Pam Golding Properties Group Newsletter
PGP logoDate: August 2012

Hospitality Property

Hospitality market outperforming 2007 levels

Looking back on the last two years of guesthouse sales performance

 

View our selection of properties from South Africa. Click on the region below.

Cape Town Central - R16 million

Sophisticated sanctuary presiding over Cape Town's City

This Boutique Hotel & Spa offers its mix of slick urban design and shimmering sea views to Cape Town's most selective travellers. An exclusive private haven with majestic views of the ocean and Lion's Head Mountain. The black marble tiles from the front entrance, combined with the water feature lend a slight ostentatious air, yet quietly enchanting..

Cheri Hughes
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M: +27 (0) 82 693 9606

Somerset West - R14 million

A stylish and charming guest lodge in the heart of the Western Cape

Near Cape Town, situated on the slopes of the Helderberg Mountain in Somerset West, is an ideal hotel for tourists and golf players. You will find the lodge for an eventful and relaxing holiday only 35 minutes from Cape Town, in the centre of the wine country and adjoining the Helderberg Nature Reserve.

Peter Bruil
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M: +27 (0) 83 384 0584

Franschhoek - R8,5 million

4 Star guesthouse

This 4 Star Guesthouse Set on 1289m² is situated very centrally in a quiet street in the lovely village of Franschhoek, a stroll away from it's famous restaurants and shops. The Guesthouse is a national monument of over 100 years old and has been beautifully renovated, with careful attention to its original character and charm.

Peter Bruil
Click here to email
M: +27 (0) 83 384 0584

Worcester - POA

In the heart of the Breede River Valley

The hotel boasts 55 newly renovated guest rooms which includes 6 Studio rooms, 24 Standard rooms, 24 Deluxe rooms and one Presidential Suite. The restaurant, which can seat up to 200 people, is situated around the pool, has a self-service breakfast, an a la carte lunch and a buffet dinner in the evenings.

Cheri Hughes
Click here to email
M: +27 (0) 82 693 9606

Home Loans

Hospitality market outperforming 2007 levels

Looking back on Pam Golding Lodges and Guesthouses’ last two years of guesthouse sales performance not only informs us about our market, it also shows us how our market is evolving and where the current trend is potentially taking us.

Essentially we deal mainly with two types of buyers:

Firstly, those who purchase for leisure or lifestyle purposes, where they reside on the property and generate enough income to live on from the proceeds of the business and still pay operational expenses. The main driver for these buyers is a return on lifestyle.

The second type of purchaser is an investment buyer. The main driver here is a return on investment (ROI), usually requiring at least 10 percent ROI, and these buyers rarely live on site. Investment buyers are for the most part hoteliers or hospitality companies - whether it’s a property fund or a hotel management company. Fifty-four percent of our purchasers were investment buyers and 46 percent were lifestyle buyers as shown below.

Furthermore, we show below a high impact review on who bought in the last two years, why they purchased and where they bought.

The majority of our buyers came from South Africa and they account for 36 percent of the sales price volume achieved the last two years. The German and Netherland markets reflected the next highest groups, followed by the UK market.

Sixty-two percent of our investment buyers were South African while 100 percent of the lifestyle and leisure buyers were foreigners seeking a corporate career break.

Interestingly, 38 percent of the properties we sold were in the Winelands and foreigners bought all of these except for one. Twenty-nine percent of the sales transactions were above R10 million and 21 percent of the transactions were below R5 million, placing 50 percent of the transactions in the price bracket from R5 million to R10 million. The average sales price was R7.5 million.

As for the outlook over the next two years, we expect a similar trend to continue with investment buyers probably increasing slightly. The window of time that was open for the buying of  ‘good deals’, distressed opportunities and properties that were performing below par has for the most part, closed. With the hospitality market achieving levels outperforming 2007, some owners are second-guessing placing their properties on the market, while some are considering holding on and reaping the rewards of bumper tourism seasons ahead. This will place the available stock under pressure, which will in turn increase demand and drive prices up.

We seem to be indeed at the cusp of a property market that is starting to turn. Investors and lifestyle buyers alike who are looking for a property which will provide good capital growth in the years to come and also generate a feasible return on investment should consider investing in the hospitality real estate market.

Eden Island
Monterey, 12-14 Klaassens Road, Bishopscourt, Cape Town, 7708, South Africa