Es­tates feel the chill of the rough

Not all is well in par­adise with a num­ber of golf­ing es­tates mov­ing from the green into the red. Lea Ja­cobs ex­am­ines the changes in the leisure mar­ket

Business Day - Home Front - - HOMEFRONT -

SA’s golf­ing es­tates have come un­der fire on a num­ber of is­sues over the years. First it was the amount of wa­ter these thirsty types of de­vel­op­ments con­sume, and then the ac­qui­si­tion of vast tracts of land pre­vi­ously ear­marked for agri­cul­tural pur­poses came un­der the spot­light.

De­spite this, the lure of the greens saw golf­ing es­tates mush­room­ing all over the coun­try. SA has been termed by many as the per­fect golf­ing des­ti­na­tion. Warm weather, large tracts of devel­op­ment land as well as, in in­ter­na­tional terms any­way, ex­cel­lent value for money for in­vestors.

Pro­fes­sional golfers from around the world jumped at the chance of de­sign­ing the ul­ti­mate course and there can be lit­tle ar­gu­ment that the coun­try now of­fers some of the best cour­ses in the world with high-end ac­com­mo­da­tion to match.

The re­ces­sion has, how­ever, se­verely af­fected sales on sec­ond homes, as well as for­eign in­vest­ment. The over­sup­ply of these types of de­vel­op­ments is be­gin­ning to haunt de­vel­op­ers.

Nu­mer­ous es­tates around the coun­try are in trou­ble. In KwaZulu-Natal alone, var­i­ous re­ports in­di­cate that 12 cur­rent and planned ho­tel and golf es­tates are ex­pe­ri­enc­ing fi­nan­cial dif­fi­culty, some col­laps­ing be­fore con­struc­tion has even started. The lat­est ca­su­alty is Sel­borne Es­tate in Pen­ning­ton, and the en­tity that owns the ho­tel and share­block devel­op­ment has been placed un­der pro­vi­sional liq­ui­da­tion. The 220ha Cotswold Downs Es­tate in Hill­crest is also in trou­ble and First Rand Bank has filed an ap­pli­ca­tion for liq­ui­da­tion.

Rael Levitt, CEO of Auc­tion Al­liance which auc­tioned Si­tari Fields, a golf es­tate in Som­er­set West on July 15 this year, said that the sale re­flected the amount of pres­sure on the leisure prop­erty mar­ket. “Leisure prop­er­ties are re­garded as non-es­sen­tial pur­chases and the hous­ing mar­ket is cur­rently driven by a fo­cus on pri­mary prop­er­ties.”

De­spite this, he says Si­tari’s 185ha site which in­cludes two ho­tel sites, ap­proval for 1 130 res­i­den­tial units as well as a planned golf course de­signed by David Frost, elicited a great deal of in­ter­est from in­vestors around the world be­fore the auc­tion. “It is quite in­ter­est­ing that while the World Cup has not brought an avalanche of in­vestors, there is now a grow­ing trickle of en­quiries from wealthy vis­i­tors taken in by the beauty and spirit of SA.”

He said that de­spite the down­turn, SA was still con­sid­ered to be a premier golf­ing des­ti­na­tion and his com­pany had seen re­newed in­ter­est from de­vel­op­ers across the world for devel­op­ment land with ap­proved golf es­tate plans.

Jac­ques du Toit, sec­toral an­a­lyst at ABSA Bank, says in­vestors have been watch­ing key devel­op­ment land with ap­proved plans, such as golf es­tates, with keen in­ter­est as the ma­jor­ity of these are be­lieved to hold con­sid­er­able long-term in­vest­ment po­ten­tial.

“The fact that the plan­ning process has been com­pleted and ap­proved, will al­low for con­struc­tion to be­gin when mar­ket con­di­tions be­come favourable.’’

He says de­vel­op­ers are at­tracted to these prop­er­ties as most of the hard work has al­ready been done, al­low­ing them to fo­cus on run­ning through the devel­op­ment phases. “Ap­proved plans will also carry the nec­es­sary ap­proval for ser­vices such as elec­tric­ity and wa­ter, which are cru­cial as­pects to any suc­cess­ful devel­op­ment.”

Levitt agrees, say­ing that two es­tates, namely the Riviera Golf Es­tate in Vereenig­ing and the Si­mola Golf Es­tate in Knysna, which were sold on auc­tion, have backed this trend and have been trans­formed by the new in­vestors into suc­cess­ful de­vel­op­ments.

“Due to the cur­rent state of the mar­ket, great deals are be­ing picked up by sec­ond de­vel­op­ers, which is why the Si­tari Fields Golf Es­tate at­tracted such in­ter­est. This is not the first devel­op­ment to be of­fered to the mar­ket, but it is the biggest auc­tion to date.”

In a world pop­u­lated by golf­ing en­thu­si­asts where money is plen­ti­ful, SA is a dream in­vest­ment des­ti­na­tion. We have the nat­u­ral re­sources, the beauty and the cli­mate as well as skilled de­vel­op­ers with a proven track record in golf course devel­op­ment. In­deed, if golf­ing es­tates can weather the re­ces­sion storm, there is a bright light at the end of the tun­nel.

Pic­tures: STEVE D’EL­BOUX

Lux­ury vil­las at Si­mola Golf Es­tate in Knysna, which was sold on auc­tion, and has been trans­formed by the new in­vestors into suc­cess­ful de­vel­op­ments. They are built around the Jack Nick­laus Sig­na­ture Course which was code­vel­oped by KatLeisure and Golf...

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