09 Nov 2012
As the year winds down and many South Africans prepare for the their long awaited holiday to our country’s stunning coastal regions, the lure of the sun, sea and carefree lifestyle will compel many property investors to consider purchasing a holiday home.
So says Adrian Goslett, CEO of RE/MAX of Southern Africa, who adds that because of the relaxed lifestyle and natural beauty that the coastal regions offer, properties there will always remain in high demand among a broad spectrum of buyers that are looking for a holiday getaway, the ideal retirement residence, or a lifestyle that is far removed from the hustle and bustle of city living.
He says while the leisure property market has remained fairly flat in the aftermath of the recession, there are certain areas along South Africa’s coastline that continue to show strong demand.
"Due to the topography of the coastal areas there is limited space to build, and, in turn this means that there are a limited number of properties available to buyers."
Based on the fundamental principle of supply and demand, he says the limited number of properties available along the coastline ensures that these areas are generally sought-after the world over, and South Africa’s coastal properties are no exception.
"A well-chosen and well-maintained holiday home at the coast that is in a good location will often prove to be both a relaxing family getaway spot and sound investment over time through solid appreciation.”
He says that considering the exorbitant cost of coastal holiday accommodation, particularly during the peak seasons, investing in a holiday home could make financial sense, especially if the owner holidays in the same area year after year. “The money spent on the holidays could be used to pay off the bond and in 20 years or less, this fully paid-for holiday home could be their no-cost retirement residence.”
Another benefit of purchasing a holiday home is that it can generate an income. A well-positioned holiday home can be rented out during the year or over the holiday seasons when the owner is unable to make use of the property. Income generated by rentals will greatly contribute to covering the costs of owning and managing the property.
Buyers should, however, bear in mind that there may be some implications of managing a property in a different province and the services of a professional rental management company might be required. A good rental agent will conduct regular inspections and screen, select and place tenants as well as collect rental money.
Goslett says that as with any property purchase, the same fundamental principles apply when considering buying a holiday home. For example, the location of the property remains vital from an investment perspective as the location in which a holiday home is situated will have an impact on the capital appreciation of the property and it will be an important element to attracting tenants.
“Properties with views of the ocean or mountains are highly sought after, as are those within walking distance to the beach and amenities such as shopping malls, entertainment and medical facilities.”
He points out that holiday home buyers should also consider their financial position, paying particular attention to the acquisition costs such as a deposit, transfer fees and conveyancing fees, as well as the impact of possible interest rate increases, ongoing monthly maintenance, security and insurance costs and the rates, taxes and utility tariffs in the area.
“Prospective holiday home investors will be able to ensure that they make a solid investment decision by researching the area and seeking out a property expert that will be able to provide them with reliable information and sound advice,” says Goslett.
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