Drought and Money

I think it’s common knowledge that the Southern Cape (George and Knysna area) is the region where the highest number of golf estate developments have sprung up over the last few years. I think it’s also common knowledge that the Southern Cape is the region where the worst drought in 80 years took hold during the 2009/2010 summer. So what do these two things have in common? Water! And what does this mean for a property investor? Money!

The government already announced several years ago that new golf course developments would have a tough time getting approval. The main reason they gave for this was the fact that a golf course uses a huge amount of water. Whether that’s true or not and whether the Southern Cape’s water shortage is as a result of the golf course developments or not doesn’t matter much. What does matter to me as a property investor is the government’s decision. It’s a decision that is without a doubt going to make lots of money for the long-term investor.

This decision by the government is going to cause the supply of golf estate properties to drop further and further below demand in the future. It’s not that supply is decreasing terribly, but rather that it’s stagnating. The excessive demand is being caused by the fast-growing upper middle-class, which has developed out of the fast-growing middle-class, and all of this is being driven by black empowerment. I see it as opportunity after opportunity after opportunity!

The ultimate status symbol for the nouveau riche is to live on a golf estate. Recently there’ve been numerous reports about high-up members of the government – even ministers – who are letting their expensive state residences in Pretoria stand vacant because they’d rather occupy houses in Woodhill Golf Estate in Pretoria. Soon Mr Julius Malema, who is getting rich so quickly now, will almost certainly also want to assert his status with a house on a golf estate.

Another big reason that the supply is going to stay limited is that long-term investors like the rich Europeans are buying their summer houses on golf estates in South Africa. The Erinvale Golf .........................

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