Investors

Those of us who have played Matador know that it costs money to get to Rådhuspladsen. The argument is that it costs the fund to buy land on the spot.

The same applies everywhere in the world. It is the land that costs. Building costs almost the same regardless of where it is built. Land will always have a value regardless of the purpose. Of course, the m2 price will be different.

The campsite, which likes to have sizes between 5 and 20 ha, is no exception. Of course, the value will be greatest if it is used for the purpose, but as an alternative use the place will also have value. The campsites often have an attractive location. Preferably near water or resorts. We have experienced that campsites are closed down to be sold as hobby properties.

Camping as an investment property

With liquid capital, banks or shares will be natural options. The banks currently offer an interest rate of up to 3%. The shares have also not been particularly attractive in the recent period. So what about investment properties?

There are many different types of investment property which can be divided into properties for either residential or private use. The business offers a return of around 5-8%.

As a novelty, commercial broker Hans Korsgaard has developed a concept within investment in campsites. Hans Korsgaard has followed the industry since 1978 and from 1986 dealt with the sale or assessment of camping. During the period, he has sold/assessed around 70% of the Danish campsites.

Now is the time for camping as an investment project. We can see that campsites with great potential are sold at prices from DKK 10 – 60 million. This amount is not available to traditional buyers because the moneylenders, banks and credit unions, require an equity of at least 25% of the purchase price.

In recent years, there have been acquisitions of Danish campsites, especially from the Swedish chain First Camp, but also the Danish Camping Union (DCU) has also appeared as purchasers. In addition, current owners have started to buy up more places.

If we look at the amount of Danish places, this is currently approx. 450. approx. half or more will not have attractive earnings. The establishment of new campsites will not be interesting, as they must be located at least 3 km from water. In connection with that, it is recognized that location, location and location is the absolute must in relation to a reasonable return.

In order to get a reasonable return, it is necessary for the practitioners to have the necessary knowledge to operate a camping site. At the same time, the investors must also secure security for payments of the services.

Before the start-up, the lessee and possibly the owners will be provided with a concept that caters for all matters from site care, marketing, bookings, purchases, service to daily operations. The concept is used with the lessees of the spaces. At the same time, the owners will receive a copy.

As mentioned, the spaces are leased out. This takes place on terms that ensure the investors their return on investment.

The terms take into account both the investment and future investments that are necessary for continued development of the product. Here, we think in particular of the development around rental units such as cabins, mobile homes and the very popular – glamping. In addition, there will also be development within the existing building stock as well as changes to the areas.

The financing takes place via a mortgage of 50% of the purchase price. Normally, it will be possible to obtain a credit union loan of 60%, but these must not mortgage the inventory, which is why 50% is calculated.

Investors come up with the other half. This means that up to 5 investors are admitted, each contributing 10% of the purchase price. That means an amount of between DKK 1 – 6 million. We expect a business of approx. 8% p.a. In relation to improvements, we expect a business of approx. 10% p.a.

If you would like to hear more about the project, we would be happy to hear from you.