Why buy a house when you can rather purchase a game reserve lodge? And why buy an apartment when you can own a hotel room?
Buying a hospitality property not only comes with a number of advantages but is also a means of property investment that is gaining popularity in South Africa.
If you want to be the owner of an apartment in a hotel on the Atlantic Seaboard or a lodge in a Big 5 game reserve, you actually can – and at a cost that may surprise you.
Wayne Beekman, director of leisure development and property management company Beekman Group, says there has been a notable emergence of sectional title ownership opportunities in South Africa’s hospital and tourism sector in recent years. Such ownership offers a modern and advantageous alternative to traditional real estate investments.
Although each purchase will have different options for ownership, most of them allow you to use the property for a certain number of weeks a year. The rest of the time it is booked by tourists and travellers as per normal holiday rentals. However, you get a share in the profits of the establishment and do not need to deal with the servicing of the property as that is also managed by the establishment.
Some options allow you permanent residence of your property in a hospitality resort but will obviously come at a higher price.
Beekman explains further that sectional title ownership allows individuals to purchase a unit within a holiday resort property or development, and when you do so, you buy an undivided share of the common property – usually a one- to four-bedroom villa – on the established resort property.
For example, such ownership at one of the company’s resorts, whether of a complete unit or an individual hotel suite, allows each owner to possess a title deed to the unit.
“Essentially, you own the villa or hotel suite outright, and can choose to either rent it out to prospective holidaymakers or take full advantage of your holiday home for up to 14 weeks a year, while enjoying the use of all on-site facilities at discounted rates.”
An online property search reveals a number of other hospitality property buying options:
Pam Golding Properties is marketing five guest room lodges in the Welgevonden Game Reserve in Limpopo. The prices range from R645,000 to R1,6m. Each room has an individual design and outside shower. This share block is essentially for family, with international owners catered for by having two-week blocks together. Each owner gets to stay in their room for four weeks a year and receives an 8.33 percent share of the five-bedroom lodge.
RE/MAX Living is marketing a one-bedroom, fully furnished and equipped apartment in the President Hotel in Bantry Bay. All suites in the hotel form part of the hotel's rental pool and cannot be bought out of the rental pool, lived in permanently, or rented out privately by the owner. Owners can use the suite for 30 days per year, free of accommodation charges. For the period not in occupation, the owners share in the monthly net profits of the hotel's rental pool. This property is on the market for R1,65m.
For investors looking for some luxury, Knight Frank is marketing a one-bedroom apartment in the five-star Taj Hotel in the Cape Town city centre. The property is selling for R4,995m and includes the title deed of a secure underground parking bay.
Beekman says some of the key factors that have contributed to the resurgence of sectional titles within the property investment sector include remarkable returns, flexibility with regard to usage, no-hassle ownership and maintenance, stability and transparency, additional holiday benefits, and the potential for appreciation.
“While property has historically been perceived as one of the more stable investments for those looking to grow their wealth long-term, an unpredictable economy, exploitative sellers, and booming inflation rates have introduced a new fear factor to the prospect of property ownership, with many investors being driven into negative figures when it comes to their return on investment.
“On the other hand, investing through a sectional title at a holiday resort provides an unparalleled sense of security over your investment, as well as more stable returns, often as high as 12 percent annually.”
Sectional title ownership also offers greater flexibility in terms of property usage as owners typically have the freedom to utilise their property for personal stays, rent it out for income generation, or even sell their ownership share if desired. This versatility, he says, empowers investors to adapt to changing circumstances and market dynamics, making the investment more adaptable and potentially more lucrative.
Furthermore, the day-to-day maintenance of the property is managed by the agent.
“By owning a holiday property, investors may also gain access to a curated bouquet of holiday benefits, which may include free travel services, discounted facilities, exclusive deals, personal assistance, and a varied number of holiday exchange options, and more.”
Beekman’s offerings include:
- Making personal use of your unit for a maximum of 14 weeks per year
- Contributing your personal usage weeks to the rental pool in order to earn additional rental income
- Exchanging your personal usage time for a holiday at one of 4,000 resorts worldwide.
IOL Business