In February 2020 Futureneers launched its AirHotel Section 12J Fund and the initial uptake exceeded expectations. Our AirHotel project is a "decentralised" hotel model, operating like a hotel, but in different physical locations managed and marketed within AirBnB and other online hospitality platforms such as Bookings.com. The project is undertaken in partnership with ManageAir, a respected short-term rental management company already looking after 200+ AirBnB units in Cape Town..
Even before COVID-19, Futureneers identified the opportunity to raise capital for a hospitality property fund to benefit from the tax perks of Section 12J combined with an expected short-term decrease in the prices of short-term rental apartments in the Cape Town CBD and Atlantic Seaboard.
Then came COVID-19! -
Enough said. Hospitality paused and the industry will take a significant time to recover. Even then, we expect a major shift to take place in the manner in which we all view, book and experience travel. Fortunately we believe, AirHotel is perfectly positioned to make its mark in the post-corona travel era.
What does it all mean for our Section 12J AirHotel Investors? -
COVID-19 has forced us to delay purchasing our targeted units and 100% of investment funds raised are currently in cash and money market investments - meaning no negative COVID-19 impact in the short-term. Your Section 12J Investment is therefore not impacted by the issues faced by the hospitality industry, apart from lower interest rates, which will in the short-term mean lower yields on cash.
However, we believe our strategic positioning and cash resources present great opportunities for AirHotel in the short to medium term as follows:
(1) We expect hospitality property prices to materially decrease in the short term, extending and magnifying the existing buyers market.
(2) Given that most hotels are empty at this stage, we also foresee a lot of existing AirBnB units removed from the platform and offered as 6-12 month standard rental options at reduced rental income rates. Short-term rental supply will therefore decrease.
(3) Large hotel groups (and the gathering of large number of people in such hotels) are facing various challenges, with smaller units and the AirBnB market to potentially benefit from these trends.
We therefore believe our decentralised AirHotel model is perfectly positioned to re-enter the hospitality market at the right time, acquiring the right properties at reduced prices and providing our customers the perks of a hotel (such as virtual concierge and 24 hour remote checkin), while not having exposure to large number of people in a hotel setup.
Our Strategy going forward -
At this stage it is too early to predict accurately how the hospitality industry will respond to the impact of Covid-19, and only once we are able to form realistic and accurate expectations we will formulate and execute our strategy. We will keep you, our valued investor in the loop all the way.
For now, sit back, relax, be safe - your investment is protected and buying opportunities are expected to be on the horizon in the next few months.
Don't miss out - Book a Zoom cession
During lockdown, Futureneers are setting up one-on-one Zoom calls with their 100+ investors to provide feedback on their respective investments, high-level investment strategies and most importantly new and exciting investment opportunities being developed as a result of COVID-19 and 12J opportunities focused on essential South African industries - such as energy, agri (food) and medical. Should you wish to schedule a Zoom Call with Jaco and Deon, please click the link below.