Property share and share alike

A new model in property investment has hit the Cape Town market. We’re familiar with the term ‘shares’ when used alongside ‘stock exchange’, but ever thought about buying shares in property? Not ‘timeshare’ or ‘fractional ownership’, but real shares that you can buy or sell. Realcor Cape has taken a bold step in a new direction by offering buyers shares in its new hotel at the development costs.

“We’ve undertaken to create a business model that works both for Realcor as well as for the investors by going into partnership with them as a way to build up capital for the hotel and create wealth for investors,” Deonette de Ridder, Realcor’s Managing Director says of their new development The Blaauwberg Beach Hotel.

“Buying shares in the hotel is the same as buying shares in a commercial property and an income generating business. So the moment the value in the property increases, shares will in turn become more valuable. Shareholders benefit from the fixed capital which is the building itself and from the profit of the hotel business,” says de Ridder.

Recently back from its first-class launch in the United Kingdom, Realcor intends to sell shares in the hotel to both foreigners and locals. De Ridder comments, “South Africans should benefit from this hotel as well. The model was well-received in the UK. There was a lot of interest in the development of the hotel, but the idea of buying shares in a hotel is new and will possibly take time to catch on in the traditional market place.” Twenty percent of the shares offered will be on sale to the public, while the rest is on sale to listed funds. This means the public own shares together with listed funds. “Realcor is currently registering its prospectus and the shares should become available early in April,” adds de Ridder. “We are also excited that RMB has offered finance to build hotel, showing that there is faith in the project.”

The model is different from fractional ownership and timeshare in that the buyer doesn’t own a particular room or put in a lump sum never to see the return on that money. Rather, buying shares in a property is a flexible exercise. For one, you can sell shares at your own discretion while buying shares could mean earning good dividends. What’s more, shareholders will qualify for special rates and services should they ever choose to stay at Blaauwberg Beach Hotel. The idea that you are increasing the value of your shares by staying at the hotel is a marvellous advantage. This along with the fact that the hotel is environmentally-aware makes the investment an appealing one.

South Africa’s investment opportunities have necessarily been more progressive since a growing and diverse economy mean that investors need to keep thinking up creative and more appealing offers. “It’s a good climate for growth and South Africa’s property industry is benefiting from this kind of innovation ten-fold. What’s more, investors will not only benefit from the capital appreciation of the building itself, but also from the profit of the hotel as it runs”, adds de Ridder.

With the current property market boom in a slight decline, investors will benefit by buying shares now since share value is very likely to increase dramatically. “South Africa’s property market is definitely a buyer’s market at the moment. An investment now could lead to high returns later on. Buying shares in the hotel will ensure that this return is seen sooner rather than later,” ends de Ridder.

Realcor Cape is currently in the process of registering their prospectus and the shares for the Hotel should be available in early April this year. Investors will be able to purchase shares at the development costs of the project.

Contact information:
Deonette de Ridder
Realcor Cape
Tel: 083 700 4028

Source: PressPortal