Agribusiness conglomerate Crookes Brothers — which specialises in sugar, deciduous fruit, bananas and macadamias — is making steady progress in unlocking value from its Renishaw property holdings.
Other JSE-listed companies have generated strong returns outside their respective core businesses by redeveloping properties that originally formed part of operating structures. These include chemicals group AECI, sugar giant Tongaat-Hulett, clothing retailer Rex Trueform and industrial group Deneb Investments.
Crookes has harnessed sub-optimal agricultural land for redevelopment. In his annual report released last week, Crookes MD Guy Clarke said construction on the 500-unit Renishaw Hills lifestyle estate near Scottburgh, KwaZulu-Natal, had started in March.
To date, 56 of the 61 first-and second-phase units had been sold with buyers set to take occupation from September, Clarke said. "We expect continued strong demand for future phases due to the outstanding quality of the product and competitive pricing."
The medium-term prospects for the real-estate project were linked to the property market on the KwaZulu-Natal South Coast and demand for second homes and retirement property in the areas, the report said.
It indicated that the initial phases at Renishaw had sold quickly despite the infrastructure not yet being visible.
"This gives the group a positive sense that there is strong demand, particularly at unit price points below R2m."
In terms of the effect on the Crookes bottom line, Clarke said sales were recorded on transfer, and building of new phases only commenced after signed sale agreements with buyers. But he believed the development should provide a solid contribution to profitability for several years with the major effect between 2019 and 2024.
Renishaw Hills was one of many commercial, light industrial, hospitality and residential projects targeted for the Renishaw estate "master plan".
Clarke disclosed that 1,300ha of land, including 260ha developable land, had been rezoned. Renishaw Hills comprises only 28ha of this developable land.
It was planned to implement these profitable developments over the next two decades and beyond, Clarke said.
Several potential purchasers had been identified for other portions of land at Renishaw.
Some portions of land had been subject to a land claim.
"The hearing of the claims has continued on and off since 2016. The process is proving to be frustrating and costly. While we are confident of our case, it is difficult to predict the eventual outcome in the current political climate," Clarke said.