Croydon was featured in the September 2008 editionof WINE Magazine. Here is the full text of the article and you can also read it online here:
http://www.winemag.co.za/content/online/lifestyle/singlepage.asp?in=1360
WINELANDS RESIDENTIAL ESTATES
ZONING OUT
Wineland residential estates have risen fast in the popularity stakes – but are they good for the wine industry? And can the good times continue for developers? Jackie Cameron investigates.
Meander through the winelands these days and you are likely to notice as many sale boards advertising property developments as you are signposts alerting you to cellars open for tasting. Golf course homes, equestrian complexes, residential villages and other so-called “lifestyle” estates all vie for the attention of well-heeled passers-by with money to spend on pricey real estate.
Not so long ago, Franschhoek was a sleepy collection of quaint Huguenot-style heritage buildings. Now grand entrances to upmarket residential-cum-wine-farming estates like La Ferme Chantelle and Domaine des Anges signal your arrival in the fashionable restaurant town. And other wineland towns and suburbs haven’t gone unscathed by the trend. From Durbanville in Cape Town’s bustling northern suburbs to the wind-scrubbed edges of Bot River near coastal town Hermanus, developers have staked their claim to land with a view to reparcelling it for gated estate living.
Some watchers worry that the strenuous pace of urbanisation is not good for us or the environment. Inge Kotze of the Biodiversity & Wine Initiative, a partnership between the wine industry and the conservation sector, says her organisation is among those “very concerned” about high-density properties being developed on high-yield agricultural soil. “Agricultural expansion is being pushed out to marginal areas and that means they need to use lots more chemicals and fertilisers to get the same yield, which in turn is detrimental to the environment,” she says.
POLITICS AND PROPERTY
Some of the other points under debate in green circles include the extent to which property developments might be replacing vineyards. Some detractors believe the long-term character of the farming districts, a magnet for foreign and domestic tourists, is at stake, not to mention the country’s future agricultural requirements.
Others see the profit imperatives of developers and investors as getting in the way of political objectives like land redistribution. Remarks Liezl Wales of the nongovernment Women on Farms Project: “Land wanted for emerging farmers is being sold off for housing estates, as is the case in Rawsonville.”
Government is way behind on its redistribution goals, with only about 7% of land transferred nationally. The target is 30% of white-owned land, she says. But Western Cape real estate is pricey, especially in the winelands, and R20 million upwards not an unusual asking price for a medium-sized farm. As a result, she says it is just not possible to buy such agricultural land for farmers from disadvantaged backgrounds.
Black economic empowerment players, meanwhile, have accessed winelands property with greater ease, thanks no doubt to their deep pockets. For example, a subsidiary of Tokyo Sexwale’s Mvelaphanda Holdings recently snapped up Bloemendal Estate in Durbanville for a whopping R105 million.
UNLOCKING CAPITAL
Not everyone thinks the mushrooming residential property complexes are a bad thing. As André Morgenthal of Wines of South Africa, the organisation for export-oriented wine farmers, points out, property developments carefully handled can help producers tremendously. “It is such a competitive market that land-owners may need to diversify. The fact of the matter is a wine farm is profitable only to the extent that it provides a very nice lifestyle. It is usually not a cash-flush business, as everything is tied up in land and bottles,” he says.
Also not to be underestimated is South Africa’s place in the world relative to other wine-producing regions. China already has 450 000 hectares under vine, reckon some, while SA has little over 100 000ha – and must still compete for global palates with Australia, France, Italy, the United States and other nations. Is the land available for vineyards getting smaller due to property developments? “I don’t think so,” says Morgenthal. “The researchers tell us we don’t have much scope to expand our vineyard coverage.”
He adds that some property developments, particularly those that attract the holidaymaker, help promote a destination. “There is a fine balance between development, wine growing, tourism and economic viability.”
CHI CHI WINE LABELS
In the light of this, then, are wine-producing estates competing with wine farmers in an already packed market? No, says property developer Wayne Lowe of JBB Properties, which is behind the Croydon Vineyard Residential Estate as well as the Croydon Olive Estate. Top cellarmaster Beyers Truter is responsible for quality control from that particular vineyard, but Lowe insists this is more about ensuring that the farm produces “real” wine as opposed to “plonk”, rather than for serious profit motives. The Beyers Truter brand has huge appeal – and value – for those who invest in the estate. “The amount of wine we are producing won’t be significant: about 5 000 cases,” says Lowe.
