Property development in South Africa

SA_Prop_Dev rev A_ENG_02 October, 2015
A business proposal for tourism
and recreational property
development in South Africa
WORKING TOGETHER TO ACHIEVE EXCELLENCE

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Tourism and recreational
property development
LHYRA/SABI @2015 SA_Prop_Dev rev A_ENG_02
South Africa: a developing country
An ideal tourist destination
Future prospects of the country
A snapshot on selected properties market
Conclusions
Our services
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14
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The developed world recognizes South Africa as a major
economic and political power within Africa.
The financial and banking system is one of the strengths of the
South African economy: the Global Competitive Index assigns
the first place for the quality of regulation of the stock market,
the second for the soundness of banks and the third for the
quality of financial services.
South Africa’s GDP increased from 3,1% in 2010 to 3,6% in
2011 to 2,5% in 2012 and 2,2% in 2013 helped by stronger
external demand and looser fiscal policy.
South Africa is the only African country that is a member of G20,
an international forum for the governments and central bank
governors from 20 major economies.
Thanks to the sustained growth of GDP between 2004 and 2007
(when it touched the tip of 5.5%), in 2010 South Africa has been
included in the group of the new emerging powers, identified by
the acronym BRICS.

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BRICS
BRICS is the acronym for an association of five major emerging national economies: Brazil, Russia, India, China and
South Africa. The BRICS members are all developing or newly industrialized countries, but they are distinguished by their
large, fast-growing economies and significant influence on regional and global affairs.
The five BRICS countries today represent over 42% of the world population, 25% of the total area of the Earth, 20% of
the gross world product and about 16% of international trade.

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How economy sectors contribute to GDP in South Africa

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South Africa is a popular tourist destination
Since the demise of apartheid, international tourist arrivals have surged, making tourism one of the fastest growing
sectors. The tourism industry is well-established with an exciting sector of emerging entrepreneurs. The country is popular
for adventure, sport, nature and wildlife travel and is a pioneer and global leader in responsible tourism.
In 2013 were registered 14 million of arrivals.

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Main tourist attractions are Kruger National Park, Cape Town and Cape Peninsula, the Winelands, Blyde River Canyon,
Panorama Route, Durban Beachfront, the Kalahari Desert, the Garden Route, the Drakensberg and many others.
Kruger National Park
Cape Town
Winelands
Kalahari Desert
Drakensberg
Durban Beachfront
Blyde River Canyon
Panorama Route
Garden Route

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South Africa is a fast growing country with a steady grown path. There is a plenty of natural resources and the low labor
costs can fuel this growth.

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Workforce and employment people is still continuing to grow in South Africa (at a greater ratio than in rest of the world)
and this will continue to boost soil usage and houses price.

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From a financial standpoint, the long term housing prices will increase, and the midterm trends will support this growth.

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A snapshot on selected property markets

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We focused our analysis based on historical data updated to Oct. 2015 on three specific areas that were also the target
of our recent site inspections we performed: Lydenburg, Durban and Cape Town.
These three cities could be considered the ideal junctions of a tourism and recreational property proposal in South Africa
as these are placed in strategic areas to enjoy year after year the country while the investment grows steadily.
Our focus areas
Cape Town
Lydenburg
Durban

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Trends and Statistics

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Sale vs Rent
RENTSALE
Examples from internet research on October 2015
Lydenburg
Low construction and purchasing prices. High rental prices compared with purchasing.
Very low purchasing prices compared with Europe.
We can consider an average of 8 -10 years of rental fee to payback the property purchase.

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Sale vs Rent
RENTSALE
Durban
Low construction and purchasing prices. High rental prices compared with purchasing. Very high rental request due to
Universities and beaches.
Very low purchasing prices compared with Europe.

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Sale vs Rent
RENTSALE
Cape Town
Low construction and purchasing prices even this is the most expensive area in South Africa. High rental prices
compared with purchasing.
Low purchasing prices, if we exclude the Cape Town downtown, compared with Europe considering that this is one of
the most beautiful city in the World (*).

