Kwazulu Natal Golf Estate properties - lifestyle choice or smart investment? (Or both?)
Our guest editorial this month is by Dr. Andrew Golding, CEO of Pam Golding Properties International. Golf Kwazulu Natal is proud to have a number of Pam Golding Property franchises as members of our golf marketing alliance. He has very kindly agreed to share some thoughts on the state of the golf estate property market in Kwazulu Natal.
Good reason to invest in golf estate living in KwaZulu-Natal by Dr. Andrew Golding, CEO Pam Golding Properties
Over the past 20 years golf estate living has become well engrained as a desirable property genre choice for many South African as well as international home buyers. Principally, there are two main motivating factors driving investment in real estate around a golf course – security and a sense of community. These days it is rare to find a purchase made purely on the golf offering itself, although this could be a differentiating factor when making a final purchase decision between two or more estate offerings. More significantly though, it is also not difficult to perceive the benefits of an environment in which children are able to play and ride their bicycles with relative freedom, where the need for high walls around individual homes is negated and in which there is a sense of open space and freedom – and simultaneously, security. As urban boundaries continue to spread, so the viability of residential estates within reach of those boundaries improves. What has also recently contributed to the success of golf estate living is the virtual office scenario employed by so many entrepreneurs and small to medium business owners, as this enterprise is able to be based anywhere and enable a lifestyle which was perhaps originally available only for the leisure orientated home buyer . As business continues to decentralise and offer opportunities for remote management, access to schooling has proven the next defining attribute, as families look to take advantage of a less urban, traffic free lifestyle, without sacrificing the benefits of big city education. Clearly one of the key factors integral to the success of a golf estate development is location. If the development is for primary residential purposes, its commuting distance from a major business centre, proximity to schools and shopping facilities are obviously important factors, while a more leisure focused estate would need access to a variety of leisure amenities, not necessarily on but located close to the estate itself. Estates that are arguably positioned for the best possible success are those that offer a solution both to the primary residential and leisure market. There are basically two distinct subsets of golf estates – those located within the major metropolitan areas and which have similar characteristics to conventional suburbs within cities, and those catering primarily for the secondary or leisure market. The performance or price appreciation of homes in 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 in fact perform better than the surrounding suburb still holds true. According to Lightstone Statistics, which looks at a basket of properties that have sold more than once in a given time period ( in other words looking at resale value ), freehold property in a number of popular, well-known golf estate developments in KwaZulu-Natal has shown real resilience and a rebound in capital growth following the 2007/08 recession. From 2010 to 2015 to date freehold property analysed in this way, has increased by 26.2 percent in Mount Edgecombe Golf Estate, 50.3 percent in Zimbali Coastal Resort and 179.4 percent in Simbithi Eco Estate. The well-established and fully developed Mount Edgecombe Golf Estate, with its world class golf courses, clubhouses, tennis courts, squash courts, bowling greens, walkways and cycling paths, is popular mainly among locals from surrounding areas looking for security and a permanent, quality way of life, as well as a few ‘swallows’ who spend six months of the year in South Africa and the rest in , for example , Europe. The bulk of these are 35-45 years of age with young families, further attracted by the convenient location close to all amenities. There are also investors seeking a sound rental income stream, where for example a home acquired for R3.5 million could achieve rental income of R18 000 to R20 000 per month. This is coupled with the capital growth to get total investment return, which over the past year approximately has been in the region of eight percent, with consistent demand contributing to increased year on year growth.
This is a very well managed estate, with the golf club and estate run as two separate entities, both drawing their own income and running their own finances. Currently about 40 percent of residents are golfers. The estate is a mix of freehold and sectional title units (apartments, simplexes, duplexes and duets), starting at R2.5 million ranging up to R34 million, and with an average price of R5.5 million. Situated on the burgeoning North Coast of KZN conveniently near King Shaka International Airport and major economic hubs, Zimbali Coastal Resort is a premier 700-hectare coastal and golf estate situated along a pristine 3.5km beach bordering Ballito. Launched in 1996 and having exceeded the 90 percent mark for completed properties, Zimbali will finally be home to 800 freehold residences and 400 sectional title units. In addition to world-class facilities for the benefit of its residents, Zimbali also boasts an 18-hole Tom Weisskopf championship golf course – rated among the top 30 courses in South Africa - and two 5-star Fairmont Hotels. Lush vegetation and an abundance of indigenous wildlife and an unspoiled coastal forest environment complete the picture.
