Private sector to invest R20bn in Joburg CBD
Mayor Herman Mashaba to release details of funds secured for inner city housing developments next week
The City of Johannesburg has secured R20bn for residential development from the private sector, mayor Herman Mashaba says.
He said the investment, which will fund 24 developments, is a sign that the private sector believes in the rejuvenation of a CBD that it fled more than 20 years ago.
Mashaba has been trying to entice developers to redevelop mothballed state-owned buildings into affordable housing and student accommodation.
“At the end of 2016, I said I wanted to turn Johannesburg into a building site. Then at the end of 2017 our Inner City Rejuvenation Project was launched and we gradually released tenders for 86 buildings. We have now managed to secure R20bn worth of proposals for projects involving these buildings. This is a watershed moment in making the inner city thrive again,” he said.
Mashaba said the new developments “are predominantly mixed-use, with emphasis on affordable residential units, affordable student accommodation and affordable retail spaces for SMMEs. However, some developments will deliver solely residential or student accommodation.”
The 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.
Though plans are still in the approval phase, it is expected that 1,500 of these new units will be for student accommodation.
The developments are in areas such as Johannesburg Central, Yeoville, Berea, Vrededorp, Fairview, Salisbury, Marshalltown, Wolhuter and Turffontein.
Mashaba said no listed companies had tendered to redevelop the buildings but that there was interest from various black developers as well as companies led by women.
The investors’ identities will be released on Monday.
Head of research at Anchor Stockbrokers Craig Smith said listed property companies who had not invested in inner city housing for a number of years could return.
“My guess is listed players may enter in due course. It’s probably too early as if they invest there, they are raising their risk profile. They would be taking on a lot of development and redevelopment risk. I’m not sure any of them have the necessary skills or expertise to tackle this effectively,” he said.
But Smith said some of the developers may create joint ventures for select opportunities in the inner city with teams that had the necessary expertise. Investors would wait for Mashaba’s announcement next week to see which private developers were interested and why.
“Octodec Investments could participate in Mashaba’s programme, given their deep roots in the CBD and understanding of dynamics there.”
The announcement is “a little thin on detail though, so I wouldn’t get too excited just yet”, Smith said.
The city council approved an additional batch of 70 properties in February. These will go to tender on Friday.