Simulation for illustration only from the group project currently under construction on Zanzibar Pongwe Beach. Imaging: RM GROUP
More than a decade ago, Zanzibar was considered a destination that was mostly reached ‘on the road’ on a trip to Africa. Those hikers, or rather mochillers, saw the same pause as a transit point. However, in recent years the island of Zanzibar has undergone a significant makeover and has become one of the favorite places for a honeymoon for many couples. This, following the change and transformation of the region in the United Republic of Tanzania in East Africa into a hot and exclusive spot in the world of tourism.
The island of Zanzibar, which has a population of 1.4 million, with an annual increase of 1.4% and a group of islands spread over 2,461 square kilometers, experienced with the outbreak of the corona significant damage similar to other destinations in the tourism industry, but at the micro level. Recovery in the industry, when the number of incoming tourists was 80% compared to 2019. Moreover, in annual terms, the number of tourists in Zanzibar decreased by only 50% compared to the peak recorded in 2019 and January and February 2020 was 33% and 23% compared to those months In 2019, respectively.As in every investment opportunity, there were those who recognized the investment potential inherent in the island, already in the early stages and despite the global situation.
Company RM GROUP In the coming months, you will begin the process of running the hotel you built on the beach Pongwe As part of an entrepreneurial project, in partnership with a companyHotels .A.A , Headed by Avi Agagani, vice president of the Israel Hotels Association and entrepreneur Ariel Croitro, the field man in the project. The project itself includes 84 holiday units in a boutique hotel. One investment option is a partnership in a hotel unit starting at $ 100,000, or alternatively an investment in a taboo unit starting at $ 180,000 (this unit grants profits according to the relative share in the hotel). When the data indicate an annual increase of about 33% in the amount of foreign money invested on the island since 2010 and when there is a 6.8% increase in annual GDP, it can be seen that the direction in this segment is definitely positive.
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“This is an island where the tourist season takes place for ten months a year. We will add to this gaps between the growing demand of inbound tourism which shows an annual increase of 16.7% from 2015 to the beginning of the corona crisis, compared to supply that does not meet expectations,” emphasizes Matan Partman. And CEO ,RM GROUP“The change in the nature of the island to the format we know today in the form of four- to five-star hotels has only occurred in the last 15 years.
He added that “the gap between the cost to the tourist, which is completely Western, and the operating costs that are local, creates a very high profit potential and margins of security, along with a democratic government that encourages foreign investment in grants and help establish businesses on the island.” “In addition, there is extensive development of infrastructure on the island (roads, airports, shopping centers, etc.) – which indicates the following. Therefore, there is a particularly high and significant profit potential than in investments in the Western world.”
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So is the investment risk-free? not exactly. According to Partman, “Along with the many benefits, it is also important to pay attention to the other side of the coin. First, cultural differences and local standards must be considered – as with any investment that has construction and then management and operation of the investment there are risks. Unsuccessful management, etc.) Because in Zanzibar it is a very different culture from the one we know, things have to be monitored seven times, nothing is trivial. Advocate, etc.). In addition, there are risks in investing in a third world country – working with the authorities, government revolutions and the like. ”
Partman emphasizes that “there are macro risks – for example the corona plague and its damage to global tourism, although it is worth noting that Zanzibar has suffered much less than other countries and is already recovering back to its peak numbers. To reduce the risk as much as possible, the company “Government, creation of a trust account in Israel, mechanism for transferring funds to the contractor only after the end of each stage and approval by an Israeli and local building inspector to the fact that the land was registered in the company’s name before transferring money to the seller.”
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