PROPERTY: Soccer Cup Boosts Guesthouse Deals
Recent Western Cape Business News
Cape Town - and the Western Cape - remains a location of choice for both local and overseas investors in hospitality establishments, particularly among those with the 2010 Soccer World Cup in mind, says Leonard Brewer, a director of Pam Golding Lodges and Guesthouses (PGLAG) – a member of Pam Golding Hospitality.
Over the past few months, PGLAG has facilitated the sale of five guesthouses to a total value of R30 million as well as a 20 bedroom boutique hotel to the value of R22 million.
Says Brewer: "Currently the market for such hospitality establishments is active, however purchasers are committing only to those with attractively priced properties with sufficient upwards potential both in terms of the business and the intrinsic property value. In other words, buyers are capitalising on the current economic climate which affords lower prices and therefore good value, particularly in instances where they perceive the business to be under-performing but with the potential to increase this, and where the property is well situated. The forthcoming Soccer World Cup provides them with an additional reason for investment."
Adds Peter Bruil who is also a director of PGLAG: "At present we are seeing good interest from overseas buyers due to the low rand combined with lower property prices. Due to the economic crisis in Europe and the United States where returns are negatively affected, international investors are looking elsewhere. They are turning to South Africa as a good alternative where sound returns can be made, given that to date we've been less affected and our outlook is less bleak. Cape Town remains attractive as it's a complete tourist destination with natural beauty and the added appeal of the nearby Winelands. For South African upcountry buyers, it is perceived as a more pleasant place to live."
Situated in Cape Town's central city, the boutique hotel was sold by PGLAG to a consortium of Russian buyers as an investment, with a local operator in charge of daily operations and marketing. Set in a good location with a sound investment value, the potential exists to significantly boost the current occupancy of 50 percent as the average for Cape Town is approximately 70 percent.
The guesthouses comprise:
The 4-Star, seven-room guesthouse (Dongola House) and owner's apartment in upmarket Constantia in Cape Town's Southern Suburbs, purchased by a British couple residing in South Africa for many years. This is a lifestyle property on a large plot with the opportunity for expansion and it sold for close to the asking price of R6.5 million.
4-Star, six-room Kingslyn Guesthouse well positioned near the new soccer stadium in centrally located Greenpoint and bought by a Johannesburg-based purchaser for his son. Realistically priced, it was sold for close to the asking price of R6 million.
4-Star, seven-room guesthouse with owner's accommodation in Somerset West in the Western Cape's scenic Boland region, purchased by a German couple. This lifestyle property affords a sound property value due to its spacious size and zoning/subdivision possibilities.
3-Star, five-room guesthouse in Somerset West sold to a Dutch buyer. With permission to expand to 15 rooms, this currently low-key operation offers very good potential.
4-star, 4-room Cape Dutch style guesthouse and large owner’s apartment in Somerset West sold to German buyers. This again is a lifestyle property with upwards potential due to the zoning, with permission to expand to eight rooms.
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