Be­friend the Trend:

Finweek English Edition - - INSIGHT - ONE OF THE

most promis­ing prop­erty trends at the moment is be­ing dubbed “re­pur­pos­ing” and it may of­fer some in­ter­est­ing op­por­tu­ni­ties for in­vestors with a lit­tle ap­petite for risk.

Jo­han­nes­burg-based prop­erty devel­op­ment firm Ci­tiq is one of a grow­ing num­ber of com­pa­nies that re­pur­pose ex­ist­ing struc­tures i nto res­i­den­tial struc­tures. The com­pany is in the process of con­vert­ing the New­town Si­los, con­structed in the Six­ties and in dis­use since the Eight­ies, into ac­com­mo­da­tion for 320 stu­dents.

Ac­cord­ing to Arthur Blake, the en­gi­neer­ing mas­ter­mind be­hind the project, pro­vid­ing ac­com­mo­da­tion that is con­ve­niently sit­u­ated, close to work and ameni­ties, se­cure, func­tional and well­main­tained, is be­com­ing in­creas­ingly dif­fi­cult and ex­pen­sive.

“Most of the so- called af­ford­able hous­ing in South Africa has been built on the ur­ban fringe where land is cheap and the size of de­vel­op­ments al­lows de­vel­op­ers to build at low cost due to economies of scale.”

By con­trast, prop­er­ties within city lim­its are ex­tremely ex­pen­sive to de­velop due to high land prices and lim­ited space. Ren­o­vat­ing and re­gen­er­at­ing ex­ist­ing struc­tures into of­fice parks or ac­com­mo­da­tion can be achieved at be­tween 60% and 70% of the cost of a new struc­ture.

“Ex­ist­ing build­ings built for other pur­poses, such as of­fices, in­dus­trial space and grain si­los, of­ten out­live their use­ful­ness for their orig­i­nal pur­pose, which pro­vides great op­por­tu­ni­ties to con­vert th­ese struc­tures into res­i­den­tial ac­com­mo­da­tion,” says Blake.

“By re­pur­pos­ing an ex­ist­ing build­ing, the pur­chaser is able to buy a build­ing, which is con­ve­niently sit­u­ated in the city cen­tre, with pre-ex­ist­ing walls, floors and win­dows at a frac­tion of the cost of build­ing a struc­ture of sim­i­lar size,” he ex­plains.

For ex­am­ple, had Ci­tiq com­pany pur­chased the land, de­mol­ished the ex­ist­ing struc­ture and re­built a struc­ture with the ca­pac­ity to house 320 peo­ple, the New­town Silo project would have cost R59m, or R13 111 per square me­tre. By re­pur­pos­ing the ex­ist­ing struc­ture, how­ever, the

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