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30 Aug 2011 14:28
Three hotels on the Garden Route are to be sold at an auction, a sign that the hotel industry is under severe pressure.
According to Auction Alliance, assets of the Hartkorp Group in the southern Cape, will come under the hammer following its liquidation and the suicide of its founder.
“The property developer developed over R200-million worth of hotels, apartments and buildings, and was liquidated in May this year by its founder Hennie van Niekerk after its flagship Riviera Hotel slumped following the post-World Cup leisure sector downturn,” the auction house adds.
The group also owned the High Rustenberg Health Hydro in Stellenbosch, which it later sold to iProp in 1972.
Hartkorp was hit hard by the economic downturn and its founder committed suicide in June this year. The auction will take place on September 16, Auction Alliance says.
The three hotels, which Hartkorp developed in conjunction with Stocks Developments in 1996, will now be auctioned as well as a residential complex and two commercial properties, all of which cost over R110-million to develop.
The hotels going on auction include the Riviera Coastal Inn Suite Hotel in Hartenbos, Diaz Beach Garden Route Boutique Hotel and Boland Park Hotel & Lodge.
“The sale is unfortunately a sign of the deterioration currently occurring in the leisure and hotel industries, but despite negativity in the sector we have received extensive interest in the developments, particularly from individuals who are sensing conversion opportunities.
My sense is that hotels will be snapped up by smaller operators or property developers who will convert them into retirement complexes or residential apartments’,” chief executive of Auction Alliance Rael Levitt said.
The Riviera Coastal Inn Suite Hotel features hotel rooms, large family rooms, and luxurious private suites all facing the Hartenbos Lagoon.
Boland Park Villas, the secure residential complex going under the hammer, consists of 10 fully furnished one-bedroom villas, and is situated 500m from Diaz Beach. The commercial properties which will be offered are both situated in Hartenbos, and include Storage 4 U, a centrally situated and secure self-storage facility, as well as Boulevard Place, a sectional title mixed-use building comprising retail and office space.
Earlier in August, Pinnacle Point Golf Estate in Mossel Bay was also placed under provisional liquidation.
“The distress experienced by the leisure property sector has resulted in an augmentation of opportunistic buying by investors seeking to not only unlock value from investments, but obtain properties at prices significantly below market and replacement value,” Levitt adds.
Auction Alliance has successfully sold various hotels and leisure properties across South Africa including, Harbour House Hotel in Hermanus for R18-million, Hartenbos Eco Estate sold for R35-million, Sitari Fields Golf Estate in Somerset West fetched R63-million and 22 stands situated on Yzerfontein Beach in the West Coast secured R28-million.
“Recent pronouncements by Reserve Bank Governor Gill Marcus, that interest rates are in a low cycle and may possibly be lowered, have already given the investment market a boost. Our auctions in August have been surprisingly strong despite global concerns about an economic double-dip”, adds Levitt.—I-Net Bridge
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