Markets & Investment News South Africa

Subscribe to industry newsletters

Search jobs

Living the high life

Any financial advisor worth their salt will tell you that property is the go-to product if you're looking for a safe long-term investment, especially given the volatility of the stock market and world economies.

What if you can combine a good return on your investment with the kind of concierge lifestyle you find in top-class hotels?

That's exactly the business model Marc Wachsberger has successfully developed and marketed through The Capital Hotel Group.

The concept

It all started with the World Cup. In the build-up to the soccer extravaganza, Wachsberger saw a gap in the market and seized the opportunity to sub-let apartments to business travellers who needed accommodation for a longer time than the conventional tourist. Especially those who were here as part of the 2010 preparation contingent.

Marc Wachsberger
Marc Wachsberger

The idea was to end his leases on the two properties after the tournament, and use the capital he had accumulated to start another business. Instead, he discovered that demand for this type of accommodation post-World Cup was higher as ever. He had hit on a successful business model, which has grown exponentially since then.

Sandton's success

Wachsberger's latest venture - The Capital in the Park - is nestled in the heart of Gauteng's millionaire mile, Sandton.

"We secured the rights for a high-rise development overlooking Mushroom Park. It's themed along the lines of Central Park in New York, where tall apartment buildings overlook the green space."

"It's mixed use residential and hotel. People who wish to live on the property have access to all the amenities of a hotel such as room service, valet parking, spas and bars and gym facilities. There is also the benefit of excellent security."

"Investment buyers have the guarantee of a tenanted unit. They have the option to lease their property back to the hotel on a nine-year contract, with a fixed return on investment of about R23,000 per month at a minimum annual growth of 6%," says Wachsberger.

The hotel bears the risk. Even if the apartment isn't rented out, the owner still gets an income. The idea was obviously appealing to buyers - and who doesn't want to own a piece of prime real estate in Sandton - because the 240-unit development sold out within a week of launch.

On the cards

The tumbling rand has made South Africa all the more attractive to tourists, yet the amount of accommodation available isn't keeping pace with the demand.

"Since 2010, banks have not been financing hotels. So there have been no new hotel developments for five years, resulting in an undersupply of hospitality bed," Wachsberger explains.

Impression of The Mirage once it opens its doors in November 2015
Impression of The Mirage once it opens its doors in November 2015

The Capital Hotel Group currently owns six properties across Sandton including The Empire, Moloko, 20 West, Villa, Hydro and Esprit with another four (besides Mushroom Park) at various stages of development. The Capital on Bath in Rosebank is due to open in2016, The Mirage in Cape Town opens in November 2015, as well as The Green City development in Pretoria and another in Hyde Park.

About Nicci Botha

Nicci Botha has been wordsmithing for more than 20 years, covering just about every subject under the sun and then some. She's strung together words on sustainable development, maritime matters, mining, marketing, medical, lifestyle... and that elixir of life - chocolate. Nicci has worked for local and international media houses including Primedia, Caxton, Lloyd's and Reuters. Her new passion is digital media.

Let's do Biz