The reality is the golf estate development sector has progressed into one characterised by an extremely strong supply environment, pegged at pricing levels accessible only to a very few.
HM&A believes the future growth of the sector is dependent upon making golf estate living more affordable and accessible to a broader target market range. One that is still "top end", but simply more affordable. HM&A has therefore spent much of the past 3 years devising and pursuing a development model that is able to yield everything the market has become accustomed to in terms of golf estate living, yet priced at a more affordable level. Given its brand credibility and stature, quality of the finished product is something that HM&A can not and would not compromise on. The net effect has been a scrutiny of means and methods to reduce costs, yet still yield a highly attractive investment and lifestyle offering. In terms of baseline requirements, the HM&A "It's About Life" development model focuses on 2 main factors to contribute in this regard;
The first being a focus on upgrading facilities as opposed to capitalising from scratch. There are a number of good golf courses in SA that operate as country clubs with limited membership bases and associated shoe string budgets, often with questionable future viability. From a development perspective, to upgrade an existing golf course to that required for a golf estate development costs 10-25% of the same cost to build such a golf course from scratch. However, not to say that all golf courses have such an ability to be upgraded to the standard required. When one considers that the majority of new golf courses (i.e. the course alone) cost in excess of R50m to build, the savings accrued through upgrading a suitable golf course contributes significantly to reducing the price of the properties subsequently sold to the market.
In addition, obtaining the necessary environmental, hydrological and other associated approvals to build a golf course have become extremely more onerous and expensive in more recent times (and rightfully so). Through upgrading an existing golf course many such approvals (specific to the golf course) are avoided (above and beyond the environmental benefits). Again, another significant cost saving. Existing golf clubs also tend to have an existing club house and often other sporting facilities such as tennis courts, squash courts etc. The same principal of upgrading applies in this instance as well. Some of the new golf estates boast of R50m plus clubhouses, which down the line become the financial operating burden of the homeowners subsidised by inflated levies (a profitable club house is a rare entity, yet courses owned by the HM&A team have achieved this status). However, a facility upgrade can be considerably more cost effective and again can be reflected through the price of property sold on the estate.
Secondly and in addition to the strategic focus of "upgrading" existing facilities, the HM&A development model focuses on areas and sites that to have viable primary and secondary lifestyle product potential. To date, most estates in SA rely on either primary residential demand (Dainfern, Mt. Edgecombe, Silver Lakes, Woodhill, Blue Valley, Steenberg etc.) or secondary lifestyle demand (i.e. for the most part holiday home based estates such as Arabella, Pinnacle Point, Zebula etc.). Through offering both a primary and secondary lifestyle product, one is able to diversify the potential demand market and in doing so maximise viability i.e. attract more buyers. As such, the "It's About Life" development model looks only at sites that are typically 2nd or 3rd tier metropolis, but also have very strong tourism potential. The creation of an "It's About Life" golf estate in such an area therefore playing an import role in creating or enhancing the town / area as a tourism investment destination, which in turn drives investment and associated levels of property appreciations ie. affordable market entry levels with high growth and yield potential.
HM&A currently has two "It's About Life" golf estates in the approval process, with anticipated launch towards mid-end 2009. One in Mokopane, being in the heart of the Platinum industry and a very picturesque bushveld region easily accessible to Gauteng. The other being in Mpumalanga, on the upper, most pristine reaches of the Vaal River and within 2 hours of Gauteng. A limited number of other "It's About Life" developments are in planning.
From a property product perspective, the "It's About Life" developments comprise a unique marriage of primary residential and second lifestyle (holiday) homes. In terms of primary residential, the estates offer tradition golf estate product, as well as "Senior Village" offerings, enabling retired or semi-retired persons to reside in a secure, safe, golf estate environment at a substantially lower cost than has been the case to date. From a second lifestyle product perspective, again both a traditional product, as well as a strong focus on "rental pool lodge" product that enables investors to generate income from such assets when not being used i.e. supporting the financial justification in the holiday home. From a price perspective, HM&A anticipate launching on "It's About Life" golf estate development products in the region of R250-350k per stand and fully finished product at around R1m.
Copyright 2011 © Hayes, Matkovich & Associates
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