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BUILDING: New R156m East City Hotel


Recent Western Cape Business News

Stag Properties is set to launch a R156 million two phase development in Cape Town’s East City precinct, which, says Stag’s CEO, John Schooling, will be one of several projects completely transforming this area and “restoring it to its rightful place in the city’s life”.

Known as the City Edge Hotel and Suites, the new complex will consist of 166 apartment units, 40 of which will form part of a Relais Hotels managed rental pool. All the apartments will be sold under sectional title. 

Cape Town Partnership’s Chief Executive, Andrew Boraine, says, “This well-positioned neighbourhood is rapidly being transformed and I am confident that the City Edge development will help to accelerate this process and add much-needed residential space to the central city.”

The 6,700m2 site is on the corners of Mount and Caledon Streets.  It will be almost entirely covered by basement parking, above which will rise two and three storey apartment blocks.  These have been designed in consultation with Heritage officials and the architects, have ensured that the complex will have a Cape Vernacular style and an atmosphere reminiscent of the Victorian and earlier buildings of this precinct.

“The design,” said Schooling, “creates pedestrian friendly living, with many courtyards and walkways and incorporates such Cape features as pitched roofs, dormer windows, private patios and door and window mouldings.  I believe our architects have captured the correct feel and the atmosphere for this precinct.

The hotel suites will all be self-catering with electric ovens and hobs, gas stoves and microwave ovens.  They will also be air-conditioned and the complex will have full wi-fi coverage.  There will also be an Internet café in the complex.

The apartments will vary in size from 49m2 to 80m2.  Those in the hotel suites will be fitted out and decorated by Caroline Osborne of Seed Design and Schooling has promised that, although Relais Hotels will be aiming for a three star grading, the fittings will very definitely be of a four star standard.

The hotel operation will be backed up by a coffee shop for the residents’ use, sited on Caledon Street.

Work is expected to start early in the new year (2009) and to be complete in the first half of 2010. 

Alan Romburgh, Managing Director of Relais Hotels, said this week that his group is one of the most experienced in South Africa in managing this type of operation.  Founded in 1990, when they took over and totally refurbished the Beach Hotel at Kleinmond, they have now managed many such projects including the Leisure Bay Suites at Milnerton (another joint venture with Stag Properties) and the Bantry Bay Apartments, both of which were also sold under sectional title.  Both, said Romburgh, are still giving excellent returns to investors.  In all, he said, Relais Hotels have in their 18 year history been involved with many hospitality venues and have recently moved out of the Cape to take on the Casa de Sol Hotel and Resort in Mpumalanga, often described as the top resort in that province.  The group has also recently opened The Adderley in Cape Town and has been appointed to run the Harbour Edge Hotel.

“What is particularly relevant to this project,” said Romburgh, “is that Relais Hotels, through its shareholder Tourvest, handles more inbound travelers than any other South African travel management team.  This arrangement has greatly extended our marketing network, with the result that we can now make use of a client base of local and international leisure and business travellers – including many large international corporates.”

On any one day during the summer, added Romburgh, Tourvest is probably looking after just on 1,000 people in Cape Town alone.

“Anyone buying here is, therefore, assured of being able to tap into the Cape tourist market where volumes are set to rise by 10 to 12% per annum over the next three years.  An investment here will generate an annual return of 7,8 to 8% from day one.

“Buyers can, if they so wish, buy their units in VAT registered entities facilitated by the developers which will enable them to claim back their VAT payments, thereby saving 14%.”

Romburgh said that positioning the project in the three star bracket would enable it to make the most of the fastest growing category in the hotel business.

“South African three star hotels have this year enjoyed almost 70% occupancies – and their room rate is 26% up on that of 2007.  No other hotel category performs in anything like the same highly successful way.”

This fact, added Romburgh, enables Relais Hotels to predict “with some confidence” that those buying here will achieve a 7.8 to 8% return in year one and significant annual capital growth thereafter.

Schooling said that prices of the units will start at R820 000, with the top and most luxurious units costing R1,5 million.


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