Advice and Opinion

Real estate companies see exponential rise in game farms and game breeding

An elephant at the Sabona Wildlife Reserve, Little Karoo.

Real estate companies involved in game farms and game lodges in Southern Africa have seen good growth over the last ten years, says Gavin Commins, Chief Executive of The Valuator Group.

“In the last decade,” said Commins this week, “our group has seen a massive increase in the number of requests for valuing these farms and the wild animal stock on them. We can take some credit for foreseeing that there would be a swing from conventional stock farms to game reserves and for setting up a specialist team to cater for this.”

His team, said Commins, is served by several specialists, most notably a qualified ecologist, Greg Seymour, who has become The Valuator Group’s specialist game valuer. Seymour’s background includes both zoological and botanical experience and he has had 15 years in assessing agricultural and game reserve assets. While The Valuator Group’s specialists in property, plant, equipment, machinery and technical assets (including vehicles) are qualified to value any game reserve.

Commins said the trend to converting conventional farms to game farms came about when many farmers were battling to make ends meet. Droughts and adverse market prices have frequently resulted in farmers being overtaken by debt and having to sell – even though tragically in some cases the land had been owned by their families for a century or more. Many might have lost their farms for ever had they not had the option of becoming game farms.

Distressed farms, said Commins, were sometimes bought out by investors who had awoken to the fact that game farms and game lodges were becoming the flavour of the month – and could be very profitable. Sometimes the new buyers worked with the previous farm owners but in many cases they brought in their own specialist staff, including specialist wild life veterinarians, who, he said, played a very significant role in this sector.

“We have no reliable figures on which to work but we know that in the early 1980s there were very few game reserves in South Africa outside the traditional areas linked to the Kruger Park. Today, believe it or not, the figure is ± 2,000. As I have indicated, the rise has been phenomenal.”

This rise in the number of game farms, said Commins, was complemented by three other new trends. The first was a concomitant rise in the number of game auctions, some of which are now held at regular intervals annually, biannually or even more often. The second was a big increase in high priced hunting establishments catering for the affluent amateur hunter and in most cases operating under very strict government controls and conservation principles. The third new trend, and this has been particularly noticeable in South Africa, has been a swing towards estate management and controlled breeding programmes – and here the wild life veterinarians have proved invaluable. The aim of these innovations, said Commins, has been to ensure that, as in the agricultural sector, the stock is continually improved along with the animals’ appearance and their ability to resist disease and tough climatic conditions.

As a corollary to the above, certain game farm breeders have also, said Commins, become exceptionally clever in learning how to breed the rarer, more exotic species such as black and red impala and golden wildebeest, which in today’s market command very high prices.

“The escalation in the price of wild animals,” said Commins, “has been higher than any previous forecasts could have foreseen, In some cases new world records have been set. A buffalo bull sold last year for R40 million is just one example. Recently a kudu bull was sold for R9 million and a sable antelope bull for R12 million. Although certain stock (notably elephants) are not in short supply and do not command high prices, the rarer, more precious game animals will sell between R700,000 and R1 million and many of these are not the large species with which we are all familiar.”

As in the vineyard/wine producing sector (for which The Valuator Group also has specialist valuation teams) and in horse breeding and horse racing many of today’s buyers, said Commins, are in syndicates and are quite possibly new to this type of investment. Their lack of experience makes it all the more important that for insurance and other purposes fair, accurate, market-related valuations are obtainable.

“Some of those who did not make use of a good valuation service,”said Commins,“have overpaid or under-or over-insured to an almost ludicrous degree”.

“Game farms are one sector in which the profits can be very satisfactory indeed, but it is also a sector in which the investor will be well advised to tread warily,” said Commins.“If of course the purchase is made purely for lifestyle reasons without regard to profit our services may be less valuable – but the vast majority of game farm and game lodge buyers are moving in here for hard-headed business reasons.”