Why South African wildlife estates are attracting local and foreign investors

The Covid-19 pandemic and rising interest rates have both impacted many people in South Africa. While both have affected incomes and affordability, buyer activity in certain property sectors remains robust.

Urban Soup’s Ray Harli observed that “there are some positive signs that suggest a more optimistic outlook. For one thing, there has been an increased interest in real estate investment from both domestic and international buyers – I believe the South African property market has the potential for growth and prosperity moving forward. Investors who approach the market with caution and a long-term perspective could see promising returns on their investments in the years to come.”

Factors influencing the market

“One significant factor that I believe will drive the property market is the growing trend of remote work… As more and more people realise that they can work effectively from anywhere, there is likely to be increased demand for properties that offer flexible working arrangements.”

“High-net-worth individuals are increasingly making real estate investments based on lifestyle choices rather than location dictations because they know that as long as there’s a digital connection, they’re in business,” said High Street Auctions Founding Partner and Lead Auctioneer Joff van Reenen, adding that lifestyle properties in the bush and near the coast have been the biggest draw cards in South Africa in recent years, among local and international investors alike.

Van Reenen noted that “auction buyers in this segment are pretty evenly split between foreign and local purchasers” but that foreign buyers are “facing stiff competition from the local semigration market”.

According to the “African Wealth Report” for 2022, 48% of South African high net-worth individuals either live in or have second homes on lifestyle estates. This percentage has been rising steadily over the past decade – in 2011, it stood at around 30%. The report, authored by global intelligence firm New World Wealth (NWW) and Henley & Partners, noted the following trends:

• Affluent buyers in SA are increasingly moving towards estates that have apartments.
• There is a general movement away from traditional golf estates and towards wildlife and parkland estates.

In their “Upcoming eco-friendly trends among the world’s wealthy in 2023”, NWW notes “the rise of ecologically friendly estates as the new second homes of choice for the world’s super-wealthy – lifestyle estates with natural indigenous wilderness areas, and diverse flora and fauna. Notable examples include Jacks Point in New Zealand, the Yellowstone Club in the USA and Predator Ridge in Canada, as well as a large number of eco-estates in South Africa.”

According to NWW analyst Andrew Amoils: “Estate living is becoming increasingly popular worldwide, especially among affluent people that travel a lot and have homes in several countries around the world. This is mainly due to the safety and environmental benefits of estates. Ecologically friendly lifestyle estates with natural indigenous wilderness areas are becoming particularly popular.” Amolis added that these estates are especially sought-after for their abundant wildlife and birdlife in a natural setting of indigenous bushveld and forest.

“They are normally situated away from the big cities, and most of them offer outdoor activities such as game viewing, forest walks, fishing, bird watching, hiking and mountain biking.”  Other benefits in a South African context include security, higher property values and, for locals, the attraction of owning a Rand hedge.

Take the latest estate to be built on Kruger’s Crocodile River boundary. Shawu’s Hills Wildlife Estate offers an extraordinary lifestyle experience in “the bush” in full title homes, fractional ownership lodges, and timeshare units – all of which can be rented out to international visitors – if the rand gets weaker, demand from international visitors increases.

And, of course, as Paul Stevens, CEO of Just Property, points out, “Property in a new development can be purchased with no transfer costs, offering buyers the lowest cost of acquisition. There is a great opportunity to save thousands of rands when buying into high-quality developments.”

Tom Gelletich, a Pam Golding Properties agent in Hoedspruit, specialises in the sale of Big Five farms and lodges. He told AltVest Capital last year that properties in the greater Kruger that boast Big Five animals enjoy far greater value than other reserves. If investors could afford to buy a large farm with good traverse rights, they would, but from a holiday home point of view, being able to dilute the costs of ownership makes sense; it really depends on your motivation and budget.”

At Shawu’s Hills, for example, the range of ownership options includes:

• Fractional ownership lodges
• 75 – 100 Timeshare units
• 93 Full title stands.

When investing in property, consider the pros and cons of wildlife estates.

Writer: Bluegrass Property Developers