Welcome to Golf’s Garden of Eden” the billboard by the entrance to Pinnacle Point reads. The 400 hectare golf estate under construction near Mossel Bay, on South Africa’s Garden Route, is indisputably a place of primeval beauty. The course, when completed, will meander through fynbos scrub unique to the Western Cape and touch cliffs overlooking crashing surf in seven places.
For now, however, envisioning the development requires imagination. Bulldozers plough and shape a maze of muddy furrows interspersed with patches of green that will soon be a finished course. A stray bushbuck – which, like springbok and baboons, make occasional appearances on Garden Route golf courses – scampers across the spot where a championship tee will be.
Still, the property’s unfinished state has not deterred investors, who have bought up most of the plots at prices starting at R1.3m (£125,000) plus sales tax, an increase of some 50 per cent since they went on sale two years ago but still a bargain by international standards.
“I think it’s the uniqueness of the golf course that has sold the property so well,” says Stephen Murray, a sales agent for Pam Golding Properties. Construction is due to finish by the end of this year.
Mossel Bay is one of many golf estates mushrooming around the Western Cape, the frothiest part of South Africa’s bubbling property market. Plettenberg Bay, at the eastern end of the Garden Route is now South Africa’s second-priciest area for real estate after Cape Town’s Clifton suburb. The local golfing establishment is building a niche as a year-round destination for both locals and the northern-hemisphere seasonal visitors South Africans call “swallows”. And it has benefitted in recent years from celebrity endorsement, with Tiger Woods playing the 2003 President’s Cup golf tournament at Fancourt (and proposing to his wife at a game estate afterwards) and Ernie Els opening a signature course last December at Oubaai.
“What we have in the Garden Route is a golfing experience equal to anything in the world,” says Jeff Clause, PGA director of golf at Pezula, the area’s highest-end new estate and probably its most visually striking. (Visitors have compared the course, which runs along 4.5km of dramatic coastline, to Pebble Beach.) “It reminds me of what the US north-west used to be 30 or 40 years ago,” adds Keith Stewart, Pezula’s chairman.
Pezula has a luxury hotel and plots priced from R2m to R14m for premium sites. When completed, it will also have world-class facilities for cricket, tennis, fishing and horseback riding. The development’s promotional material tempts buyers with pictures of frolicking whales, cliffside greens and a testimonial from Nick Price about the estate’s “uniquely African” environment. An in-house aviation team stands at the ready for airport transfers or holiday charters.
Although the Garden Route’s newest developments are centred on golf courses, many of the investors in them do not even play the game. Instead, says Craig Holt, a property consultant with Engel & Völkers’ South African branch. “It’s about security and lifestyle, and you mix with like-minded people from a similar financial bracket.”
There are also a fair number of speculators in the mix – mostly South Africans who buy off-plan expecting to sell on in a year or to at a tidy profit. With average home prices in the country gaining an annual 25 per cent or more in recent years on the back of falling interest rates and increased demand from black middle-class buyers, few early investors will have been disappointed. And foreign demand – mostly from the UK, Ireland or Germany, or expatriate South Africans – is further boosting prices.
Holt reports that a plot of land at Fancourt, one of the largest established golf estates, would have cost R300,000 10 years ago but is today worth R2m to R2.5m. Other types of developments, such as wine estates, which offer residents a piece of a vineyard’s action – including their own wine allocation – without the costs, are also selling well.
Still, there are growing concerns about the development frenzy. Last year, local officials called for a review of the construction industry as part of a larger push to re-examine beachfront development rules. A governmental group is examining possible curbs on foreign land ownership amid concerns that spiralling real estate prices are putting the government’s “willing buyer-willing seller” land-reform programme at risk. “More and more, the poorer communities are feeling marginalised by these developments,” says Tasneem Essop, head of environmental affairs with the Western Cape’s provincial government.
Environmental groups have also decried the golf estates’ visual, environmental and social impact. Some local communities have had their sea access blocked or obstructed by gated estates. At a time when residents of the drought-stricken Western Cape are under water restrictions, golf estates use up to 2m litres a day. And there are fears that the region will become overdeveloped, like Spain’s Costa del Sol, diminishing its commercial potential. Signs of this are already evident: one recent visitor to the Garden Route asked where the “garden” was.
Since last year, the Western Cape government has had a temporary moratorium on approvals pending an investigation. As of November, there were 83 existing estates, and the local government was coping with 33 new applications. Some unscrupulous investors still waiting for permits were already advertising their developments, presenting local communities with what looked like a fait accompli. But from mid July, a new, more exacting approval process will come into effect, and Patrick O’Shea, chief executive of Engel & Völkers South Africa, predicts that “developers will have a critically hard time getting developments approved outside the urban edge”.
Essop calls the new rules “mitigating guidelines” aimed at regulating golf estates into the future. And, although she admits to being “physically sore” after seeing bulldozers “rip up the land” at Pinnacle Point, she describes the government’s environmentalist faction as “pro-sustainable development . . . not anti-anything”.
Sensitive to the growing criticism, most developers have started to emphasise how eco-friendly their projects are. At Pinnacle Point, which received its environmental approvals in 2003, builders have already moved one road to protect threatened vegetation and replaced one kind of grass deemed invasive by environmental auditors with another. The estate is preserving existing vegetation, including one of the best stands of limestone fynbos in the area. In keeping with environmental rules, it is also eradicating all alien vegetation. A “fynbos guru” is reviewing its management and burning plan for the scrub. An existing 14km hiking trail which runs through the development will be upgraded and kept open, allowing public access along the shore up to the high water mark.
Pezula is equally keen to market itself as pro-environment. With just 255 residential sites on 612 hectares, its developers claim to be redefining the term “low-density housing”. Just 15 per cent of the estate will be built on, with the remaining 85 per cent given over to indigenous forests and fynbos stretching down the cliffs to wild beaches. Stewart, the Pezula chairman is a native of Zimbabwe (then Rhodesia) who made a fortune in the US developing and selling feeding, sorting and collating technology for office copiers. He came back to Africa after selling that business, moving to Knysna in 2000 and acquiring the land on which Pezula was built from a family that had owned it for more than 100 years.
His bet that buyers would be willing to spend up to $2m for a piece of South African land appears to have paid off: the project’s first two phases are sold out, and phase three – put on the market in December – nearly so, with an unusually high number of foreign buyers at 60 per cent. “We want to be South Africa’s first luxury resort,” Stewart boasts. “This is the most expensive piece of dirt ever sold in South Africa.”
John Reed is an FT correspondent in South Africa. Pinnacle Point, tel: +27 (0)82-828 4893; www.pinnacle-point.co.za
Pezula, tel: +27 (0)44-302 5332; www.pezula.com
