In this article local resident, entrepreneur and romantic, Thys Geyser, shares his international property experience.

It started with a few bottles of Merlot. We had all the ingredients; good company, a few friends, a dash of romanticism and two spoons of eagerness. The end result? We should buy our own property in France and share it with friends. After all, if Peter Mayle could do it, we could, right?

Surely we have all the expertise, I thought. We have a banker, a decorator, a real estate businessman, a developer, not to mention their spouses – the sideline experts with all the knowledge..

The area we sourced was Lourmarin which is in the Luberon region of Provence, just 35km from Avignon and 30km from Aix-en-Provence. Having been awarded one of the ‘most beautiful villages in Provence’ and boasting some of the best restaurants, shops and local wines it was, in fact, almost Franschhoek.

We were lucky and found a gem; a run-down apartment built in 1573, but located perfectly in the centre of Lourmarin (we quickly referenced in all the Peter Mayle books!). There was more than enough space and it was a fantastic building with views over the Luberon mountains, the village plane trees, the Friday morning market and had a champagne bar right underneath the kitchen window!

Mrs Local, the French overseer, was our guiding light. She was going to protect us – little did we know! The finance was the easy part. However, the redesign concept presented by Mr Apple noted that any exterior changes affecting a view from any other place in Lourmarin must be approved in Paris which meant waiting months for an answer.

The seller had, in the meantime, moved to Corsica and access was now impossible. Having flown to inspect our purchase the “Immobilier” (agent) casually said he was sorry but he didn’t have a key and we should try next time!

The transfer took more than a year and we almost lost the deal three times with penalty interest to follow. The renovator, a one-man show called Bruno, who doesn’t understand a word of English, took months to do the changes when not on his lunch or tea breaks and always applied ‘Le French’ logic, instead of ‘Le Architect’s’ drawings. Romanticism has its boundaries.

The detail of this process is better spared as building overruns, late delivery, linguistic challenges, remote control, overcharging supervisors, etc., never make a good story.

But there was light at the end of the tunnel. After a potential partner split we agreed that the best decorator would be one of French descent. At last the sun shone on us as Le Decorateur (ala “Catherine Zita-Jones look-alike with Banderas look-alike hubby) transformed the apartment into a piece of heaven!

At last the end result is an authentic renovated, three bedroom, three bathroom apartment, with lounge, open-plan kitchen, huge fireplace and a reading room in perfect nick – decorated for kings. It’s a pity we only go there once a year!  And it had a happy ending, even though we lost two friends in the process.

We have subsequently appointed a French manager (of Nordic descent) to oversee the running of the apartment and have introduced a roster system defining use and appointed an accountant to run the finances. Now we only enjoy and this means no more shareholder meetings!

My advice; its great to burn your fingers and learn by your own mistakes, but it’s easier to learn by others.

Thys specialises in niche properties and properties with unlocked potential. There is a 10% share of the French property he speaks about above available for E70 000 of which 90% can be financed at 4.9% over 10 years. Feel free to call him (see banner below) if you have an interest in part ownership or property opportunities both here and overseas.

The first heritage Founder Estate, Goede Hoop, set on 21 hectares and comprising a main homestead built in 1821 with tall sash windows, thatched roof, three reception rooms, dining room and three bedrooms and, in addition, a two bedroom cottage, a wine cellar built in 1832, stables and courtyard and modern amenities including a sw

The two additional Founder Estates, each of approximately 21 hectares, “providing the investor or developer the chance to build a manor house among a rich legacy of vineyards” with a permitted development footprint, for each, of 2400sqm sold for R10m and R9,5m each. Outside the “excluded area” the land on all three estates is subject to a 99-year registered lease in favour of Boschendal Winery (Pty) Ltd.

Although needing to comply with various restrictions and permitted improvements, the new owners “will enjoy an iconic address, benefit from professional management and extensive estate security and receive a quota of the wine production each year” said a Pam Golding spokesperson.

A wise man once said to me that if you want to understand the value of property in a town get into the local coffee shops and check out the local estate agents. That man was local entrepreneur, Thys Geyser from Franschhoek Investments, so I took him to Franschhoek’s latest coffee and breakfast joint, BICCCS, and asked him to share with The Month his views on property valuation in the Franschhoek valley and the future. As the coffee flowed so did the knowledge..

Thys Geyser: The most amazing thing to me is that Estate Agents work in the only profession in the world where it is standard practice to gladly impart all their knowledge at the first meeting. They will tell you everything they know about what properties are on the market, tell you what you can buy and where, why you should develop, etc, – a doctor or a lawyer would never do that. You’ll also get opposing views so you can build up a huge amount of knowledge completely for free.

