It can be divisive: some people love large city hotels for the predictability of it all. Stay in a branded hotel, let’s say Radisson Blu, and you know exactly how luxurious the room experience will be, and the service you’ll receive on check-in. But many travellers dislike them for precisely that, preferring to stay somewhere that feels a little less anonymous, somewhere where you feel at home from the get-go.
Investing in your own apartment-hotel suite offers, to a degree, the best of both worlds. You know just which corner of your suite gets the best sun for your morning coffee, but you’re equally able to tap into the service and amenities of a luxury hotel experience. And, you’ll have other travellers to help pay off the investment.
So little wonder that both investors looking to diversify and frequent travellers — often people ticking both boxes — are looking to apart-hotel investing, offering accommodation when it’s needed and investment income when it’s not in use.
With its contemporary serviced apartments in both corporate and leisure destinations, The Capital has grown into one of the strongest brands in this space, and today offers investment opportunities at apartment-hotel properties across the country.
“If you’re a business commuter from another city, a regular visitor from across the border or someone who just wants a convenient home base, there’s no better investment than this,” says Fiona Wachsberger, head of property sales for The Capital. “It’s the perfect lock-up-and-go that will provide you with a passive income when you are not in town.”
Sure, you won’t be able to hang your family photos on the wall or keep trinkets on the mantelpiece, but what you lose in personalisation you gain in your bank account as you earn rental income for the nights the vacant apartment is leased out.
What’s key is to understand the various purchase and rental options, as they vary between properties and developers.
“With a variable lease, the owner can stay for free at any time, but we’d pay them rent for the nights that the unit is rented out,” says Wachsberger.
That flexibility is ideal, but it’s not available everywhere. At The Capital’s Sandton, Rosebank and Cape Town properties, for instance, the owner only enjoys a 25% discount at any property in the group, while at The Capital Zimbali owners receive 14 complimentary nights per year. Read the fine print.
Owners at The Rockefeller, in Cape Town’s burgeoning downtown CBD, also receive 14 free nights for purchasing a rental apartment that is then leased back to the hotel operator, Newmark Hotels. Apartments range from R1.595m for bachelor pads to a hefty R10.2m for the three-bedroom penthouse. Of course, the potential rental income increase with the purchase price, from R10,000 per month to an expected R36,950.
While operators promise a return of roughly 7% per year, this could vary according to the flexibility of the contract you’ve signed. Some are guaranteed; otherwise change with hotel occupancy rates. Take both risk and reward into account.
There is additional upside for those looking to tap into hospitality investing offshore.
“Since 2005 the Mauritian government has been on a drive to encourage investment through property sales to foreigners,” explains Richard Haller, director of Pam Golding Properties (PGP) Mauritius. “The programme has really improved over the last two years, post-Covid-19. The minimum purchase price to qualify for residency has dropped from $500,000 to $375,000, making it a more accessible investment, particularly for SA buyers.”
Of course, even $375,000 is a cool R6.7m. Nonetheless, and perhaps remarkably, South Africans remain the second-largest sector of foreign property buyers on the island.
$375,000 is something of a magic number when it comes to investing in Mauritius. Investors spending above this threshold automatically receive residency rights for their immediate family, including parents, with no visitation or language requirements. The downside? You can’t simply invest in any property that takes your fancy; it must be in one of several government-approved hospitality or residential developments.
But that’s not necessarily a hardship.
In the north of the island at Trou aux Biches in Grand Baie PGP is currently selling The Essence; an apartment-style development linked to The Casaurina Hotel, offering direct beach access, villas with a private garden and pool, and on-site wellness and dining facilities. Here a one-bed investment apartment starts at $249,000 (R4.45m), or a two-bed option at $375,000. For those with deeper pockets, La Pirogue Luxury Residence at Flic-en-Flac on the east coast is a more upscale option, with apartments starting at $700,000 (R12.5m).
“These investments are ideal for those who want a hands-off investment with the benefit of residency in Mauritius, whether that’s a ‘plan B’ or a retirement option,” adds Haller
Those qualifying for permanent residence can of course live in the apartment full-time, or opt to return the apartment to the development’s rental pool, with the resort taking care of revenue management, occupancy and maintenance.
“Depending on occupancy, annual returns are about 7%,” says Haller.
But, aside from ROI, perhaps the best upside is in the TOI: ‘Time-On-Island’. Owners also receive up to 60 days per year of self-usage, and your two-month island holiday may even pay for itself.