Johannesburg – The oversupply of golf estates has claimed
The latest casualty resulting from financial woes is the
luxurious Pearl Valley golf estate development between Paarl and Franschhoek in
the Western Cape.
Shareholders in this estate have for the past couple of
years been financing the operating losses, but have been unable to improve the
financial position of the enterprise.
On Friday the Pearl Valley directors announced a
business-rescue strategy in terms of the Companies Act.
Rode & Associates property valuer and economist Erwin
Rode says that for some time the oversupply of golf estates has been well
known. He says this market segment is stone dead and it will be some time
before the oversupply is eliminated. “What does count in Pearl Valley’s favour
is that it's within striking distance of the Cape metropole,” he says.
This golf estate enterprise is one of many to have landed in
the financial “rough” since the economic downturn.
The most recent case was the owner of the Pinnacle Point Group [JSE:PNG]
golf estate. Not even a business rescue was able to save this company, which
ended in liquidation.
The first golf estate to be liquidated in the wake of the
downturn was the Highland Gate Golf & Trout Estate in Dullstroom. It's now
owned by Investec [JSE:INL], which has meanwhile completed the golf course.
Pearl Valley is owned by LeisureCorp, a subsidiary of the
Dubai property giant Dubai World, one of the former owners of the V&A
Waterfront in Cape Town. Dubai World and London & Regional sold this iconic
property to Growthpoint Properties [JSE:GRT] and the Public Investment Corporation last year for
The global economic downturn pricked the Dubai property
bubble in 2009/10, leading to Dubai World having to restructure $25bn worth of
The Pearl Valley board of directors believes that, should
the rescue effort prove successful, the company’s business, property assets,
equity and debt can be restructured to ensure the business’s long-term future
as a top-quality golf estate.
An business-rescue practitioner has been appointed and has
taken immediate control of the company and is expecting to come up with a
business rescue plan.
The first completed 200ha phase of Pearl Valley has an
18-hole golf course designed by golfing legend Jack Nicklaus, on which 31 500
rounds of golf were played last year. There are also 590 residential units, a
clubhouse and recreational facilities. A luxury unit on the site was recently
sold for R15m, a record for the development.
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