Ten Year Comparison With Other Investments
We have compared our Parktonian Sectional Title Hotel investment with alternative property and hotel investments over the 10 year period 2007 to 2016 during which our Sectional Title scheme has been operational.
The methodology was:
- We took the average price paid for a Parktonian Sectional Title unit in 2006 / 2007, which was R442 000 per unit.
- We took the estimated value of a Parktonian Sectional Title unit 10 years later as R600 000. This was based on the highest prices achieved in actual sales, which were R600 000. This is a 36% increase in capital value over 10 years, or 3.6% p.a.
- By comparison, and just for interest, the insured value of the hotel building has increased by approximately 800% over the 10 years. These valuations were produced by valuers nominated by our insurers.This increase is so high because of inflation, rising property values and the many repairs and replacements that have improved the buildings condition over the period. These factors partly led to the huge replacement cost of the building 10 years later.There is also a further reason for the increase. Over the 10 years our public areas have increased in area by about 10%, due to the construction of the following additions:
- A new rooftop facility comprising pool, gym, rooftop bar and conference rooms.
- A new conference room, the Protea Room.
- Extensions to the Orchards Restaurant.
- Hotel entrance & porte-cochere revamp.
All the capital and interest costs incurred in the above additions have been expenses to the Income Pool.
- To the annual capital value increase of 3.6% p.a. (see 2 above), we added the annual income distributed to Parktonian Sectional Title owners over the 10 years. (As a matter of interest the annual income figures, when totalled cumulatively for the 10 years, totalled R468 220 per unit.)
- We then charted the Parktonian units versus R442 000 invested 10 years ago in various alternative types of property and other investment in South Africa. This chart is as follows:
- We then also charted the Parktonian units versus R442 000 invested 10 years ago in certain other hotel investments in South Africa.This chart is as follows:
The other SA hotel investments were charted on the following basis:
- The dividend amounts were derived from the companies’ financial statements.
- The dividend return was obtained by dividing the dividend amounts by the share price at year end.
- The share prices were as published for each year end.
- Please note that the dividends paid were after company tax paid by City Lodge and Tsogo Sun, but before dividend tax, if any, in the hands of the investor.
The above analysis shows that an investment in a Parktonian Sectional Title Hotel unit has done well when compared to most other property and hotel investments.
We believe that this explains why many of our existing investors feel that our units offer the best property investment available. They feel that these units offer good monthly income plus capital growth. Moreover, there is a hotel management company in place that does all the administration, marketing and sales, repairs and maintenance, etc., leaving the investor with a hassle free hotel room investment.