because second home owners live elsewhere and occupy their second homes chiefly for leisure purposes, almost all of them depend on locally hired assistance. Most respondents employed a gardener and a domestic worker. Since these assistants mostly work at the homes on days that the owners are not there, other permanent local residents tend to manage them on the owners' behalf. The wages earned are low; although generally higher than those for other wage-earning opportunities at equivalent skill levels in the sites under investigation. The average monthly remuneration for domestic workers across all five sites was R503 at the time of writing, and varied little from one site to another (see Table 5). Second home owners in Clarens, unlike those in the other four sites, pay what is expected in contractual agreements as required by the government (personal communication, R Crowther, retired resident, 11 August 2009). In Nieu Bethesda, domestic workers are not employed permanently but on an ad hoc basis and are paid for ‘piece work’. We assume that the wages paid in Dullstroom, Rhodes and Greyton are paid on a permanent basis although no formal contractual agreement is made with the domestic workers. Payment for gardeners varies: their monthly remuneration at the time of writing amounted to an average of R200 in Rhodes, R695 in Greyton, R401 in Dullstroom, R430 in Clarens, and R162 in Nieu Bethesda. However, despite being a welcome source of income in the absence of other employment opportunities, wage levels are low and might even be seen as exploitative.

Table 5: Domestic workers' and gardeners' remuneration

	Average per second home owner per month	All second home owners per month	All second home owners per annum
Domestic workers
Rhodes	R464 (n = 14)	R15 687	R188 247
Greyton	R460 (n = 54)	R70 494	R845 932
Dullstroom	R541 (n = 33)	R45 469	R545 633
Clarens	R833 (n = 28)	R61 636	R736 358
Nieu Bethesda	R218 (n = 9)	R4 360	R52 320
Gardeners
Rhodes	R200 (n = 13)	R6 261	R75 137
Greyton	R695 (n = 68)	R134 222	R1 610 659
Dullstroom	R401 (n = 35)	R35 755	R428 939
Clarens	R430 (n = 32)	R36 232	R434 779
Nieu Bethesda	R162 (n = 8)	R2 916	R34 992

If these figures are extrapolated to the total number of second homes in each of the study sites, as shown in Table 5, it appears there is a very significant capital inflow into the local economy.

In terms of other recurrent monthly expenses, the largest contribution to the local economy comes from payments to the local authorities for water, electricity, rates and refuse removal. This amounts to an average R629 per month for owners of second homes in Rhodes (see Table 6). Of this total, R320 typically goes to rates and taxes, and the rest to utility charges. If we extrapolate the total average amount of R629 to all second homes here, we find that R23 530 per month or R282 356 per annum flows into the coffers of the local authority. Similarly large amounts are paid to the local municipalities in Greyton, Dullstroom, Clarens and Nieu Bethesda. As the second home owners do not use the services throughout the year, the municipality saves on the provision of services and income can be used elsewhere in the municipal area. It should be noted, however, that in Nieu Bethesda most second home owners get their water from their own boreholes. Thus the local municipality does not receive any revenue for this service, which makes the economic impact of second homes noticeably lower in Nieu Bethesda than in the other sites (see Table 6).

Table 6: Payments made to local municipalities for services rendered

	Average per second home owner per month	All second home owners per month	All second home owners per annum
Rhodes	R629 (n = 19)	R23 530	R282 356
Greyton	R1 057 (n = 72)	R209 044	R2 508 528
Dullstroom	R959 (n = 40)	R94 826	R1 137 913
Clarens	R1 441 (n = 34)	R126 671	R1 520 053
Nieu Bethesda	R360 (n = 9)	R5 688	R68 256

The totals of the standard costs of wages and municipal rates are R545 739 for Rhodes, R4 965 119 for Greyton, R1 683 546 for Dullstroom, R2 970 442 for Clarens and R155 568 for Nieu Bethesda. This capital inflow to these small towns and villages is certainly significant, given their extremely limited alternative means of income generation and employment.

6.2 Expenditure on tourism-related products by second home owners and guests

A further impact of second homes on the local economies of small towns comes from the owners' support of leisure activities in and around these localities. This impact is seasonal, however, and varies according to the length of the owners' stay. The owners, but also importantly their guests, provide seasonal stability to the demand for a range of tourism related functions, which in turn service the tourist market.

