February 24, 2024

Emergence of sectional title ownership in hospitality and tourism sector

4 min read

In recent years, there has been a notable emergence of sectional title ownership opportunities in the hospitality and tourism sector, offering a modern and advantageous alternative to traditional real estate investments.

An article published by Bizcommunity highlighting the Top Property Trends for 2023 states that approximately one-third of all property sales revolve around sectional title ownership, while transfer volumes for freehold homes have been continuously declining over the last five years.

Beekman Group, one of South Africa’s leading leisure development and property management players for over 50 years, has witnessed the impact of this growing property trend first-hand and remains at the forefront of this exciting market.

Wayne Beekman, director of the group, shares his expertise around the various factors that have contributed to this shift within the market and lends his insights as to why sectional title ownership has become a more popular option for investors seeking hospitality, great returns and incredible benefits.

Key factors driving the emergence

Sectional title ownership allows individuals to purchase a unit within a holiday resort property or development. When you purchase into a sectional title development, you buy an undivided share of the common property – usually a one- to four-bedroom villa – on the established resort property. Sectional title ownership at Beekman Group resorts, whether of a complete unit or an individual hotel suite, allows each owner to possess a title deed to said unit. Essentially, you own the villa or hotel suite outright, and can choose to either rent it out to prospective holidaymakers, or take full advantage of your holiday home for up to 14 weeks a year, while enjoying the use of all on-site facilities at discounted rates.

Some of the key factors we have seen that have contributed to the resurgence of sectional titles within the property investment sector are: remarkable returns, flexibility with regard to usage, no hassle ownership and maintenance, stability and transparency, additional holiday benefits, and the potential for appreciation.

Remarkable returns

While property has historically been perceived as one of the more stable investments for those looking to grow their wealth long term, an unpredictable economy, exploitative sellers and booming inflation rates have introduced a new fear factor to the prospect of property ownership, with many investors being driven into negative figures when it comes to their return on investment. On the other hand, investing through a sectional title at a holiday resort provides an unparalleled sense of security over your investment, as well as more stable returns, often as high as 12% annually.

Flexibility

Sectional title ownership offers greater flexibility in terms of property usage. Owners typically have the freedom to utilise their property for personal stays, rent it out for income generation, or even sell their ownership share if desired. This versatility empowers investors to adapt to changing circumstances and market dynamics, making the investment more adaptable and potentially more lucrative.

No-hassle ownership and maintenance

With sectional title ownership, investors can rest assured that the day-to-day maintenance of their property is managed by the agent. This includes fully furnishing your villa to a design standard that has been proven to attract and satisfy rental guests, cleaning, servicing and minor maintenance of your villa, as well as rental marketing, finance and administration of your investment – and even vetting and managing potential ill-behaviour of rental guests – which leaves you with nothing to worry about but the growth of your investment.

Stability and transparency

Sectional title ownership structures tend to be more transparent in terms of costs and fees associated with property ownership. Unlike other real estate investments that may come with hidden fees and escalating maintenance costs, owning a sectional title typically offers clearer insight into financial obligations, helping investors make informed decisions.

Additional holiday benefits

By owning a holiday property, investors may also gain access to a curated bouquet of holiday benefits, which may include free travel services, discounted facilities, exclusive deals, personal assistance, a varied number of holiday exchange options, and more.

Potential for appreciation

Owning a holiday property in a desirable location can potentially lead to appreciation in property value over time. As the property gains popularity and demand increases, investors stand to benefit from capital appreciation – providing a potential return on their investment beyond the enjoyment of using their villa.

Beekman Group spearheads leisure sectional title offerings

Beekman Group has distinguished itself in the market with unique leisure properties. It recently launched a campaign that looks to capitalise on the growing demand and interest in buying sectional titles within the leisure industry. These offerings provide numerous benefits including holiday flexibility, maintenance-free ownership, and exclusive access to multiple luxurious resorts. Owners can generate rental income and enjoy the option to exchange accommodations at various resorts globally.

With diverse high-end developments in stunning locations, Beekman caters to various preferences, making it an attractive option for investors in the leisure sectional title market.

The options available to owners who invest with Beekman Group are:

  1. Making personal use of your unit for a maximum of 14 weeks per year;
  2. Contributing your personal usage weeks to the rental pool in order to earn additional rental income; or
  3. Exchanging your personal usage time for a holiday at one of 4 000 resorts worldwide.

Beekman has worked closely with a leading marketing agency that specialises in property and development and, according to its director and founder Stefan Botha, there is a growing enthusiasm surrounding this leisure property offering, which bypasses many of the restrictions of the traditional real estate model. He also believes the emergence of the sectional title model marks a shift in property ownership, offering a fresh and unique approach that enables investors to reap the rewards of high-end hospitality investments.

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