Institutional investors and corporates are constantly looking to achieve double digit yields in relation to investments in traditional real estate assets. With retail, office and residential property under pressure the study set out to determine how hotels perform compared to traditional property investment asset classes in terms of investment yields during different stages of the property cycle, and whether investors (property developers and institutional investment funds) are considering the hospitality sector for investment or diversification of current portfolios. Furthermore, to determine how aligned the commercial banks, Development Funding Institutions (DFI) and Section 12J funds are with funding single hotel assets versus portfolio lending, and what their requirements are. As an exploratory study, interviews were conducted to obtain in- depth and rich information from purposively selected respondents with experience in the sector after completing a preparatory questionnaire. Respondents included property developers, investors, financiers, tour operators and hotel operators. Results confirmed that both developers and investment funds are indeed considering hotels as an alternative investment since the yields are favourable when compared to other asset classes, yet with a longer investment horizon. Hotels required time to stabilise and at this point an expected yield should be higher than 12.5% which is higher than initial yields for traditional commercial properties. Historically, hotels investors were very specific in their investment asset classes and usually purely focused on hospitality assets (specialist investors). This has now changed with an increase in generalist investors coming to the market with exposure in a diversity of asset classes including the hospitality sector. Funding challenges, due to the operational risk associated with Hotel Management Agreements (HMA) is perceived by both financiers and developers or investors. Leases are the preferred income model but are seldom available in the hospitality sector and often those that are made available, may not provide the strong covenants required by financiers and developers/investors. Alternative funding is available in the form of Section 12J VCC’s or from DFI’s but both have their limitations as became apparent in the results. Recommendations for further research include funding challenges for a development or acquisition strategy at a single asset and portfolio level, and expansion to Sub-Saharan Africa as it impacts many investors and international hotels brands with exposure in these regions. / Dissertation (MSc (Real Estate))--University of Pretoria, 2021. / Construction Economics / MSc (Real Estate) / Unrestricted

This study sought to examine whether the use of tax incentives to boost investment into the SME sector is an effective policy for economic development. More specifically, the study focused on the Section 12J tax incentive of the Income Tax Act of South Africa, which underpins the current venture capital companies' (VCC) regime for this country. This VCC regime is aimed at addressing the challenge of lack of access to finance by SMEs, and it does so by incentivising venture capital investors to provide equity capital to qualifying SMEs. These SMEs are, in turn, expected to grow and help reduce the economic challenges of poverty and unemployment in South Africa. A mixed methods research approach was adopted for this study. It was also inductive in nature, based on primary data collected from a survey of various stakeholders of the VCC regime using a convenience sampling method. The data variables of the study were based on factors relating to the impact that the VCC regime has had on SMEs in terms of financial performance and creation of decent employment. The study concludes that the VCC regime has had a positive impact on the South African SME sector in terms of financial performance and creation of decent employment. As a result, the VCC regime has shown to be an effective tool for addressing various economic challenges, such as: lack of access to finance faced by SMEs, high failure rate of SME businesses, and poverty alleviation through provision of decent employment by SMEs. Thus, the resultant recommendation submitted in the study is that the VCC regime should as such be extended beyond its current sunset date in order to ensure the South African economy continues to enjoy the benefits that the regime has to offer.