Owners of second homes in Rhodes reported spending an average of R774 at local restaurants and eateries, R694 at art galleries and R819 on petrol at the local petrol stations on their previous trip. Assuming that all second home owners have similar spending patterns, these amounts can be extrapolated to all second home owners in Rhodes. This would yield a combined inflow from all second home owners of R39 224 to restaurants, R16 752 to art galleries and R31 635 to the local petrol station during their previous visits. In addition, if tourists who rent second homes have the same spending patterns, the following totals can be calculated for a year: R259 465 at restaurants, R110 812 at art galleries and R209 265 at the local petrol station, amounting to an overall total of R579 542 per year (see Table 7). Similar calculations of the annual expenditure in the other four towns produced totals of R6 789 876 for Greyton, R3 333 787 for Dullstroom, R4 969 540 for Clarens, and R243 250 for Nieu Bethesda. Table 7 provides a summary.

Table 7: Expenditure on selected local amenities

	Average per second home owner (previous trip)	All second home owners (previous trip)	All second home owners and tenants per year
Rhodes
Restaurants	R774 (n = 19)	R39 224	R259 465
Art galleries	R694 (n = 10)	R16 752	R110 812
Local petrol stations	R819 (n = 16)	R31 635	R209 265
Greyton
Restaurants	R580 (n = 67)	R110 472	R4 170 120
Art galleries	R752 (n = 17)	R36 315	R1 370 843
Local petrol stations	R466 (n = 25)	R33 085	R1 284 913
Dullstroom
Restaurants	R778 (n = 44)	R87 227	R1 849 222
Art galleries	R537 (n = 18)	R24 649	R522 559
Local petrol stations	R509 (n = 35)	R45 378	R962 006
Clarens
Restaurants	R790 (n = 24)	R49 868	R1 154 078
Art galleries	R3 303 (n = 15)	R130 395	R3 017 656
Local petrol stations	R504 (n = 26)	R34 474	R797 806
Nieu Bethesda
Restaurants	R1 239 (n = 13)	R35 934	R157 862
Art galleries	R1 090 (n = 8)	R19 410	R85 388
Local petrol stations	No petrol station	No petrol station	No petrol station

Second home owners and guests who rent second homes participate in a range of local activities proven to have a significant economic impact on the surrounding rural economy. To give an idea of these impacts, only the activities that make the greatest contribution to the local economies are taken into account in this discussion.

In Rhodes they generally go fly-fishing, skiing and horse riding, and on game drives and 4 × 4 trails. Skiing at the nearby Tiffendell Ski Resort is the most lucrative activity in the area. Second home owners spent an average of R3100 on skiing during their previous trip. If this amount is extrapolated to all second home owners in Rhodes, an amount of R29 931 is reached. If tenants and second home owners are combined, this gives a total of R197 992 per year (see Table 8).

Table 8: Expenditure on various tourism activities

	Average per second home owner (previous trip)	All second home owners (previous trip)	All second home owners and tenants per year
Rhodes
Snow-skiing	R3 100 (n = 4)	R29 931	R197 992
Greyton
Local market	R256 (n = 57)	R41 456	R1 564 948
Dullstroom
Fly-fishing	R1 130 (n = 19)	R54 735	R1 160 384
Clarens
Horse riding	R580 (n = 5)	R7 632	R176 614
Nieu Bethesda
Horse riding	R397 (n = 10)	R8 853	R38 859

Second home owners and people who rent second homes in Greyton generally do not take part in adventure-oriented activities like those in Rhodes and Dullstroom but rather in activities that influence the regional economy, such as visiting the local market and wine cellars. During their previous visit, second home owners in Greyton spent an average of R256 at the local market. If this amount is extrapolated to all second home owners in Greyton, we get a total of R41 456. Assuming that tenants spend similar amounts on this activity, their expenditure combined with that of the second home owners comes to a total of R1 564 948 per year.

In the Dullstroom area, second home owners and tenants generally take part in a variety of outdoor leisure activities such as hiking, mountain-biking and fly-fishing. Fly-fishing is the most popular activity with second home owners and their tenants – it is after all the town's main drawcard. During their previous trip respondents spent an average of R1130 on tackle, guiding services, rod fees and fishing licences. If this amount is extrapolated to all Dullstroom's second home owners, we get a total of R54 735. Assuming that on average tenants spend a similar amount, then a total of R1 160 384 is spent on fly-fishing products and services.

Clarens offers a variety of leisure based activities, although the survey data suggest that the second home owners and guests are generally not as active as those in other towns. Horse riding and golf were frequently cited leisure activities. However, we can assume that the tenants of the second homes take part in more of the many local activities, such as quad-biking, 4x4 trails and hiking. During their previous trip respondents spent an average of R580 on horse riding. If this amount is extrapolated to the previous trips of all second home owners in Clarens, we get a total of R7632. Assuming that their tenants spend a similar amount on average, then horse riding brought in a total of R176 614.