The Month: So why are properties here valued so highly? Isn’t it just demand and supply?

TG: Of course you can value property on demand and supply but it’s area specific. In Pretoria it’s all about square meterage. If 100m2 sells at R1m, then a 200m2 place would be priced at R2m. That doesn’t work in the Cape. There’s no correlation between the size and the price. Normally you’d value the land first then the physical building. That theory doesn’t really work here. Here it’s about understanding what people want and correctly pricing property to sell.

TM: So valuation here is less mathematics and more art – more right brain than left brain?

TG: It’s the Monaco of SA. In Franschhoek there’s some sort of dynamic beyond economics. This is a place where property decisions are based on emotions. You could buy a much nicer house in Stellenbosch but there’s just one problem. It’s not in Franschhoek. The brand is not attached to it. So it’s not easy to value. Three estate agents will come up with three different values. It’s not an exact science. Business minds want to do that but property doesn’t work like that.

TM: So it’s really about imagining how a property could look?

TG: The agents that do well here are the ones that can paint a picture. How can a hectare be worth R7m? I’ll tell you how. Look at what’s actually selling around it, not offered, selling. Let’s say a place sells for R15m and you could build a similar house for R4m and R1m to tidy up the plot, fix the entrance, sort the view. This picture, quite rightly, is worth R15m. So the empty land is worth at least R7m. This is what I call ‘changing the dynamic’ of the property to unlock its value. The simplest example is buying a big plot and chopping it up into stands so you can sell the view many times over instead of just once. This changes the application (the dynamic) from A to B. Or a big house into a Guest House – it’s the same thing. To unlock value you need to paint the picture that people want to see – but at a premium, not at input cost.

TM: So the valley still holds good value.

TG: Ja, but I think there’s a general misconception. The money in property is made on the way in, not the way out. In other words it’s important to buy right, understand the potential and unlock it. There’s no perfect formula. It takes emotional intelligence.

TM: And what is the valley likely to attract in the future?

TG: That’s an interesting one. Undoubtedly it will continue to attract but more likely people with similar sized cheque books not necessarily similar taste. Only a certain strata can play here. Why do people make wine? Because it’s part of the aspiration. People buy for aspiration reasons so they can say they own a piece of Franschhoek.

TM: So, we’re not overvalued then?

TG: Look, agents naturally overvalue to get the mandate but there’s also a benefit in the focused marketing that follows. An agent may tell you you’re property is worth R5m if the others are telling you it’s worth R4m so he can get the mandate. But can he sell it at R5m? He’ll say “Give me a sole mandate and I will because I’m going to have to work hard to sell it and I don’t want to have to do the work and lose the sale.” Hence the secure mandate focuses the marketing effort even if it is unrealistic.

TM: And lastly do you think the recession has left the valley largely unscathed?

TG: There’s no doubt the availability of money affects property prices but in Franschhoek you have cash buyers. Banks have certainly begun to release the handbrake and if you look at the stats, viewings over the recession did not drop – it was just the ability to make the deal that ceased. It’s all about timing and if everyone is supplying your timing is wrong. You can buy right, build right and see all your potential depleted by carrying costs.

TM: Thank you for your time, Thys, we’ll be following up with you in the near future. Thys can be contacted at Franschhoek Investments – details below.

By Tracey Brits

The arrival of 2010 and the much anticipated Soccer World Cup together with the first signs that South Africa is moving out of recession bode well for the country’s beleaguered property sector over the next 12 months, according to Samuel Seeff, chairman of real estate giant, Seeff Properties.

A “cautiously optimistic” Seeff believes that this year will bring good news – increased demand for property, more sales as well as conservative price increases. “We will see more activity and more demand which will translate into more sales provided that banks keep their doors open to providing more finance,” he pointed out.

Looking back, Seeff said from June 2007, the property sector had had two years of bad news. The fallout from the National Credit Act and more stringent lending criteria, continued hikes in interest rates, rising inflation and the escalating effects of the global financial crisis during 2009 all contributed. “Demand for housing slumped to low levels and prices dropped, resulting in massive attrition of thousands of agents.”

This all affected liquidity and confidence and, as such, sentiment. The market reacts to sentiment. People are reluctant to make long term commitments,” he pointed out.

During this year’s economic crisis, banks tightened up on lending, demanding larger deposits and granting fewer and fewer loans which had had an extremely negative effect on sales, according to Seeff. As a result, the full impact of interest rate reductions that began in 2008 and continued to August 2009 are yet to be fully felt.

