In­ner city project may bring in­vestors back

Business Day - - FRONT PAGE - Alis­tair An­der­son Prop­erty Writer

A R2bn project backed by RMH and Ned­bank could kick-start the re­turn of large cor­po­ra­tions who de­serted Jo­han­nes­burg’s in­ner city in the 1990s, ac­cel­er­at­ing its de­cay, says mayor Her­man Mashaba.

While cer­tain parts of the in­ner city have been re­ju­ve­nated, largely in the lead-up to the 2010 Soc­cer World Cup, many sec­tions are suf­fer­ing from poor in­fra­struc­ture, bad spa­tial plan­ning, inad­e­quate trans­port links, a lack of new busi­nesses do­ing trade and crime.

Speak­ing at the launch of the Divercity Ur­ban Prop­erty Fund in New­town on Wed­nes­day, Mashaba likened the prop­erty op­por­tu­nity of­fered by the in­ner city to the “sec­ond dis­cov­ery of gold. I be­lieve that this project can be the start of some­thing which sees the pri­vate sec­tor com­mit to the city again.

“We are go­ing to make Jo­han­nes­burg great again. In the past, govern­ment worked against the pri­vate sec­tor in the in­ner city, but this is chang­ing.”

Divercity is a new real es­tate group backed by in­sti­tu­tional money, which is com­mit­ted to grow­ing a sub­stan­tial in­ner city prop­erty port­fo­lio that it even­tu­ally wants to list. The com­pany was cre­ated with the in­ten­tion of mak­ing large mean­ing­ful in­vest­ments into Jo­han­nes­burg, “which ben­e­fit a range of peo­ple in­stead of just the up­per mid­dle class and rich”, it said.

In the past, in­vestors had cre­ated in­ner-city precincts, which of­ten in­cluded nightspots and res­tau­rants that ap­pealed to rel­a­tively wealthy South Africans and tourists, and spent money on scat­tered res­i­den­tial de­vel­op­ments, but big in­sti­tu­tions had not been con­vinced of com­ing back and putting their cash to use in Jo­han­nes­burg, said Carel Kleyn­hans, ex­ec­u­tive di­rec­tor at Ithemba Prop­erty De­vel­op­ment.

Ithemba is one of the main share­hold­ers in Divercity, along with main­stream prop­erty de­vel­oper At­ter­bury.

Kleyn­hans said Divercity’s ini­tial R2bn in­vest­ment, which would be spent on re­de­vel­op­ing Absa Tow­ers Main and cre­at­ing the new mixed-use six-city­block Jewel City, showed that there was scope for large

com­mer­cial de­vel­op­ments and re­fur­bish­ments in down­town Jo­han­nes­burg.

“We’re start­ing by in­vest­ing R2bn over 18 months. It’s been years since such a large sum of money was spent on the in­ner city in such a short pe­riod.

“In the past decade or so there have been some small in­vestors who have bought and de­vel­oped build­ings here and there and the likes of Jonathan Lieb­mann’s Prop­er­tu­ity, which spent hun­dreds of mil­lions over a num­ber of years, but no­body has in­vested half of what we’re do­ing here,” he said.

Prop­er­tu­ity is the main de­vel­oper of the Mabo­neng re­de­vel­op­ment.

Divercity ac­quired the 30storey un­oc­cu­pied Absa Tow­ers Main build­ing from Absa, and plans to re­de­velop it into one that in­cludes 520 af­ford­ably-priced res­i­den­tial rental apart­ments, a floor of res­tau­rants, ground floor con­ve­nience re­tail and a pub­lic park.

Absa will also be leas­ing back nine floors with 10,000m² of of­fice space in the re­de­vel­oped build­ing. Once com­pleted, the de­vel­op­ment will be val­ued at more than R400m.

Talis Prop­erty Fund helped form Divercity, which al­ready owns R2bn of as­sets in the in­ner city, in­clud­ing New­town Junc­tion Mall and Tur­bine Hall.

RMH Prop­erty and Ned­bank Prop­erty Part­ners’ role as corner­stone in­vestors are sub­ject to Com­pe­ti­tion Com­mis­sion ap­proval.

Wouter de Vos, CEO of At­ter­bury Prop­erty Fund, said Divercity might list in the next three to four years as a real es­tate in­vest­ment trust when it owns about R6bn in as­sets.

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