Property development in South Africa

SA_Prop_Dev rev A_ENG_02 October, 2015

A business proposal for tourism and recreational property

development in South Africa

WORKING TOGETHER TO ACHIEVE EXCELLENCE

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Tourism and recreational property development

LHYRA/SABI @2015 SA_Prop_Dev rev A_ENG_02

South Africa: a developing countryAn ideal tourist destination

Future prospects of the countryA snapshot on selected properties market

ConclusionsOur services

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South Africa: a developing country

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The developed world recognizes South Africa as a majoreconomic and political power within Africa.

The financial and banking system is one of the strengths of theSouth African economy: the Global Competitive Index assignsthe first place for the quality of regulation of the stock market,the second for the soundness of banks and the third for thequality of financial services.

South Africa’s GDP increased from 3,1% in 2010 to 3,6% in2011 to 2,5% in 2012 and 2,2% in 2013 helped by strongerexternal demand and looser fiscal policy.

South Africa is the only African country that is a member of G20,an international forum for the governments and central bankgovernors from 20 major economies.

Thanks to the sustained growth of GDP between 2004 and 2007(when it touched the tip of 5.5%), in 2010 South Africa has beenincluded in the group of the new emerging powers, identified bythe acronym BRICS.

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BRICS

BRICS is the acronym for an association of five major emerging national economies: Brazil, Russia, India, China andSouth Africa. The BRICS members are all developing or newly industrialized countries, but they are distinguished by theirlarge, fast-growing economies and significant influence on regional and global affairs.

The five BRICS countries today represent over 42% of the world population, 25% of the total area of the Earth, 20% ofthe gross world product and about 16% of international trade.

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How economy sectors contribute to GDP in South Africa

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An ideal tourist destination

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South Africa is a popular tourist destination

Since the demise of apartheid, international tourist arrivals have surged, making tourism one of the fastest growingsectors. The tourism industry is well-established with an exciting sector of emerging entrepreneurs. The country is popularfor adventure, sport, nature and wildlife travel and is a pioneer and global leader in responsible tourism.

In 2013 were registered 14 million of arrivals.

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Main tourist attractions are Kruger National Park, Cape Town and Cape Peninsula, the Winelands, Blyde River Canyon,Panorama Route, Durban Beachfront, the Kalahari Desert, the Garden Route, the Drakensberg and many others.

Kruger National Park

Cape Town

Winelands

Kalahari Desert

Drakensberg

Durban Beachfront

Blyde River Canyon

Panorama Route

Garden Route

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Future prospects of the country

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South Africa is a fast growing country with a steady grown path. There is a plenty of natural resources and the low laborcosts can fuel this growth.

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Workforce and employment people is still continuing to grow in South Africa (at a greater ratio than in rest of the world)and this will continue to boost soil usage and houses price.

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From a financial standpoint, the long term housing prices will increase, and the midterm trends will support this growth.

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A snapshot on selected property markets

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We focused our analysis based on historical data updated to Oct. 2015 on three specific areas that were also the targetof our recent site inspections we performed: Lydenburg, Durban and Cape Town.

These three cities could be considered the ideal junctions of a tourism and recreational property proposal in South Africaas these are placed in strategic areas to enjoy year after year the country while the investment grows steadily.

Our focus areas

Cape Town

Lydenburg

Durban

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Trends and StatisticsA snapshot on selected property markets

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Sale vs RentREN

TSA

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Examples from internet research on October 2015

Lydenburg

Low construction and purchasing prices. High rental prices compared with purchasing.

Very low purchasing prices compared with Europe.

We can consider an average of 8 -10 years of rental fee to payback the property purchase.


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Sale vs RentREN

TSA

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Durban

Low construction and purchasing prices. High rental prices compared with purchasing. Very high rental request due toUniversities and beaches.

Very low purchasing prices compared with Europe.



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Sale vs RentREN

TSA

LE


Cape Town

Low construction and purchasing prices even this is the most expensive area in South Africa. High rental pricescompared with purchasing.

Low purchasing prices, if we exclude the Cape Town downtown, compared with Europe considering that this is one ofthe most beautiful city in the World (*).