A variety of outdoor activities are available in Nieu Bethesda. These differ to some extent from those in the other towns and include, for instance, donkey cart rides, but horse riding seems to be the most popular and lucrative activity. During their previous trip respondents spent an average of R397 on horse riding. If this amount is extrapolated to the previous trips of all Nieu Bethesda second home owners, we get a total of R78 853, and if their tenants spent a similar amount, then horse riding contributed R38 859 to the local economy.

From this discussion the general economic impact of second homes at the five study sites becomes apparent. For Rhodes, if all expenditure on tourism activities by second home owners and tenants is combined, then we get a total of R1 001 248 per annum. To this must be added the total annual expenditure of R545 738 on gardeners, domestic workers and municipal services. In addition, if the average of R25 757 spent per second home owner on general renovation work during the previous year is extrapolated to all second home owners, this gives a total of R1 026 666 per year. It is estimated that R35 933 of this amount is spent on local labour and R990 733 on building materials. If we add up the amounts spent on tourism activities, gardeners, domestic workers, municipal services and renovations we find that this contributes an estimated overall total of R2 573 653 per year to the economy of Rhodes. Our general observation, thus, is that second home ownership offers substantial economic benefits to Rhodes itself, and also to the surrounding region. (Similar calculations were made for the other case studies, see Table 9.)

Table 9: Key expenditure categories in the case-study areas

	Tourism expenditure	Remuneration	Renovation work	Total
Rhodes	R1 001 248	R545 738	R1 026 666	R2 573 653
Greyton	R11 975 126	R5 771 305	R36 750 630	R43 839 378
Dullstroom	R6 038 342	R2 532 308	R14 858 288	R23 428 939
Clarens	R6 775 262	R2 970 442	R6 831 857	R16 577 561
Nieu Bethesda	R412 869	R157 968	R865 539	R1 436 376

7. Conclusion

LED is seen by those involved (governments, academics, consultants, economists) as a key strategic policy intervention in addressing poverty and underdevelopment in southern Africa. Among a range of interventions that have been made, tourism development as a strategy to attain LED objectives has been quite popular. This study examined a specific segment of the tourism market, second home ownership, in order to contribute to the limited body of research on second home ownership in southern Africa and to highlight what the segment can contribute to local economic development.

The study showed that second homes and the general activities surrounding the use of these properties have significant economic impact, and thus hold much potential in terms of capital inflows, enterprise development and employment creation for a range of different localities. These are key aspects of what LED aims to achieve. However, much more could be achieved if the various stakeholders in the towns and villages investigated in this study actively embraced second home development. It should be emphasised that second home development was not regarded as a LED strategy in any of the study areas. Although some of the study sites saw tourism development as having potential economic benefits, encouraging second home ownership per se was not part of their current strategies for tourism development.

There are, however, several questions to be asked about whether second home development as it is currently taking place in the case-study areas fully supports, or only partly supports, the four principal needs of LED (listed in Section 1 above). In other words, further research is required to ascertain:

• the extent of participation and social dialogue between the different stakeholders in these towns;

• what planning interventions are anchored in the local area, rather than imposed by individual second home owners, property management consortiums, or property developers located in the metropolitan regions;

• whether local resources are being used as extensively as possible and in such a way as to develop local competitive advantage; and

• whether the services are locally owned and managed.

Given greater emphasis on these issues, the authors argue that for the future development of small towns and villages in economically depressed rural areas, tourism-related businesses and local and district municipalities should not underestimate the potential LED impacts of second home ownership and development. However, if the economic, and for that matter the social and environmental, impacts of second home usage are to be assessed with greater validity, a call has to be made for local authorities to develop formal databases in which second homes are accurately reflected to guide second home development in a way that will help achieve LED objectives.

Acknowledgements

The authors wish to thank Michelle Naidoo for administering the questionnaire in Nieu Bethesda and Devlyn Hardwick for preparing the map. Parts of the paper are based on research supported by the National Research Foundation, award 65890. The authors extend thanks for their support. The usual disclaimers apply.

Notes

¹Post-productivism means extensification instead of intensification, dispersion instead of concentration and diversification instead of specialisation in the contemporary countryside (Ilbery & Bowler, 1998).

²At the time of writing, ZAR1 = approximately US$0.10.

³It should, however, be noted that future retirement is not a factor that comes into play in the acquisition of second homes in Rhodes and Nieu-Bethesda, largely because of the lack of services and the fact that there are no pharmacies or hospitals nearby.

⁴For example, at Rhodes 33 per cent of the respondents share their properties with friends, and in Greyton 29 per cent of the respondents own their properties through a trust. In Clarens 20 per cent are involved in fractional title.