He said the initial interest rate cuts had taken about five months to begin to filter down into the market. Activity levels and turnovers remained way off those recorded during the property boom of three years ago and positives were yet to increase buyer activity to the point where there was no longer surplus stock in the market. “Only once demand exceeds supply can we expect to see a more rapid increase in property prices. Until that happens, we will see minimal growth,” he pointed out.

“Overall, we believe the 2010 Soccer World Cup will have positive effect on sentiment rather than actual sales. The real effect may only be felt in 2011. By placing South Africa in the spotlight, it will certainly open up the country to potential investors and buyers who cannot help but recognise that there is significant value in the cosmopolitan lifestyle we offer, when compared to European destinations. Luxury homes and villa’s on the platinum strip which includes the world renowned areas of Camps Bay, Bantry Bay and Clifton as well as apartments and penthouses at the equally enviable V&A Waterfront still offer outstanding value for the many overseas visitors who find South Africa an appealing holiday destination. In fact, we have just sold a Camps Bay villa for the highest price ever fetched in that area, to a European executive who owns an international brand, who was in Cape Town for the draw on the 4th, looking for somewhere to rent for the duration of the tournament. On experiencing Cape town for just a few days, he decided to purchase here instead.

Coastal property gems are certainly not restricted to the platinum strip – one can purchase a four bedroomed mansion alongside the links at Sunset Beach on the western seaboard coastline, which offers post card views of table mountain and the ocean, for between R10 and R12 million, and equally outstanding homes are to be found in the coastal towns of Hout Bay and False Bay.

He said one real positive that had emerged from all the negativity was that both buyers and sellers had become more aware of conditions in the property market and the true values of their assets.

We have recently refreshed the main living space is a neutral cream. It is in good order but could benefit from a refurb which due to the size could be a reasonable investment of energy and cash. We have decided on a change after 12 years. It is a house people fall in love with if you love space and has always been a little bohemian. There are 4 bedrooms, 2 en suits and one extra shower room next to the laundry room ( in the old cuve or wine vat). Fully fitted American kitchen.

The village has one small store, post office, school and there are 2 villages either side 2 kms with everything needed inc foreign press.

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The village of Lourmarin is located in the Luberon region of Provence, the South of France. This area is populated with numerous famous villages and cities. The closest airport being Marseilles. This is also the easiest transport route, i.e. Paris-Marseille-Lourmarin. It is a 40-minute drive from Marseilles.

LOURMARIN

Lourmarin is a beautiful village with 1300 inhabitants, numerous restaurants, château and all that Provence is famous for. The village market is on Friday’s the most popular market day. Streets are lined with old oak and plane trees. The village boasts numerous street café’s and just as many bistros and famous Michelin restaurants.

APARTMENT

3 Rue de Gran Pre was built in 1573 and was restored to its glory in 2005. The apartment is in the heart of the village in a 4-unit complex, 2 on ground level and 2 on 1 st floor. This apartment is on the 1st floor with beautiful vistas over the village and the market place. The entrance off the narrow street is a huge old double door, leading you into a cobbled outside entrance, obviously originally to accommodate horses. From there an old staircase of sandstone leads you up for one flight.

The apartment has a reception passage, 3 bedrooms, 3 bathrooms, open plan lounge, dining area and kitchen. A further jardinière (used as a reading room) a separate washing room, a fourth toilet and a patio from the third bedroom. Two bedrooms are en-suite, and two have baths and showers.

FAST FACTS ABOUT THE OPPORTUNITY:

1. The property is held in a French property company, called an SCI.

2. Each 10% share represents 5 weeks usage per annum.

3. There are 3 shares for sale at €70 000 each. The shares are priced in EURO.

4. Usage is defined per roster, which slowly rotates, ensuring each shareholder the same privileges. The rotating roster has been proven as the easiest to implement and understand, although the shareholders are contemplating to rather introduce a priority-booking roster.

5. The SCI is managed from South Africa with an accountant managing the financial affairs like the levy collection and the monthly payments.

6. The apartment is managed in LOURMARIN by a professional manager (MRS GRETA BIDOU) ensuring that the housekeeping meets the highest standards.

7. Monthly levies are between ZAR 800 and ZAR R1000.

8. Ownership in such an SCI allows for extended Visa’s and all the current shareholders have visa’s ranging from 5 to 10 years.

9. The cost involved in the purchase is for the account of the buyer and is taxed at 5% in France.

10. The purchase consideration can be financed as the seller has agreed to such a structure. The finance option is a minimum of 10% cash in SA, with the balance repayable at 4.9% interest according to an agreement with the seller.

