Golf Estates Hard Hit by Market Slump - 05-19-09

May 19 - In the first few years of the new millennium, one of the biggest success stories on the scene was that of golf estates.

These luxury properties were bought like hot cakes by those hoping to enjoy the exclusiveness of living on a golf estate, with their own professional green course right in their backyard.

However, the recent property slump has hit many sectors hard, one of them being the golf estate market in South Africa.

New developments are the most at risk, with banks withdrawing their funding for these projects as the golf estates cannot find enough buyers to warrant financial backing.

Property experts, such as Alliance Group's Rael Levitt, believe that the South African golf estate market has been overdeveloped in the last five years and that a number of estates will, unfortunately, go into liquidation in the near future.

A case in point was made last week after auctioneers failed to get one single bid for the exclusive Highland Golf and Trout Estate in Sandton.

The development, which spans 700 ha and incorporates 455 stands, was at an advanced stage when the sale of units started dwindling off and the banks pulled out from their financing commitments. Nevertheless, 267 stands had already been sold and the developers were sure that a private buyer would give a fair asking price for the golf estate.

Alliance Group predicted before the auction that the estate should bring in offers of up to R100 million.

A festive auction was held on Wednesday and over 300 people attended, however not one single bid was offered, even when the opening amount was dropped R10 million to R40 million.

Despite the disappointing outcome, the Alliance Group understands that the golf estate market is being particularly hard hit because of its exclusive features and the difficulties to find funding for these kind of projects.