Abstract
Input-output analysis is a well known method of analysing specific economic activity and the influence of different sectors on the economy and on one another. This study investigates the ability of input-output analysis to consider the importance of commercial real estate on the economy. It analyses the economic activity, contribution to GDP, employment created and taxes generated with reference to direct, indirect and induced impacts. The research shows the contribution of the specific sector on the economy and highlights the ability of input-output analysis to determine the impact of different types of property and locational analysis. The interaction of property with the economy is discussed, which also enables the use of the analysis reported here for short term future forecasting, whereby expected real estate activity is used to forecast the direct, indirect and induced effects on the economy.
Highlights
Real Estate is considered globally as a very important contributor to economic activity
In this study it was shown that the real estate sector has a marked influence on the economy in South Africa
The theoretical principles as explained in space and capital market theory were taken into consideration, but there is still a vast amount of research that could be performed empirically explaining the different relationships as mentioned at any given point in time, over different time periods, or in different economic climates
Summary
Real Estate is considered globally as a very important contributor to economic activity. Does it provide the space needs for virtually all other economic activities to take place, including manufacturing, retail activities, business services etc., but itself contributes directly and indirectly to economic activity and job creation. Apart from the capital investment of the sector in the economy, non-residential real estate contributed R81 billion to the gross domestic product of South Africa during 2013, before the effects of taxes and subsidies are taken into consideration, which resulted in approximately 212 000 jobs, 1.5 per cent of all jobs in the economy.
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