ALL THAT GLITTERS IS NOT GOLD
New homes may have to be found before property plan rolls out
The Johannesburg skyline as seen from the 50th floor of the Carlton Centre.
● Johannesburg’s ambitious plans to upgrade existing apartment blocks in the inner city and build new residential accommodation have already resulted in the issuing of tenders worth R20bn. However, with the need to rehouse existing tenants, the plans may take a long time to come to fruition.
Johannesburg mayor Herman Mashaba said the city wants 500 dilapidated buildings to be transformed into affordable accommodation, including for students, within the next two years, saying that one of the biggest issues it faces is a lack of homes for hundreds of thousands of South Africans.
Many of the buildings earmarked for redevelopment have either been owned by the city for many decades or were bought by the city cheaply when private landlords sold in the early 1990s.
Some of these buildings have fallen into disrepair and are overcrowded, and it will take time to find temporary or alternative housing for those in the buildings — which will slow the redevelopment.
Two tender rounds with potential investments attached worth R20bn have been completed and another one is in process. Each round is a phase of the city’s Property Release Programme. More tenders will follow.
The first two phases include 86 properties that will be converted into 24 developments. Funders include Absa, FNB, Capitec and property finance specialist TUHF.
Paul Jackson, CEO of TUHF, said funding housing developments in the inner city is essential. But he adds there should be support for black entrepreneurs to enable them to partake in projects like these.
The developers of the first phase include a mix of established, largely black-owned developers, including the Johannesburg Housing Company (JHC), Milzet Consulting, Brickfields Housing, Nthwese Developments, Pahamo Oven, JM Corporate Real Estate Solutions in a joint venture with Ryden, Bayete Capital and EGC Properties, as well as architects including Savage+Dodd, Bentel & Associates and Gapp.
Jackson said no small BEE companies were given support to participate in the tender process, which should have been done to increase participation in the economy.
Prosper Mpofu, the chief financial officer at JHC, which tendered for numerous developments, said: “The JHC has a strong track record with affordable housing and we wanted to do more projects at scale. They have instead given projects to a very wide range of companies.”
He said the city should have been more selective and given proven developers larger projects or more housing units to develop. “We could end up having a situation where there is a hodgepodge of quality and buildings,” he said.
Mashaba said the R20bn investment is expected to yield 10,096 job opportunities within the city and up to 6,500 housing units that could be rented out from R900 to R4,500 per month.
The redevelopment is part of the city’s plan to combat the neglect, crime and grime that plague the CBD.
A large part of this property redevelopment plan is focused on the inner city, which experienced an exodus when big business migrated to Sandton in the 1990s.
In terms of the plans, apartment buildings in the inner city will either be reconfigured to contain more units or torn down to be rebuilt from scratch.
Developers who win a tender for a building, buildings or a precinct project will have a 50-year lease.
But, though architects and contractors are working on planning and heritage applications, they cannot begin redevelopments until the current residents are rehoused elsewhere. The city says nobody will be left homeless but is keeping mum on where the alternative housing is and how many people need to be housed.
Councillor Reuben Masango, member of the mayoral committee for development planning, said last week the city will do an audit to see who is occupying buildings legally and who is not. Those who needed alternative accommodation could then be given it, he said.
Developers may also struggle to redevelop old housing stock into better housing at a manageable cost.
Banks and financial institutions have started to put money back into the inner city because they believe the demand there is now strong enough to support meaningful housing developments.
Brian Roberts, CEO of RMH Property, RMB Holdings’ property investment company, said: “RMH has always believed in the value of the inner city, and investing in urban precinct development, not just housing alone, has always been part of our strategy.
“Divercity seeks to create living spaces where people can live, work, shop, go to school, gym and the doctor. The success of the precincts will largely be driven by the demand for the residential space and we believe there is strong demand for high-quality residential space in these precincts — at the right price levels.”
Divercity is an unlisted property fund owned by Atterbury and Ithemba Property, with assets worth more than R2bn. It has received additional backing from RMH and other investors.
Roberts said venture capital funds would consider making 10 investments and would be satisfied if only seven were successful.
Critics are concerned that, though the city’s plan is valiant, it is not responding to the private sector investment that has already taken place, especially since the 2008/2009 recession. They argue that the city has not upgraded roads and infrastructure adequately.
Architect Heather Dodd of Savage+Dodd said she is concerned that there is a lack of big-picture thinking on the part of the city.
Savage+Dodd has been involved in the development of more than 7,430 social housing units in more than 40 locations, including the Brickfields Social Housing Precinct close to the Nelson Mandela Bridge and the Metromall taxi rank, on the historic brickfields that date from the 1890s.
That project was financed with both government subsidies and public-private partnership funding and loans. It formed part of the Presidential Job Summit Programme.
“The city’s plan has positives, but we have seen similar plans before. We had the ‘bad buildings programme’ and the ‘better buildings programme’ a year ago. It’s all good developing housing but you need environmental upgrades, and developments need to contribute to spatial transformation,” she said.
While there has been massive investment into public housing by private players, there hasn’t been a significant response from the city by, for example, developing enough new parks or other public spaces.
Two of the buildings that Savage+Dodd will redevelop are Vannin Court and Beaconsfield Court in Hillbrow, which Dodd said have been atrociously managed, with residents living in appalling conditions.
Vannin Court has 58 apartments housing as many as 300 people. The plan is to redevelop the building so that it contains 112 units, she said. Beaconsfield is a failed sectional title development that needs to be fixed as soon as possible, she added.
The Johannesburg Property Company (JPC) manages property owned by the city.
Fanis Sardianos, executive manager: client business operations at JPC, said it could take 10 years for the city to release the 500 buildings and for them to then be redeveloped into housing.
“This is a long process. Certain buildings need to be rezoned and people in them need to be rehoused … There are an initial 24 proposed developments, some of which are on vacant land. I think we will start to see developments gain traction in the next year,” Sardianos said.
We could end up having a situation where there is a hodgepodge of buildings