Pam Golding Properties Group Newsletter
PGP logoDate: August 2012

Hospitality Property

Lucrative guesthouse opportunities abound in prime tourism hot-spots of Knysna and Plettenberg Bay

Increasing number of tourist arrivals – even throughout the year

New legislation regarding foreign loans

Peter Bruil, MD of Pam Golding Lodges and Guesthouses talks to Jan Schliemann of Schliemann Incorporated Attorneys

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

Robertson - R7,9 million

Charming 4 Star Guesthouse for sale

Award winning, well established and profitable 4 star Wellness Retreat. This significant establishment is situated on a 16 Ha land with residential, hospitality and agricultural components, located just 4km outside of Robertson, only 1 hour and 45 minutes from Cape Town. The Guesthouse boasts with eight generously appointed rooms, all en-suite and offering magnificent views.











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

Stellenbosch - R8,95 million

Beautiful thatched jewel on a 912 m2 plot – 9 rooms

Located in the University area of Stellenbosch, the Guesthouse is within walking distance of the historic town centre and is quietly located in a leafy suburb around the corner from the University Campus. While the outside is all thatched, the emphasis inside is on style, modernity and function: natural materials, modern fittings in bathrooms and high-quality orthopaedic beds. Combined modern design and an African atmosphere.

The establishment enjoys many return clients and attracts visitors from across the globe as well as parents of students, visiting lecturers and corporate clients all year around. Average room occupancy is close to 70% pa. This profitable three star guesthouse offers a very attractive yield to an investor.

The Property boasts a total of 8 guestrooms plus a separate owner’s apartment comprising two bedrooms, full bathroom, study, storage, lounge and kitchen. Separate dining / lounge area for the guests and a laundry area make this a complete package.

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


Cresta - POA

Luxurious African Boutique Hotel

This unique boutique hotel offers a tranquil getaway near the busy hub of Cresta, Johannesburg. Lush manicured gardens with an abundant bird life and a rock splash-pool complement the main house (dating back from the 1900s) and African-style cottages – creating a luxuriously laidback bush lodge feeling. The property boasts 12 luxury en-suite rooms (with space to add 2 more), conference facilities, a bar and restaurant, lounge areas, fully equipped kitchen, laundry, staff quarters and ample parking.


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

Gordon's Bay - R16 million

With unspoilt panoramic views over False Bay

This Gordon's Bay guesthouse offers peace and tranquillity on your own private terrace, in the outdoor swimming pool or amidst the beautiful gardens. Only 30 minutes from Cape Town International Airport and 3 minutes from the N2 towards the Garden Route. This property is rated 4 stars and has a land size of approximately 12000m². This property has 6 gorgeous rooms, which are all en-suite. All the rooms have the following facilities: Private entrances, en-suite bathrooms with showers, ceiling fans, underfloor heating, coffee and tea making facilities, mini bars, DSTV, safes, WLAN and internet facilities.

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

Home Loans

Lucrative guesthouse opportunities abound in prime tourism hot-spots of Knysna and Plettenberg Bay

Increasingly popular as a holiday destination among both domestic and international tourists, the scenic Garden Route town of Knysna has evolved into a burgeoning resort which offers entrepreneurs rewarding hospitality opportunities – particularly in the buoyant guesthouse market, says Ling Dobson, area principal for Pam Golding Properties in Knysna and Plettenberg Bay.


Knysna Guesthouse - R16,5 million

“Approximately 70km from George airport, Knysna has a population of approximately 65 000 which increases to some 110 000 in season, while Plett’s residential population of about 40 000 also rises to about the same number during season. Renowned for their own unique beauty and quaintness, these areas are seeing more and more international tourists visiting throughout the year. We constantly see visitors wandering through the streets – the restaurants are busy and there is a buzz about the towns. Whereas previously you could walk into most restaurants after high season, bookings are a must and many guesthouses are even turning clients away due to the demand. In 2012, Conde Nast Travel Magazine ranked Knysna as runner-up on its World’s Best Cities list, which further boosted this as a prime tourism destination.”

Dobson says during the summer season visitors are predominantly international as those in the northern hemisphere travel south to escape the cold winter months. In low season from May to September, visitors are mainly South Africans, many of whom stay in self-catering establishments which are more cost effective for families. “However,” she says, “there are other overseas markets that travel here during our winter months, such as the Middle East, Italy, Brazil, Holland (year round tourists), India and China.”

Historically, business opportunities in the Knysna and Plett areas have tended to be limited by their distance from major cities. Knysna’s industrial area caters mainly for the wood industry and other light industries, while the town has in recent years become a mecca for the car collector fraternity, having hosted the International bi-annual MG Indaba 2014. “Attracting car enthusiasts from all walks of life, Knysna is rapidly becoming an international classic car destination,” says Dobson.

She says from a hospitality perspective many guesthouses in these areas have been established by those retiring to the Garden Route or relocating for a change in lifestyle and then finding they can derive an income from paying guests. Today there are over 400 accommodation establishments - inclusive of hotels in Knysna, Sedgefield and Plett, providing in excess of 6000 bed nights. These comprise small three and four bedroom B&B’s, with a further market segment offering four to seven bedroom guesthouses, also in the 3 Star, 4 Star and luxury category - which includes high quality boutique facilities.

“While hotels require a year-round occupation for a viable business, guesthouse infrastructure and overheads are lesser, making it easier for owners of these establishments - who also live on the properties - to offer accommodation in the peak periods and ride out quieter periods during the year. As there are no plans for any more large hotels in the area, with an ever-increasing tourism market, there is definitely room for expansion of the guesthouse offering, particularly well-run establishments which provide good service. Many visitors also book out houses for accommodation over the holiday season, and during the past year (2014) our holiday rentals reflected an increase in excess of 30 percent over the previous year, with the exchange rate also contributing to growth in this sector,” she says.

