Lifestyle properties take the sting out of farming

The recent purchase by a United Arab Emirates businessmen of an upmarket private game reserve in Steytlerville, Karoo, between the Addo Elephant Park and the Baviaanskloof World Heritage Site, has raised the eyebrows of smallstock farmers. This prompted Roelof Bezuidenhout to ask Wayne Rubidge dealer principal of Pam Golding Properties in Graaff-Reinet about the state of the property market in the vast Karoo.
Issue date : 20 February 2009

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The recent purchase by a United Arab Emirates businessmen of an upmarket private game reserve in Steytlerville, Karoo, between the Addo Elephant Park and the Baviaanskloof World Heritage Site, has raised the eyebrows of smallstock farmers. This prompted Roelof Bezuidenhout to ask Wayne Rubidge dealer principal of Pam Golding Properties in Graaff-Reinet about the state of the property market in the vast Karoo.

Who is investing in the Karoo and why?
Two out of every 10 enquiries come from foreigners. Other buyers are professionals from Cape Town and Gauteng who form syndicates and buy in the middle price range between R6 million and R10 million. Many potential investors from the northern provinces are attracted by the stability of the Karoo lifestyle. Investors also include game ranch owners who have sold up north and want to relocate rare breeding gene pools of game, such as buffalo and sable, to a more appropriate area with the right grazing and vegetation.

The foreigners are very interested in established game farms and high-end clients focus on property with Big Five potential. But there’s always a desire for good Karoo stock farms if the price makes economic farming sense. The Northern Cape Bo-Karoo is in demand due to its premium smallstock carrying capacity.

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Has the economic meltdown affected the Karoo property market in general?
The downturn started with the implementation of the National Credit Act in 2007 and residential sales have dropped by about 30%. Like other categories of residential property, lifestyle investments such as second homes and holiday homes suffered the most. Many Karoo purchasers fell into this category and some properties are coming back onto the market.

With average house prices in average-sized Karoo towns up by 150% since 2005, the new average indicator prices are R250 000, R450 000 and R750 000, depending on the town, available services, infrastructure and appeal. Cape game farms have increased in popularity and the three Cape provinces offer a wide variety of game and wildlife properties. Very popular is the Eastern Cape, Karoo and Kalahari. The Eastern Cape has become an established Big Five destination and has seen prices rocket in areas adjacent to Addo, the Baviaanskloof and the Fish River.

There has also been a shift to neighbouring, drier Karoo regions due to availability and prices. Districts such as Jansenville, Graaff-Reinet, and Somerset East are seeing strong demand. The Upper Karoo is fast becoming the Northern Cape’s premier game region. While lifestyle properties have taken a dip, as most farms are large and require substantial capital investment, there has been an increase in the selling off of marginal farming portions to this market which has helped farmers capitalise on their properties.

What are the prospects?
The platteland appeal is here to stay and the Karoo is one of the front-runners in this market. The number of speculators has dwindled, leaving more serious buyers to look at property. These buyers often intend relocating to the Karoo, a trend which is on the increase as urban pressures intensify and space becomes valuable.
We expect the trend of moving to the platteland to continue, particularly in the farming sector. After all, there are only so many farms available in the region.
Due to its vastness, the Karoo will always be a lifestyle decision, not a business decision. Those who want to move here, but can’t afford to sacrifice existing incomes, will be trapped until general economic conditions improve and personal financial constraints are lifted.

Where are the current hot spots and why are they popular?
The hot spots are the wetter half of the Karoo, including irrigation land. Rainfall has become a very important factor and buyers understand this when choosing a farm.
But rainfall is also connected to the price per hectare so there’s strong interest in the western regions and mainly from lifestyle buyers who can get a sizable property for less money. Generally, buyers from Cape Town or the Garden Route prefer districts such as Laingsburg and Willowmore.

The Gariep River is equally sought after. Prince Albert, Nieu Bethesda and the Bethulie area remain popular. In the Northern Cape, the Kalahari is fancied by game farmers. Here any property with good stands of camel thorn attracts lots of interest. The core of the Baviaanskloof gets enquiries, but very few seem to follow through. Prices are high and only attract lifestyle buyers. Perhaps this is more of a nature lover’s paradise than a game ranching area. Most of the interest lies in the western Baviaanskloof. Another game hot spot is the Graaff-Reinet/Somerset East/Jansenville triangle valley bushveld, where prices are lower than around Addo.

What kind of farm is most likely to get a good price?
A property located in a sought-after district with good infrastructure, good browse, no through roads and easy access. If it has game on it, even better.

Will events like the Soccer World Cup and the upcoming Karoo Development Conference help the market?
The Karoo conference should add to the awareness of the virtues of the Karoo and could lead to more interest in property. The soccer, too, could have a ripple effect with positive spin-offs spreading to the Karoo and Kalahari regions.
See the Farmer’s Weekly Farms Sold pages for an idea of farm prices or contact Wayne Rubidge at 082 432 9364 or visit [email protected]     |fw