Invest in resilient aparthotels

Serviced apartmentstyle hotels are showing market resilience as property investments despite a tough economy.

SA has the highest concentration of aparthotel developments in Africa.

HTI Consulting MD Wayne Troughton says recent hospitality sector figures highlight an increase of 4% in occupancy at five-star hotels in Cape Town, where many aparthotel operators are located, over the past year. The average daily rate (ADR) has grown by 2.6%. Four-star sector occupancy has increased by 1.6% and its ADR by 2.2%, even though new hotels entered the market.

“Cape Town’s tourism resilience and attractive rate of return are making property buyers move to other nontraditional investments, like buying an apartment in a hotel and then leasing it to the hotel to enjoy a good monthly return,” says Troughton.

At Green Point’s

Romney Park Luxury Apartments, previously a five-star hotel, furnished apartments are now sold following a multimillionrand development in 2018. These units are leased to the on-site hospitality management company

The Stay Collection to operate as self-contained hotel apartments with fivestar amenities.

“Our owners of onebedroom apartments have seen an average occupancy rate of 77.1% for the past 12 months, with an average monthly revenue of R34,026, including VAT,” says The Stay Collection director Heino Reuling. The average occupancy rate for a two-bedroom unit is 75.9% and the average monthly revenue R45,170. Three-bedroom apartments have an average occupancy rate of 53.6% and bring in an average monthly revenue of R42,476.

Troughton says the

12J investment option, derived from Section 12J of the Income Tax Act, has boosted the aparthotels trend because a tax rebate is offered to investors in apartments that operate as hotels.