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Golf Estates
Growth for Residential Golf Estate Sector
Addressing delegates at a golf summit held at Fancourt in George recently (March 30, 2009) Dr Andrew Golding, chief executive of the Pam Golding Property group said during the past five years there had been significant growth in the residential golf estate sector in South Africa.
"During this period, 50 percent of a total of approximately 30 000 residential golf estate properties – located within 66 golf estate developments - came onto the market in South Africa. Around 4 000 of these were sectional title properties.
From a regional perspective these are spread in Gauteng (around 33 percent of total stock), the Western Cape (30 percent) and KwaZulu-Natal (16 percent). Naturally some of the older and well-established estates such as Fancourt, Erinvale, Camelot, Princess Grant, Mount Edgecombe, Dainfern and Centurion have been around for more than 10 years.
During 2008 prices paid for property in golf estates ranged from R350 000 – for land in less expensive estates – to over R10 million, considerably up since 2005 when prices ranged from R265 000 for land in more affordable estates to around R5 million for houses in more upmarket estates. Similarly the middle price range paid for stock in 2008 was R680 000 to R2.5 million compared with R500 000 to R1.3 million in 2005.
While there were more than 5000 transactions per year in 2005 and 2006, dropping slightly to approximately 4700 in 2007, unsurprisingly sales volume in 2008 reduced - however this trend follows a reduction in volumes in residential estates in general rather than being a trend simply in golf estates. Sales volumes for 2008 currently stand at around 1700 - however this figure is likely to increase as more registrations filter through the deeds office.
Bear in mind that there are in essence two distinct subsets of golf estates – those located within the major metropolitan areas and which have similar characteristics to suburbs within cities, and those catering primarily for the secondary market. The performance or price appreciation of the primary metropolitan golf estates has been very much in line with the metropolitan performance of that particular area and generally the adage that such a golf estate will perform better than the surrounding suburb still holds true – sometimes by as much as 25 percent.
For golf estates outside the major metropolitan regions the picture is different – these are characterised by an over-supply of stock both in terms of undeveloped land and built homes, where sellers are unable to sell these properties due to a lack of buyers. Here there is no particular product mix or offering that is achieving better results than the others in these secondary markets – whether fractional ownership, syndication, vacant land, corporate lodges or built homes, the market is depressed in all these sectors.
So what of the future for golf estates in South Africa? Currently there are a number of trends or opportunities that prospective golf course developers and investors could consider. Firstly - retirement space. This is one segment of the market that continues to grow and is undersupplied, and likely to remain so for many years to come. While it requires specialist knowledge it represents an excellent investment opportunity.
Then there is the hamlet trend, the emergence of small town South Africa whereby people are electing to live in smaller towns for lifestyle reasons and because of their ability to conduct their work – from a technology perspective – from home or even to commute from these areas.
Many of these small towns have municipal golf courses which I believe is an opportunity for the conversion of existing municipal golf courses into residential golf estates at a number of price levels in the market. The need not necessarily all be upmarket and perhaps there is an opportunity to tap into the middle class segment of the market through these municipal courses – both within cities and in the smaller towns of the country and which are within one to two hours' driving distance from an airport.
There is also an opportunity to tap into international marketing opportunities in order to increase the current percentage of foreigners who purchase residential golf estate property. There are currently a handful of packaged opportunities for residential golf course developments which are fully zoned and ready to go to market or to be land-banked ie investing capital now for launching when the market recovers.
I believe such opportunities exist certainly in Europe and the Far East, but also specifically I Africa, where large numbers of high net worth African investors have already made significant investments in South Africa."
For further information contact Pam Golding Properties l 021 7101700 l visit www.pamgolding.co.za l http://www.pamgolding.co.za/.
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