Golf resorts are in vogue
Demand for elitist golf resorts continues to grow in South Africa. Bruce Whitfield finds out who is doing the buying and where the hot spots are.

Bruce Whitfield:
The company that owns some of South Africa’s most valuable real estate, reporting maiden results today, promising more resort development in South Africa.

IFA Hotels and Resorts, reporting a jump in headline earnings per share for the six months ending December. It owns Zimbali Lodge and 50 percent of it, joint venture development in the Zimbali Coastal Resort as well.

Some of the most expensive property in South Africa located in that area. Philip de Sylva, IFA Hotels and Resorts executive director, joins us on the line from Johannesburg now. A quick history lesson if you can Philip. IFA, it is a Kuwaiti company and reversed listed into Moribo Leisure last year.

Phil de Sylva:
Yes, that is correct Bruce. Thanks for having me on your show.

Bruce Whitfield:
Do the results give an operational indication of what is going on with IFA at this stage, or is it a bit early for that?

Phil de Sylva:
I think it is a little bit early for that. It is really only the six months trade, and the main purpose of these financials was to provide additional information to show the financial effects of the reverse takeover which occurred on the 16th of January.

Bruce Whitfield:
So the operations that you have under your mantle as such, there is Zimbali Resort, which used to be owned by Sun International, if I am right.

Phil de Sylva:
Yes, I think the Zimbali Resort is a development, a manufacturing of land which people buy. So, in terms of actual operation, I think really, the Zimbali Lodge is really the only one that is in operation that you can measure in that sense.

Bruce Whitfield:
Does Sun International still manage that on your behalf? They did have a contract initially for that.

Phil de Sylva:
They do, they still remain as our operator.

Bruce Whitfield:
And what about the land question on that particular coastline. There has been a remarkable growth story. You have got some very lucrative assets there.

Phil de Sylva:
Certainly, I think the North Coast of Kwazulu Natal has been a phenomenal success over the last five years.

I think over the next ten, 15 years we will see phenomenal development continuing a pace, particularly with the development of the new airport.

Bruce Whitfield:
The new airport that you are referring to is the King Chaka Airport which is being built North of Durban.

Phil de Sylva:
All indications that it will be built, and that it will be operational by 2010, but of course, one never knows how that will pan out.

Bruce Whitfield:
So it is still pretty much up in the air, so to speak?

Phil de Sylva:
Well, the politicians have promised it and one has to remain and see.

Bruce Whitfield:
South Africans are not used to the big resort lifestyle, which I am assuming you proposed to bring to the South African market. You are talking about expansion into the Indian Ocean islands, many of us are fortunate to be familiar with those kinds of resorts in those markets. Is that what you are looking to replicate in South Africa eventually?

Phil de Sylva:
Yes, I think a golf course estate development integrated resorts offers a lifestyle and in South Africa, it is really taking off, although there have been a number of, something like 60 golf estates in South Africa, when you compare it to what has happened in other international areas like in the Unites States, we are really at the beginning phases of this phenomena.

Bruce Whitfield:
And in terms of … we have got the golf estates, it is the lifestyle where people actually buy in and own the homes, but in terms of actually creating a holiday resort type of environment, is there capacity in the South African market for that?

Phil de Sylva:
I think there is. Zimbali itself is a good case and point. 80 percent of our buyers are from Gauteng, who do come down, and of course over December and the busy periods, the rental business within Zimbali is phenomenal, which we manage from the hotel.

Bruce Whitfield:
And the Zimbali Coastal Resort that is a separate development is it?

Phil de Sylva:
The Zimbali Coastal Resort is really a generic term which covers the whole development which is being undertaken between IFA and Moreland.

Bruce Whitfield:
And the development there, the last time I was at Zimbali, there seemed as if the properties’ house was just being thrown up all over the place.

Phil de Sylva:
Well, just to put it into context, the existing development, some 630 properties have been sold of which 430 are built on, and the current phase, the remainder that are left to be sold are 70 properties. So there is not much left to be sold in the current phase.

Because of the phenomenal success of the current phase, we are now looking at developing at the Zimbali Lake’s prescient, which will include a further hotel, and a Gary Player secondary golf course, and that will deliver some 600 residential units.

Bruce Whitfield:
What is driving the demand in that particular area? And why is it that Zimbali is suddenly becoming the place in South Africa to be?

Phil de Sylva:
I think its proximity to Durban is a big factor. It is with an easy commuting distance of the industrial sector of Durban, which is in the Umhlanga Rocks area. And of course, the natural beauty of that area speaks for itself.

Bruce Whitfield:
Absolutely, and in terms of the developments there, we have seen property prices in that region. Recently there was a big parcel of land that was sold off at a record price on auction as well. The sustainability of land prices in that area. Constantly we hear how the upper end of the market seems to have been affected. It doesn’t seem to be affecting that particular part of the world.

Phil de Sylva:
The particular sale you refer to, I believe has collapsed. This is the rumour that is going around. Personally, I think that the price that was achieved was way over the top, because I don’t think that one can sustain a development with that kind of input price.

But certainly, the North Coast has seen a lot of investment in the recent while, but we are reaching a point now, where I think that the supply is beginning to outstrip the demanding.

Bruce Whitfield:
I saw a report today, from the property economist at First National Bank, John Loos, who came out with a property report suggesting that yes, we may see a flattening of the property prices at the top end in 2006/2007.

But he expects property prices to be, I think 55 percent ahead of their current levels by 2010. Are you as optimistic on the South African sector as John Loos appears to be?

Phil de Sylva:
I think John is being quite conservative to be quite honest. I think 55 percent will be easily achieved 2010, particularly with the World Cup and all the initiatives that government is putting into place to boost and enhance our tourism.

Bruce Whitfield:
But in terms of those initiatives, one would think that the World Cup is a once off event, how is that going to boost property in South Africa, especially when you have got a government that is considering particularly maybe putting restrictions on foreign property ownership in this market?

Phil de Sylva:
It might be a once off event, but when one sees the phenomenal success of Fancourt, and having experienced the once off event of the President’s Cup. It is a good analogy. I think that South Africa will benefit tremendously from that event and the infrastructural development that will take place between now and then will also oil the well for ongoing development.

Bruce Whitfield:
Any concerns about governments proposals to restrict foreign property ownership and there are various potential restrictions coming in on that front.

Phil de Sylva:
At this particular stage, we don’t have any concerns. Just prior to the listing, there was some talk in the market place of a moratorium, but I think it was ill considered at that particular time, and has proven to be, because I think now the government will be taking up a more comprehensive survey of the situation.

I have been at a conference all day today at Fancourt, regarding golf course estate development in the country and the reality is that something less than one percent of property in South Africa has been sold to foreign investors.

Bruce Whitfield:
There is of course the talk that government doesn’t really like the elitist golf estates, and if some government ministers have been quite outspoken about it. Is there some concern in the sector related to that as well, where elitism is being frowned upon?

Phil de Sylva:
Most certainly, there is a great concern to the sector, and what came out very clearly at the conference which was attended by government as well today, is that there is a fairly large concern which exists in communication between government and this particular sector, on this particular issue. And I think that there has to be some debate about improving the image and taking the elitist tag away from it.

Bruce Whitfield:
Interesting talking to Philip de Sylva. Thank you very much indeed. He is an executive director of IFA Hotels and Resorts talking to us this evening on 'The World at Six'.

Article by: IAfrica