New Plettenberg Bay Developments At Risk

Plettenberg Bay property, especially vacant land, will go through a period of consolidation and low capital growth over the next five years. John Fuller of Chas Everitt International Property, Plettenberg Bay, says there is an enormous surplus of vacant stands on the market following large scale real estate developments in the town over the last ten years. These new developments include areas such as Brackenridge, Whale Rock, Schoongezicht, The Hill and Baron's View. Baron's View is being marketed for the third time by new developers, following two previous failed attempts by previous developers to sell the stands. The other developments have many stands which have either not sold or have been sold to investors who are now unable to resell their stands at a profit. John says that Plettenberg Bay remains the most beautiful resort town in South Africa, and an exceptionally desirable place to live, but being mostly a secondary home environment it has been hit hard by the current world and local economic crisis, and property sales have dropped dramatically because of consumer debt and the introduction of the National Credit Act and Banks' reluctance to finance vacant land without substantial deposits.

Many investors snapped up stands at launch or on resale thereafter thinking that the high annual price inflation being experienced then would continue, but have since unfortunately discovered that the market has fallen back to 2005 price levels. Those who do not reduce their inflated asking prices and ignore that the market has changed forever will find that their holding costs will be considerable. Their high price expectations will only assist the better priced properties to sell first.

Two new golf estate developments have been in the pipeline in Plettenberg Bay for some time and the developers will need to introduce some exceptionally creative marketing strategies if these are to be successfully launched during the next three years. Garden Route golf courses like most courses elsewhere are struggling to generate positive cash flows and simply cannot survive without strong demand from international investors and increased international tourism into South Africa. Developers normally attempt to cover the basic annual running costs for the golf course from owner membereship subscriptions, but if the properties are not sold the course can collapse. There are simply too many new residential golf estates on the Garden Route competing for a diminishing buyers' pool. Supply far exceeds demand at this time.