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Conclusions

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ConclusionsAlthough during the last 20 years the property market in South Africa dramatically increases its value, there is still good roomfor improvement.

The economy of the country will continue to grow in medium term supported by infrastructure and housing industries.

For years South Africa will remain an attraction for sub Saharan people allowing to maintain labor cost at the present lowlevels.

The houses price pick is today only located in very small areas (i.e. Cape Town Waterfront), this will positively influence thesurrounding areas (just as an example very expensive houses in Waterfront can reach 50.000 Rand for square meter while atless than one km away you can find prices as low as 10.000 RAND for square meter).

South Africa is a wonderful touristic attraction so owners can easily enjoy their property as part of ROI.

The selected areas have a good touristic presence and also host universities and Corporation, so that houses renting resulteasy.

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Conclusions

In a new outlook on Africa mega trends performed byFrost & Sullivan it is highlighted that infrastructure andhousing industries will stately grow fueling all the linkedbusinesses.

This all, if well manages, could have very high businessreturns for both local and foreign investors.

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Conclusions

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ConclusionsLuxury lodges in Kruger Park surroundings(Lydenburg) Luxury lodges in Kruger Park surroundings(Lydenburg)

Beachfront houses in Durban(Durban) Beachfront houses in Durban(Durban)

Exclusive Suites in Cape Town Peninsula(Cape Town) Exclusive Suites in Cape Town Peninsula(Cape Town)

These are just examples of our projects – with very higheconomical potential – as suggested by our architects.

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Our services

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Our services

SABI srl and LHYRA srl, together with their partnersnetwork, can offer support to private or public investorsthrough dedicated services to boost the deployment ofwhole investments and/or single parts:

• Partner sourcing in Europe• Partners sourcing in South Africa or in southern

Africa• Project and architectural planning• Territory analysis• Properties scouting• Pre-feasibility study• Contractor scouting• Administrative advisory• Quantity surveyor advisory• Finance advisory• Legal advisory• Project planning• Ongoing site control (construction, safety etc.)

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LHYRA srlVia Carlo Poma, 2

00195 ROMAwww.lhyra.it

m@il: [email protected]

Team LeaderIng. Antonio Valente ([email protected]) – A degree as Electronical Engineer and a MBA at INSEAD Paris in Business Development. His professionalactivities focus on solving complex business problems involving holistic controls on all solution influencing factors. Ing.Valente’s work focuses on ICT, Marketingand Communication including Contract Negotiation. He works extensively on projects involving energy, environment, health, green economy, consumer products,luxury, automotive and utility industries. He has also a long successful story in multinational firms and performed extensive experiences in almost all Europeancountries, US and South Africa.

Area SpecialistsArch. Rosa Russo ([email protected]) – Senior landscape architect graduated at the University of Rome “Sapienza”. Responsible for creating projects, plansand designs on wide area scale. Her expertise is in preparing models and cost estimates for each site development project and communicating with customers,subcontractors, vendors and all stakeholders involved with projects. Arch. Russo’s responsibility is related to capturing the “genius loci” of the area and integratingit with customers and landowner desires and inspirations to ensure that the final result is a consistent harmony of landscape, territory and luxury accommodation.She is also involved in project with Durban University of Technology to valorize the old trade routes to Kruger and Maputo Bay in line with the examples of NorthAmerican Parkways.

Arch. Jessica Alfieri ([email protected]) – Urban architect graduated at the University of Rome “Sapienza”. Responsible for housing unit design, project andplanning. Arch. Alfieri’s experience in urban and environmental design (standards and guidelines, design policy, urban rules and regulations, public realm design),construction super visioning and health and security control. She has also a very good experience in urban design theory and history. Her previous internationalexperiences were in UIA (International Union of Architects World Congress) in Durban in 2014, where she performed a feasibility study and a renovation projectfor the Durban beachfront as well as a feasibility project for a new train station in Durban.

Our Service

SABI srlVia Giovanni Nicotera, 2900195 ROMAwww.sabisrl.itm@il: [email protected]

Property development in South Africa

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