Dobson’s advice for those looking to acquire a B&B or guesthouse is that it is better buy an existing property as starting from scratch is not easy and requires considerable marketing spend, while there are a number of viable establishments for sale in the area for various reasons.

“If you own the property outright then the income derived during the summer months should be sufficient to sustain the slower off-season months. It is therefore advisable to purchase the property in cash so that the income is not required to pay off a bond – bearing in mind that the banks are generally not providing bonds on guesthouses; instead they take into account the value of the residential property. In terms of location, an excellent position is either on the beach on Leisure Isle (Knysna) or in Keurbooms (Plettenberg Bay), or very close to the CBD.”

She says it is important to consider the number of rooms. In 3 Star establishments, from seven rooms and more tend to translate into lucrative returns, whereas it the luxury category this can be achieved with as few as four to five rooms. “It is imperative to maintain ongoing marketing as well as an innovative and inviting website. Register with the Department of Tourism, work with tour operators and travel agents for recommendations and network with other establishments to facilitate referral business. Also, ensure you know the town and all the restaurants and facilities available.”


Knysna - Yellowwood Lodge R9,9 million

Pam Golding Properties is currently marketing two 3-4 Star guesthouse opportunities which enjoy excellent positioning, are well-priced and offer opportunities for sound return on investment of 9-11 percent and potential for expansion. The first comprises two adjacent guesthouses with a thriving turnover, positioned within walking distance of Knysna CBD with its eclectic restaurants, coffee shops and shopping malls, waterfront and museums. The joint establishments comprise Art Deco, which includes a well-appointed restaurant that could be used for functions and conferences, a second guesthouse – Beauchamp, and a separate three bedroom owner/manager’s cottage with its own private garden with deck and scenic views towards The Heads, all marketed at a total selling price of R16.5 million. The property is visible from the N2 and also has spectacular views over Knysna lagoon.

Yellowwood Lodge, steeped in history and a few minutes from the centre of Knysna, is a charming, restored heritage guesthouse with 14 guest rooms and 12 bathrooms (11 en suite), with a secluded swimming pool and spacious grounds of 3450sqm, priced at R9.9 million through Pam Golding Properties.

Renowned for its lush forests, tranquil lagoon, landmark sandstone cliffs - The Heads, whale watching and world class golf courses, picturesque Knysna is also well known for its festivals including the Oyster Festival, Literary Festival, Pink Loerie Mardi Gras & Arts Festival, car show and host of sports events - including athletics, mountain biking, cycling and the Jaguar Simola Hill Climb, among others. Plettenberg Bay is host to Plett Bubbly Festival, Dr Evil Cycle Race and Plett Rage.

For further information contact Pam Golding Properties Knysna on 044 3825574 or email knysna@pamgolding.co.za or Pam Golding Properties Plettenberg Bay on 044 5332103 or email plettenbergbay@pamgolding.co.za.

Foreign loans, Reserve Bank approval & pitfalls - get your house in order

Peter Bruil, MD of Pam Golding Lodges and Guesthouses in discussion with Jan Schliemann, of Schliemann Incorporated Attorneys

It is common practice for a South African resident (be it a company or a natural person) to borrow money from a non-resident, or for that matter, a non-resident to lend money to a South African entity or person.

This made ultimate commercial sense for many years, particularly with non-residents not having had to pay income Tax in South Africa on interest earned and/or accrued.


Interest Taxed
As of June 2013, interest is, however, taxed in South Africa in the hands of non-residents in the form of a withholding Tax of 15% to be retained and paid to SARS by the relevant borrower, similar to withholding Tax on Dividends.

Recording of the Loan
What happens more often than not is that monies are introduced into South African from a non-resident, and at the time of introduction into South Africa, it is recorded as either “Capital Investment”, “purchase of immovable property” or some other description, where in fact it ought to be a “loan”.

Description
When the monies are introduced and in the heat and excitement of the moment, the description of the purpose for the monies introduced may seem technical or irrelevant, the consequences are not thought through thoroughly, or the parties may intend to rectify matters in due course.

The fact is that monies cannot be paid to a non-resident by a resident in respect of a loan without the Reserve Bank approval to do so, and this will only be obtained if the original loan is/was approved.

The Risk
The risk is that over time the parties forget to obtain the necessary Reserve Bank approval for the loan, or worse yet, the relationship breaks down between the parties, and by the time the relationship is disturbed (possibly by death or a dispute between the parties), it is too late. Enormous costs are incurred in an attempt to rectify the situation by bringing an application for retrospective approval, which fails if both parties don’t cooperate.

It is not only the substantial costs involved, or the drawn out procedure and delays that are experienced that should be avoided. As is borne out in the case of Pratt (Pratt v First National Bank [2008] ZA SCA 92 (12 September 2008), the High Court held that the lender was unable to claim back the unauthorised loan without the Reserve Bank approval. Thus in the event of a dispute, the lender stands the risk having his/its claim against the borrower dismissed due to the fact that the approval of the Reserve Bank was not in place.

Prior Approval
While it is possible to obtain the Reserve Bank’s retrospective consent for a loan by a non-resident to a South African resident, (at a cost and waste of time), it is still, and always is, the best policy that the Reserve Bank’s approval be obtained from the beginning. After all, that is what the Act and Reserve Bank rules prescribe.

Conclusion
For those who do not have their house in order, it is strongly recommended that this is done without delay.


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