Residential property prices in Zimbali have escalated in some cases by up to 1000 percent since 1996 and vacant land (including re-sales) is now scarce. New sectional title development units at entry level were up 33 percent over the past four years, for example ‘Sanctuary’ sold at R2.995 million per unit in 2011 and is now reselling at just under R4 million. As all land options in Zimbali – including re-sales, have now been exhausted, this will bode well for capital growth of existing homes, in a market that remains buoyant in terms of demand. In addition, Zimbali has established itself as one of South Africa’s most exclusive brands in property and resort living and is highly regarded country wide and abroad. Today developed homes sell from its entry level of around R3.7 million up to R10 million for a sectional title unit and R7 million for a single residential home up to R38 million for beachfront homes, with the average selling price of approximately R8.5 million. Zimbali attracts affluent home buyers who are from around the country, predominantly from Gauteng (60 percent), followed by KZN (30 percent), other regions (five percent) and the balance international – being mostly returning expatriates. The resident owner percentage has risen from 30 to 50 percent due to the growth and popularity of the region and the new airport, which allows Gauteng based buyers to relocate their families and commute on business. Many holiday homes are still being purchased here with retirement in mind, while younger, family oriented buyers are very much in evidence. According to Lightstone, 74 percent of recent buyers are 18-49 years, with the largest percentage (46 percent) being 36-49 years.
For the buy to let investor, long term capital growth is taken into consideration in conjunction with gross rental yields of approximately eight percent both for holiday letting or long term letting. High season rates can peak to R5 000 per day for three bedrooms (and up to R7 000 per day for four bedrooms. Entry level units of R4 million can generate over R300 000 per annum in gross earnings with more expensive homes in the region of R500 000 to R600 000 per annum. Long term rentals for entry level units start from R20 000 per month and can range up to R50 000 for larger homes. With a fully subscribed and financially healthy golf course which enhances residential capital growth and appeal in the marketplace, Zimbali offers a huge range of amenities that apart from the hotels, clubhouse and restaurants include two spas, tennis, squash, gym, cricket pitches, soccer, volleyball, basketball and netball, among others. Also in the greater Ballito area of the North Coast, in nearby Simbithi Eco Estate, demand far outstrips supply due to limited land available for new sales - activating a healthy resale market. With prices being achieved mainly between R3 million and R7 million – and even up to the R10 million mark, free standing homes in this estate are in highest demand while sectional title homes on the eco-estate are fetching prices between R2.5 million and R5 million. Currently the most expensive freehold home on the market is priced at R38 million for a house approximately 1000sqm in size, set on an erf of 2918sqm. Resale vacant stands available for purchase at present range from R1.85 million for 1 100sqm to R6.8 million for 2176sqm.
Buyers are predominantly aged 30-50, mainly locals and from other regions such as Gauteng, Mpumalanga and Free State, plus expatriates returning home from countries such as the UK and Canada and a small number of ‘swallows’ staying for the summer months. Again, young families are increasingly turning to this kind of estate environment for security and lifestyle benefits, with a designated children’s clubhouse and this being a pet-friendly estate further adding to the appeal. Some 18 percent of residents are golf members. Simbithi will eventually comprise a total of approximately 1 850 units as well as six community centres with a range of sporting facilities – including an equestrian centre, dams for fishing and a world-class golf course with clubhouse. There are currently 461 completed freehold homes on the estate with another 101 under construction. Two off-plan developments named Fish Eagle and Jacana are in progress, with construction of the former underway and the other currently marketed. With no development land available on the estate as from April 2014, there are some re-sale stands available for purchase, priced from an entry level of R1.99 million. On the KZN South Coast, San Lameer is South Africa’s own tropical paradise, with something to offer the entire family as well as having direct access onto two magnificent Blue Flag beaches. This is set on a 169ha nature conservancy, landscaped with 620 privately owned luxury villas surrounding the 18 hole professional golf course, and with a world class hotel. With the perfect year round climate, this is a dream location for golfers, beach lovers and families, and includes jogging and cycling routes, beach and dune trails and canoeing. There are two swimming pools at the hotel with a restaurant, tennis courts, squash courts, bowling greens, spa and library further attractions.
Buyers – mainly from Gauteng as well as locals – look to acquire property for short leisure breaks, longer holidays or for retirement in a secure and quality environment. Some owners rent out their properties for short term rental income, for example a three bedroom villa let out during school holidays from December 2014 to January 2015 achieved total rental income of R152 750, . Income can be significantly further increased if the property is rented out on weekends and other periods during the year. In regard to capital growth of homes in San Lameer, in 2010 sectional title sold on average at R1.253 million compared with R1.399 million in 2014, reflecting growth of 11.65 percent. Freehold properties sold on average at R837 000 in 2010, which escalated to R2.138 million in 2014. Over the past 12 months to September 2015, the price range for sectional title properties sold was between R230 000 and R2.75 million with an average price of R1.327 million, while freehold sales ranged from R500 000 to R18 million with an average selling price of R4.76 million. Resale stands currently start at R1 million for about 600sqm, with new stands being sold from R2.5 million to R3 million for 940-1100sqm.
