Hundreds of property owners are not having fun as they settle into their holiday homes for the summer.
SA's leisure and second-home market has had a horrible year, with sales down 50% from 2007. Around now, interest-rate fatigue is beginning to set in for those who have used debt to buy their properties and now can't sell them. They're caught in a pincer grip of nagging calls from credit clerks about instalment arrears on one hand, and from estate agents who don't produce offers to purchase or return their calls - even as they demand another R1m drop in price - on the other.
They're having sleepless nights worrying about how they are going to get out of this torture. Sitting bleary-eyed, unable to concentrate on the beauty of the beach and the blue waves rolling onto them, doesn't make for the holiday of a lifetime. Pam Golding Properties CEO Andrew Golding has bad news for them. Sales will fall further in 2009, and so will prices.
But the homeowners' lot is better than that of developers sitting on hundreds of unsold properties, their business plans in tatters and polite but cool bankers calling them into meetings to ask why. Theirs is proving to be the hardest-hit sub sector of a slumping property market.
Wilfred Robinson, CEO of newly merged listed developer Pinnacle Point, is blunt. "We don't intend doing much with our local properties for the next year or so," he says. "Our cash will be devoted to our Nigeria and Seychelles [interests]."
He's lucky. Many developers sitting on unsold stock don't have cash to see them through. "We are getting constant calls from developers desperate to sell out of their projects," says Andreas Wassenaar, marketing director of SA listed Kuwaiti giant leisure developer IFA Hotels & Resorts. Even his Zimbali coastal resort at Ballito, the plush new ultra of coastal residential status, is selling fewer properties than last year. About 230 freehold properties, including undeveloped stands, were transferred for an average R1,5m last year. By August this year, 104 properties at R1,6m went through the deeds office. Annualised, this would be about 180.
Transfers at Knysna's Pezula private estate dropped from 19 last year to an annualised 13 or 14 so far this year. The average price stayed at just under R2,7m. But these are the most desirable leisure properties. "People who own in premium estates are best off and because they mostly pay cash, and can sit out a downturn," says Golding. At slightly less plush Pinnacle Point golf estate near Mossel Bay, the average price has fallen 42% from R1,8m to R1m and transfers from last year's 52 to about 25.
The secret of property is that your purchase will forgive you all your mistakes if you can just hang on. Golding, Wassenaar and Robinson are bullish about the future with, according to Golding, "zillions of dollars", pouring into SA leisure property after 2010. SA's continuing urbanisation and the need to take a break from city pressure, growing local and global wealth, and an SA newly discovered by millions during the 2010 World Cup ensure that.
