Southern star rising

Tommy Barker reports from the latest hot destination for Irish cash — South Africa.

THE CELTIC Tiger hasn't gone away, you know it has just gone on safari.

Just over a decade ago, most Irish people wouldn't buy an orange from South Africa.

Now, after the dismantling of apartheid and the ending of trade boycotts, we are buying up select swathes of that country, swooping on apartments, hotel suite investments, golf course and beach-side villas so winery and orange grove property purchases can't be far behind.

After a remarkably and historically prosperous decade at home, we have an insatiable appetite for property abroad. We've moved from inflated native markets which made millionaires of many to the UK, Spain, and eastern Europe, and now also to long-haul destinations on the other end of the world.

A market is a market, the canny investor knows but just to remind oneself how important "local" knowledge is, try getting your head around the simple fact that "down there" in the southern hemisphere, you want a north-facing aspect for the sun, not south-facing.

Two weeks ago, Irish property development company Howard Holdings and its subsidiary Eurocape Investments, had its day in the sun. It launched a bravado €80 million development in the heart of old Cape Town (a hot tourist destination, with 1.4 million visitors a year) in South Africa.

Its 'old town' scheme, called Mandela Rhodes Place and backed by local civic administration, is probably the city's most pivotal and important mixed-use development in decades. It includes 165 apartments, hotel, the city's only winery, restaurants, offices, parking, gym/leisure and clinics in a city business district area undergoing promised residential rejuvenation a sort of Dublin's Temple Bar meets Table Mountain.

Howard's directors, including Greg Coughlan and Frank Gormley, with solicitor David Coleman and Cormac Magannety in Eurocape, bought almost two entire city blocks for conservation and redevelopment, picking up a number of buildings with strong architectural presence, from classical Victorian through Art Deco and the 1960s.

Think two blocks of Cork's South Mall, taking in the AIB's No 66 building for style, as a comparison, and then imagine their plans for a further bright and shiny 11-storey apartment tower block poking up through one block's core, plus a five-star Sofitel hotel in the old building in the other block.

And, by the way, the Irish developers got their hands on all this international real estate for about €5 million about the price of a small retail building on Dublin's Grafton Street or Cork's St Patrick's Street. With full planning now for the development (which will have tax relief for local investors, a South African first), and work starting towards a 2006 completion, local estimates already put the site's value at over €20 million. Howard/Eurocape are getting a lot of development for their €80 million: by comparison, they are also investing the same sum in Cork's City Quarter development opposite City Hall, comprising a 200-bed hotel, 50,000 sq ft of offices, restaurant and boardwalk, launched without an Irish fanfare and only now grabbing local attention.

In contrast, their Cape Town launch was attended by South African government ministers, the town's mayor, by a familiar face to many Irish, Kadar Asmal, who left this country a decade ago to return home to become an ANC minister, as well as by bankers, brokers and buyers. The Western Cape's media was there in full flight: the development made front page news, and TV and radio headlines over a weekend.

To an Irish visitor, there was a hint of the bleak times of the 1980s in Ireland when an overseas company arrived bearing job announcements and got the IDA red carpet treatment. Only, in this case, the gig had 500 people partying in the two city blocks and along the blocked-off street to the backdrop of a singing kids' choir from a South African township, while private security guards on horseback kept a bemused but watchful presence.

Because there was a certain Ireland-South Africa rugby test (the second test match) match the next day, there was a heavy concentration of Irish and, indeed, Howard Holdings had flown out 60 guests, many of them equity investors and soon-to-be apartment purchasers in their Mandela Rhodes Place development.

Prior to the launch, the company had secured buyers for 30 of its apartments; two days after the launch sales stood at 80 units, many of them bought by local Cape Town residents and investors.

Contrary to expectations, they weren't cheap, either, even by local values. A couple of small one-bed apartments of 500 sq ft went from €145,000 but, in the main, prices were premium, and went right through the €250,000-350,000 range, while the very largest apartments of over 2,000 sq ft weighed in at up to €600,000, according to Irish selling agent Richard O'Sullivan of Christies Estates in Dublin (see also www.eurocapeinvest.com).

South Africa has had double digit property inflation for the past several years, and just like Ireland the continued pace of growth confounds some commentators. Not too surprisingly, the weekend's local Cape Town papers had reports of the market being driven by super-confident overseas investment in the province.

An Irish journalist now working for one of Tony O'Reilly's South African newspaper titles noted that his own 4,000 sq ft villa, with pool, bought two years ago in swish Camps Bay for €400,000, was now worth €1.2 million.

The city, and country, clearly has its downsides as well as the ups. Spectacular is too banal a word to describe the scenery and its raw, physical impact and variety, with the iconic Table Mountain as its calling card.

Its history has been tragic and oppressive, but its emergence from decades of apartheid to (so far) stable democracy has been uplifting. Compared with Robert Mugabe's madness in Zimbabwe, Cape Town and South Africa's emergence as an international tourism destination is testament to a country determined to move forward.

Nelson Mandela's humanity seems to have suffused a nation.

Even on Robben Island, where Mandela was incarcerated, former ANC political prisoners who now lead tours of the cells stress the need for moving forward positively, and not dwelling on the savage inequities of the past. (One of the guides, unaware that some of his guests were Irish, spoke of how international sanctions against apartheid started with a group of shop workers in Dunnes Stores in Ireland.)

The Irish who bought into Howard Holdings'/Eurocape's "old town" urban renewal (offices are decentralising to out-of-town campuses and compounds) project are investing faith as well as money.

They accept that there's a risk to investing in South African property, as indeed in any overseas or other investment, and they comprise a broad mix of business backgrounds. One individual bought one apartment and took options of five others; another equity investor who had been in from the start said he was spreading his investments geographically across varied markets and just liked the notion of his cash in a southern hemisphere sun-spot.