Although the wine farm element will be handed over to property investors when it is solvent, the idea is to help fulfil owners’ aspirations of making their own wine. Lowe makes the point that the farm was created “from scratch”. The development wasn’t agricultural but zoned residential, with vineyards subsequently planted on it.
The same applies to many similar developments. Monte Levin, co-principal of Pam Golding Properties in Franschhoek, points out that only one or two small wine estates have been used for residential property. As for the rest in the town, it has been a case of “the look is vineyard”. He explains: “It is the romance of the vineyard. People like the open feeling of vineyards but with controlled access. I don’t think we’ll see much more in Franschhoek because we don’t have the land. And very few wineland residential developments are actually on wine farms.”
SHREWD PROPERTY MOVES
One farmer who has turned the property boom to huge advantage in the sector is Kobus Basson. A former commercial lawyer, Basson was one of three developers who got De Zalze Winelands Golf Estate – a hugely popular and prestigious residential development outside Stellenbosch – off the ground. Then he used the profits to enhance the volumes and quality of his wines at Kleine Zalze, now one of South Africa’s bigger wine exporters with a particularly strong segment of the market in countries like Sweden and the UK.
Basson achieved his business goals while adhering to a strict environmentally friendly approach. De Zalze Winelands Golf Estate, which combines vineyards and golfing fairways, resulted from the amalgamation of three farms, of which two were working wine farms (Kleine and Groote Zalze).
Arable land was increased by more than 30% to 120ha, including shifting vast quantities of topsoil from land not suited to agriculture (now the golf course) to land on which grapes or olives could be planted. “We moved almost a metre of soil from the golf course area and worked it back into 8ha of productive land,” says Basson.
Instead of fertilizers and chemicals, Kleine Zalze planted grain, corn and wheat and ploughed it back into the earth to provide the necessary nutrients. Indigenous plants were returned to the ground. Today, the number of bird species in the area has doubled and creatures like the rare grysbok still live in bushy enclaves on the estate.
Other wine farmers may be tempted to follow Basson’s lead. As he says, there is a need for wine farmers to be able to unlock capital in order to upgrade facilities and generally boost business. There is, however, a proviso for Basson: it must be managed in a way that does not allow things to be “messed up”.
A TRICKY BUSINESS
So far, so good on that front. According to town planners and environmental consultants, it is actually very difficult to get the nod of approval from the various layers of local and provincial government for a residential property development in an agricultural area. Exact figures on the number of lifestyle residential estates in wine-growing areas are not available; anecdotally, there aren’t as many as the hype around them might lead us to believe. And people object more now than they did in the past.
Says town planning specialist Jan Janse van Rensburg, director of TV3 Architects and Town Planners in Stellenbosch: “It is very challenging to get developments off the ground. Every year it gets more complicated. There is more legislation and people are more green-conscious.”
To illustrate just how difficult it can be, he says there are two developments that have been in the pipeline for 12 and 19 years respectively. “It’s not a quick buck.”
Janse van Rensburg and others in the business of providing services to developers in general are “definitely” feeling a big residential slow-down. “You still get the luxury developments, but they are a small proportion and not necessarily affected by interest rates.”
PRICEY PROPERTY
Property price figures for about 50 low-density estates in the Paarl-Franschhoek-Stellenbosch-Somerset West area sourced by Lightstone Risk Management bear testimony to the commercial success of these developments.
An average current price of R4.4 million is confirmed at a number of wineland estates – including De Zalze – by Deeds Office data. That’s up from just under R3 million in 2005. While property volumes around the country are down dramatically since the start of the year, and the Lightstone figures suggest that this is also the case for wineland developments, business has not ground to a halt. Andrew Watt of Lightstone says he is “surprised” at how long demand has persisted in this segment, given the tightening credit conditions. As many of these estates have a “vacation” or second-home element, one would have thought cash-strapped South Africans would lose their appetite for them quickly.
Developers like Lowe remain optimistic that these properties will remain sought-after. “We have a burgeoning black middle class buying existing stock and people who want to make a lifestyle change,” is his reasoning.
For Basson, the attractions of living in a relaxed, secure, country-style environment are unlikely to wane. He sums it up like this: “The next step is heaven.”
