Spear takes aim at site for mixed-use business
One of the last pieces of industrial land available for development in Cape Town could be turned into a new mixed-use site by Spear Reit, the only Western Cape-focused property company listed on the JSE.
Spear intends to develop Marine Place, a 51,000m² project in Paarden Eiland, a seafacing stretch of historical industrial land that has, over the years, been transformed to include retail, offices and hi-tech industrial properties.
Marine Place will consist of 200 residential apartments, 10,000m² of A-grade office space, 10,000m² of retail, motor showrooms, and a 12,000m² limited service hotel.
Listed landlords such as Equites Property Fund and Fortress already own industrial properties in the fast-growing node and now other property funds are investing in it.
Paarden Eiland’s proximity to the CBD makes it a highly attractive shop, live and work location. Many Capetonians who work in the CBD have had to look for housing outside of it due to strong residential price growth in the past few years. Cape Town’s population has also doubled in a decade, driving housing demand.
Dean Cowling, a listed property portfolio manager at 3PM Investments, said the development made Spear’s pipeline look far more attractive for investors in its shares.
“While I don’t think their ambitious Paarden Eiland development will come to fruition in the near future, it is exciting. Paarden Eiland has become a satellite location away from the congested Cape Town CBD. Many Capetonians have been looking for alternative places to stay out of the city, especially because of traffic congestion and this is the kind of development which will be well-received,” he said.
PAARDEN EILAND HAS BECOME A SATELLITE LOCATION AWAY FROM THE CONGESTED CAPE TOWN CBD
The development would lead to an increase in the net asset value of Spear in the future. “We are fans of Spear. Their pipeline is attractive,” Cowling said.
Spear CEO Quintin Rossi said the group would start to develop Marine Place once it receives the approvals it needs from Cape Town’s city council and when market conditions are conducive. Management expects to take two to three years to break ground on the development.
This would be followed by a two-year construction period. The asset, which will be Spear’s flagship property, will be worth about R1.6bn.
Spear CFO Christiaan Barnard said Paarden Eiland was “becoming an attractive investment node for both private and listed real estate funds looking to capitalise on its close location to the CBD, N1, N2 and N7 highways respectively”.
Rossi said Spear was working with the city towards approvals for Marine Place.
“This is a pioneering project that will give greater access to people wanting to live and work closer to the city,” he said.
“We are currently engaged with various city departments on this project.”
Since listing in November 2016 Spear’s asset base and market capitalisation have climbed from R1.4bn and R800m to R3.4bn and R1.8bn, respectively. Rossi said he aims to grow Spear’s asset base to between R10bn and R12bn by 2025, and its market capitalisation to between R5bn and R6bn.