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Conclusions

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Conclusions
Although during the last 20 years the property market in South Africa dramatically increases its value, there is still good room
for improvement.
The economy of the country will continue to grow in medium term supported by infrastructure and housing industries.
For years South Africa will remain an attraction for sub Saharan people allowing to maintain labor cost at the present low
levels.
The houses price pick is today only located in very small areas (i.e. Cape Town Waterfront), this will positively influence the
surrounding areas (just as an example very expensive houses in Waterfront can reach 50.000 Rand for square meter while at
less than one km away you can find prices as low as 10.000 RAND for square meter).
South Africa is a wonderful touristic attraction so owners can easily enjoy their property as part of ROI.
The selected areas have a good touristic presence and also host universities and Corporation, so that houses renting result
easy.

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Conclusions
In a new outlook on Africa mega trends performed by
Frost & Sullivan it is highlighted that infrastructure and
housing industries will stately grow fueling all the linked
businesses.
This all, if well manages, could have very high business
returns for both local and foreign investors.

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Conclusions

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ConclusionsLuxury lodges in Kruger Park surroundings
(Lydenburg)
Luxury lodges in Kruger Park surroundings
(Lydenburg)
Beachfront houses in Durban
(Durban)
Beachfront houses in Durban
(Durban)
Exclusive Suites in Cape Town Peninsula
(Cape Town)
Exclusive Suites in Cape Town Peninsula
(Cape Town)
These are just examples of our projects – with very high
economical potential – as suggested by our architects.

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Our services

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Our services
SABI srl and LHYRA srl, together with their partners
network, can offer support to private or public investors
through dedicated services to boost the deployment of
whole investments and/or single parts:
• Partner sourcing in Europe
• Partners sourcing in South Africa or in southern
Africa
• Project and architectural planning
• Territory analysis
• Properties scouting
• Pre-feasibility study
• Contractor scouting
• Administrative advisory
• Quantity surveyor advisory
• Finance advisory
• Legal advisory
• Project planning
• Ongoing site control (construction, safety etc.)

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LHYRA srl
Via Carlo Poma, 2
00195 ROMA
www.lhyra.it
m@il: info@lhyra.it
Team Leader
Ing. Antonio Valente (antonio.valente@sabisrl.it) – A degree as Electronical Engineer and a MBA at INSEAD Paris in Business Development. His professional
activities focus on solving complex business problems involving holistic controls on all solution influencing factors. Ing.Valente’s work focuses on ICT, Marketing
and Communication including Contract Negotiation. He works extensively on projects involving energy, environment, health, green economy, consumer products,
luxury, automotive and utility industries. He has also a long successful story in multinational firms and performed extensive experiences in almost all European
countries, US and South Africa.
Area Specialists
Arch. Rosa Russo (rosa.russo@lhyra.it) – Senior landscape architect graduated at the University of Rome “Sapienza”. Responsible for creating projects, plans
and designs on wide area scale. Her expertise is in preparing models and cost estimates for each site development project and communicating with customers,
subcontractors, vendors and all stakeholders involved with projects. Arch. Russo’s responsibility is related to capturing the “genius loci” of the area and integrating
it with customers and landowner desires and inspirations to ensure that the final result is a consistent harmony of landscape, territory and luxury accommodation.
She is also involved in project with Durban University of Technology to valorize the old trade routes to Kruger and Maputo Bay in line with the examples of North
American Parkways.
Arch. Jessica Alfieri (Jessica.alfieri@lhyra.it) – Urban architect graduated at the University of Rome “Sapienza”. Responsible for housing unit design, project and
planning. Arch. Alfieri’s experience in urban and environmental design (standards and guidelines, design policy, urban rules and regulations, public realm design),
construction super visioning and health and security control. She has also a very good experience in urban design theory and history. Her previous international
experiences were in UIA (International Union of Architects World Congress) in Durban in 2014, where she performed a feasibility study and a renovation project
for the Durban beachfront as well as a feasibility project for a new train station in Durban.
Our Service
SABI srl
Via Giovanni Nicotera, 29
00195 ROMA
www.sabisrl.it
m@il: info@sabisrl.it

Property development in South Africa

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