A Whole New Exciting Sector

by Johannes Maree


AirBnb

The last few months have opened my eyes to a whole new industry – the hospitality sector in the Cape Town CBD.  In retrospect, the fundamentals make sense:

  • Just about every year, Cape Town is voted as one of the top tourist destinations in the world.
  • Cape Town is small – so the supply of accommodation is only so big.
  • There aren't many open spaces to build.
  • It's scenic
  • …and it's frequented by tourists throughout the year, not only the summer months.

At Destinata Capital, our registered Section 12J Fund, we've started to invest in this sector, and to illustrate what I've been talking about, I'm going to highlight some stats from the very 1st investment we made, as an example.  A modest 54 square metre unit in the City Centre purchased for R1.5m (fully furnished), but situated close to some great amenities – Truth Coffee, voted the world's number 1 coffee shop in 2016, being one of them, situated a mere 50m down the road.

We took occupation in December 2018, and some of the stats have been as follow (I exclude February 2019 as this month was used to do a fair bit of maintenance on the unit):

  MONTH

  BOOKED NIGHTS

  OCCUPANCY

  GROSS REVENUE

  JANUARY 2019

  27

  87%

  R19 989

  MARCH 2019

  26

  84%

  R17 070

  APRIL 2019 (TO DATE)

  25

  83%

  R15 073

  AVERAGES

  26

  85%

  R17 377

 

Annualise the average gross accommodation income and a fairly useful, let's call it a 'revenue-value ratio', as opposed to the standard rent-value ratio, of 14% is applicable (17 377 x 12 / 1.5m).  And this is before taking into account capital growth, of which I personally expect a minimum of 8% per annum.  There are obviously a few more costs involved in running a hospitality unit compared to a traditional rental unit, and the winter will see a slight drop in revenue, but the numbers tell an impressive story.

Not bad. 

Coupled with the up-to-45% immediate SARS-funded returns offered by the 12J structure, this has become one of the main investment focus areas for the Destinata Group.

If you'd like more information on Destinata Capital's 12J offerings, please make contact through info@destinataholdings.com

Outside of the 12J offerings, for the property investor – please have a look at our current stock on https://www.destinataholdings.com/what-we-offer/property-investment/

The site includes a deal planner, tailor-made for the property investor.  Any enquiries hereon can be sent to:

Emile Grobbelaar
074 599 0510
propertysales@destinataholdings.com

The contents of this email should not be construed as investment-, tax-, legal-, accounting- and/or other advice. For advice on these matters, consult your preferred adviser. Destinata Capital Ltd (VCC-0073 FSP 48729) is an authorised financial services provider and is a SARS approved Venture Capital Company.

To be put in touch with any of the above service providers as a Wealth Masters Club Platinum Elite or Platinum Member, please contact services@wealthmastersclub.com.




 
      Dhrystone
Top