So says Dr Andrew Golding, chief executive of the Pam Golding Property (PGP) group, who adds that "during this period, 50% of a total of approximately 30,000 residential golf estate properties located within 66 golf estate developments, came onto the market in South Africa".
"Around 4,000 of these were sectional title properties. From a regional perspective these are spread in Gauteng (around 33% of total stock), the Western Cape (30%) and KwaZulu-Natal (16%). Naturally some of the older and well-established estates such as Fancourt, Erinvale, Camelot, Princess Grant, Mount Edgecombe, Dainfern and Centurion have been around for more than 10 years," says Golding.
During 2008 prices paid for property in golf estates ranged from R350k for land in less expensive estates to over R10m. This is considerably up since 2005 when prices ranged from R265k for land in more affordable estates to around R5m for houses in upmarket estates. The middle-price range in 2008 was R680k to R2,5m compared with R500k to R1,3m in 2005.
Golding says there were more than 5,000 transactions per year in 2005 and 2006, with a slight drop to approximately 4,700 in 2007, and unsurprisingly, sales volumes in 2008 declined. However, this trend follows a reduction in sales volumes of residential estates in general rather than being a trend only affecting golf estates. Sales volumes for 2008 stand at around 1,700, he says, but this figure is likely to increase as more registrations filter through the deeds office.
"Bear in mind that there are in essence two distinct subsets of golf estates – those located within the major metropolitan areas which have similar characteristics to suburbs within cities, and those catering primarily for the secondary market. The performance or price appreciation of 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 perform better than the surrounding suburb, still holds true, sometimes by as much as 25%."
Golding says for golf estates outside the major metropolitan regions the picture is different. These are characterised by an oversupply of stock both in terms of undeveloped land and built homes, where sellers are unable to sell their properties due to a lack of buyers. Here, he says, there is no particular product mix or offering that is able to achieve better results in these secondary markets – whether fractional ownership, syndication, vacant land, corporate lodges or built homes - the market is depressed in all these sectors.
So what is the future of golf estates in South Africa? Golding says there are currently a number of trends or opportunities that prospective golf course developers and investors could consider. The first is retirement space. This is one segment of the market that continues to grow and is undersupplied, which is likely to remain the case for many years to come. He says that while investing in this market requires specialist knowledge, it represents an excellent investment opportunity.
Then there is the 'hamlet' trend. This is the emergence of 'small town' South Africa where people are electing to live in smaller towns for lifestyle reasons, and with new technology are able to work from home or have rather chosen to commute.
"Many of these small towns have municipal golf courses, which I believe is an opportunity for the conversion of existing municipal golf courses into residential golf estates at a number of price levels in the market. They need not necessarily all be upmarket and perhaps there is an opportunity to tap into the middle class segment of the market through these municipal courses - both in cities and smaller towns, which are within one to two hours' driving distance from an airport."
"There is also an opportunity to tap into international marketing opportunities in order to increase the current percentage of foreigners who purchase residential golf estate property. Currently there are a handful of packaged opportunities for residential golf course developments, which are fully zoned and ready to go to market or be land-banked i.e. where capital is invested now for launching when the market recovers. I believe such opportunities exist, certainly in Europe and the Far East, but also specifically in Africa, where large numbers of high-net worth African investors have already made significant investments in South Africa," says Golding.
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