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Le Ferme Chantelle is a prestigious secure estate in the Franschhoek village, conveniently located right at the entrance to the village. The estate measuring some 20 ha, is built up with 23 homes and an abundance of open spaces, covered with vines and olive trees.

House G, on plot 2 is available as an investment. The stand is situated on the Northern side of the estate and has a North entrance with a South view. The uninterrupted views are of the Franschhoek mountains. The Southern side of the erf overlooks the vineyards and the creek.

The house is in construction phase and measures some 420 square meters. The design is in accordance with the estate rules and regulations, but with a contemporary approach. The buildings are set apart as two separate barns, linked with a passage that also leads onto the outdoor entertainment area.

The entrance to the house is constructed as a “barn entrance” between two bedrooms, leading you into the courtyard but overlooking the main building. The main building houses the scullery, kitchen, dining room, lounge, study and main bedroom.

All bedrooms have en-suite bathrooms, plus additional outdoor enclosed showers.

The center of the courtyard accommodates the free standing covered patio, with braai area and pool.

POTENTIAL

The asking price is R7.9m and is structured as a “plot and plan” project to reduce the transfer fee. The building work will be completed by early 2011 and occupation is from MARCH 2011. A rental agreement is in place for 12 months, if you wish not to occupy immediately.

This brand new contemporary house is available at the lowest cost on Le Ferme Chantelle!

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Le Ferme Chantelle is a prestigious secure estate in the Franschhoek village, conveniently located right at the entrance to the village. The estate measuring some 20ha, is built up with 23 homes and an abundance of open spaces, covered with vines and olive trees.

Located in Le Ferme Chantelle, lies the original manor house. Built on 7534 square meters of unspoilt, but developed land. The erf is totally developed with two patches of vineyard, an abundance of formidable trees and a landscaped garden.

The outer buildings, which are totally restored, house a boutique winery and a cellar. These two structures measure 136m and 50m respectively. The production capacity of the winery is 25 tons and the value of the equipment is in excess of R1m. The winery also has an “off-site” liquor license.

The manor house in classic Victorian state with wooden floors, high ceilings and sash windows is in fine condition, with two large stoeps. A front porch spanning the entire length of the house and an undercover back patio provides ample space for outdoor entertainment.

The house boasts 4 bedrooms, 2 bathrooms with main en-suite, dining room, living room, office, kitchen, scullery and laundry. In total approximately 320 square meters.

Asking price for this boutique “wine-holding” is R10.5m. The project is sold as a going concern and no transfer fee is applicable.

POTENTIAL

The winery can be converted into an excellent outdoor guest cottage, if there is no interest in pursuing winemaking. Similarly the cellar can be converted to a proper business office.

The house can be moderately renovated to become one of the best positioned and looking houses in Franschhoek at minor costs.

The value of an unbuilt stand in the estate , measuring 1200m is R3,6m. Taking this into account, the 2 patches of vineyard measuring some 2500m could be worth R6m, implying that the manor house with outbuildings on 5000m of erf is bought for R5.5m!

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Nestled in the Paarl/Franschhoek Valley, on the Northern slope of the Simonsberg Mountains, lies Santé Winelands Estate & Wellness Centre, a working Wine and Wellness Estate. Flanked by the famous Backsberg, Glen Carlou, Vrede & Lust and Rupert Rothschild Fredericksberg wine estates, the Winelands Estate is only 22km from Stellenbosch, 4km from Paarl, and a mere 30 minutes away from Cape Town.

As a fully operational wine estate with vineyards, olive groves, stables and paddocks, 30 Ha of dams & water features, fly fishing and a 500 ton Wine Cellar, Santé Winelands Estate is managed by a Farming Association, which is also responsible for the production, labelling and marketing of the wines.

THE PROPERTY

This smallholding of 10ha, currently held in a company, is on the market for R15m. The land has vineyards, a dam, olive grove and a magnificant manor house.

The manor house of approximately 1000 square meters, with 4 bedrooms en-suite, TV room, study, dining room, lounge, 2 patio’s, guest’s lounge, scullery, pool, storage , domestic quarters, 3 garages is built with outstanding finishes.

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FAST FACTS

This building is offered for sale at R13 250 000.

The rental income is R96k per month, rendering an 8.5% net yield on capital invested.

The leases are all in their 3rd of 5 years, with escalation at bank repo rate on shops 2 and 3 and 8% on shops 1 and 4. All leases have further options.

The lease rentals work out as an average of R276 per square meter on the total lettable space, but internally is quite wide spread.

Taking the location, quality of building, look of building, profile of tenant and the 8.5% yield into account this is a solid buy.

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