GRAHAM NORRIS Property Editor

THE sale of the luxury 15-room Cape Heritage Hotel in the city centre to a UK investor is an example of the considerable attention the South African hospitality and leisure industry is receiving from investors around the world.

Joop Demes, MD of Golding Hotel Investment Consultants (GHIC), says this interest ranges from smaller investments around R3 million to R6m up to large greenfields projects in excess of R300m. "South Africa is one of the few countries in the world that continues to enjoy strong growth in Revpar (revenue per available room)," said Demes. "Having some two years ago predicted South Africa's emergence as a prime investment opportunity for both overseas and local leaders in the hospitality and leisure industry, it's extremely gratifying to see that we are now attracting such a broad variety of investors, and across all areas of the market.

"In the Cape we have, in the first seven months of 2003, already seen in increase in Revpar of approximately 20% compared to the same period the previous year. The trend towards growth in tourism continues, with our capacity to increase tourism figures and decrease seasonality further boosted through additional flights direct from Dublin and London, and the opening of Cape Town's new convention centre."

Demes added a note of caution, saying the strong rand, coupled with normal inflationary increases, have seen prices rise by as much as 40 or 50% over the past 12 months. "While South Africa still offers value for money in accommodation - and even more so with regard to food and beverage prices - care must be taken to ensure we don't lose our competitive edge in regard to accommodation establishments," he warned.

GHIC has been involved in a number of transactions over the past 12 months involving smaller investments (around R3m to R6m), which Demes says are extremely affordable, particularly to the overseas market, Apart from the Cape Heritage Hotel, these include the 25-room Mount Sheba Hotel in Mpumalanga, sold to an American investor, the 28-room Protea Hotel Benoni Lake in Gauteng, bought by a Cypress buyer, and the 16- room Redbourne Lodge on the Garden Route, sold to a German investor.

GHIC is about to finalise a transaction for a 16-room country hotel in the Cape Winelands with a consortium of Lebanese-led investors. "The diverse locations of these properties around South Africa, combined with the spread of investors from numerous countries right around the globe, is indicative of the significantly increased awareness of the variety and attractiveness of investment options available in the SA market," said Demes.

"Just three to four years ago we would typically have seen mostly foreign investors originating mainly in the UK and Germany." He said transactions at the top end of the market had also picked up considerably, involving consortiums as well as a number of leading regional and global hotel operators who wish to either establish or increase their presence in South Africa.

"Among transactions we are busy with are those for the acquisition of approximately 150 rooms in Cape Town for a UK investor, and accommodation pertaining to five or six hotels spread across the country and representing a total investment of R320m - for a German-Dutch-UK consortium," he said. In addition, GHIC is involved in facilitating and providing technical assistance in a number of greenfields projects around the country, another growing trend which will provide a significant boost for the economy as well as jobs and skills training.

"There is a flurry of activity in greenfields hotel projects, and we are busy with numerous developments which represent a total capital investment of approximately R1bn. "These are the development of a new airport hotel in Johannesburg, a 140-room hotel in Cape Town's CBD, a 145-room hotel in Green Point, a 300-room hotel at the V&A Waterfront, which will cater for international travellers at the very top end of the market, and a new 80-room development in Knysna on the Garden Route."

More good news is that South Africa's success in attracting substantial investment in the hospitality and leisure industry is having positive spin-offs for neighbouring countries. "Many foreign operators attracted to South Africa and wishing to further expand their portfolios are now looking at surrounding countries, and we are currently involved in a variety of projects, including a new and sizeable game lodge development in Namibia, and an exciting acquisition in East Africa - a region which has been relying on South Africa to help accelerate growth in its tourism industry," Demes said. "There are other investors poised to invest in the accommodation industry in Zimbabwe and tremendous interest in Zambia, Mauritius and Angola."