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
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.
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...