Billions more pours into Joburg’s inner city

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10-02-2014
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Moneyweb
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Rejuvenation continues at a cracking pace.

Once considered the economic hub of Africa, by the late-1990s the Johannesburg City Centre had become a shadow of its former self. Overrun by crime and poverty, many of its once illustrious buildings were abandoned as the city’s degeneration seemed unstoppable.

Fast-forward to 2014 and a R110bn investment announced recently by Executive Mayor of Johannesburg Mpho Parks Tau, and you will see an inner city that is being relentlessly rejuvenated in an attempt to address its infrastructure challenges and once again lure businesses to the area.

The rejuvenation of the inner city should entice more people to live there, says Azar Jammine, chief economist at Econometrix,. The ripple effect would be immense on issues such as job creation because many people would be closer to economic activity.

He believes the move is exciting on an economic level, as many investors have been looking into investing in the city.

More than R2bn has been committed to inner city projects that are under development. More projects are soon to follow, as investors look to capitalise on the lucrative margins that the CBD may offer.

The activities in the inner city suggest both the private and the public sector may have engaged in constrictive and sustainable partnership to develop the area.

“These offerings will be an addition to the long-standing private sector parties that have chosen Newtown as the preferred home such as Numsa, Anglo-Gold Ashanti, SAB Miller, Pick n Pay to name but a few,” explains City of Joburg’s (CoJ) chief executive Thanduxolo Mendrew.

Property

The investment over the past decade seems to be paying off. Many of the buildings around Marshalltown, Newtown, Braamfontein and towards the east of the inner city, have quadrupled in value.

Property developer Urban Ocean’s chief executive, Herman Schoeman, says there’s been a massive influx over the last ten years where the business signed good leases. “It’s a long-term strategy and it is difficult to say how much has been financially committed but we see value in the city.”

For example, Urban Ocean purchased a building back in 2004 and redeveloped it into luxury apartments called The Franklin on number 1 Rissik Street near Newtown. Today, the value of the building is estimated at about R250m.

Urban Ocean manages a portfolio in excess of 150 000m² in Joburg’s financial district.

Schoeman, says investment in the area had to be more than financial. Assisting with upgrading existing infrastructure and conducting maintenance in some areas is also included.

Commenting on the benefits of the infrastructure investment, he says it will be a wait-and-see game as to how the benefits would ripple through.

The Newtown story

“If you were to visit Newtown now, you would see that it is a hive of construction,” says Mendrew.

He reveals that Newtown is attracting more new businesses and developing further as a precinct.

The City allocated R900m for development in the area of the Potato Sheds building - a high-density mixed-use and arts centre which includes a 35 000 square kilometer retail centre, as well as a 180-room hotel with a gymnasium and conference facilities, and basement parking.

In addition, a further R57m was awarded for the development of the Majestic building in Newtown - described by CoJ as a mixed-use development comprising retail space and corporate office space.

The city also recently awarded a R316m tender for the development of Site 6 Newtown which will be a “mixed-use development featuring a world-class hotels for business and leisure travellers, a conference centre and gym, as well as retail space and basement parking.”

A development by Atterbury Property called Newtown Junction, has ploughed more than R1.3bn into mixed-use development, which will consist of retail and office space as well as a four-star hotel.

“The Market Theatre itself is investing in property having purchased a building which will become the Market Foundation’s headquarters and the Market’s Main and Laager theatres are also being refurbished,” Mendrew said.

Moreover, the Sci-Bono Discovery Centre is also expanding its investment in its Newtown property.

Other projects channeled by the Joburg Development Agency in conjunction with developers and investors include the African Food & Culture Hub Project, the Inner-city Commuter Links and the Hillbrow Tower Precinct.

Below is a look at the above-mentioned projects in more detail, according to the CoJ and the JDA.

· The African Food and Culture Hub project

The City of Joburg says that this this project stems from the city’s desire to “capture the public’s imagination” through development work in the inner city. The CoJ claims it will turn Park Station into a gateway to Africa by creating a welcoming public place that is a celebration of African food and culture.

· The inner city commuter links project

The JDA said this project is was already halfway through. The upgrade runs through Noord Street Market and completes the link from Park Station to Twist Street. This year, the phase will see the “continuation of the public environment upgrade project along Noord Street between Twist and Klein Streets.”

· The Westgate Station precinct

Located in the South-Western corner of the Johannesburg inner city it is characterized by a “multimodal public transport interchange”.

The JDA says this “includes the Westgate train station that is owned and operated by the Passenger Rail Agency (Prasa), two Rea Vaya (Bus Rapid Transit) stations, a mini-bus taxi rank and holding facilities for Metrobus as well as privately owned national long distance buses and cross border buses”.

· Inner City Public Places Challenge

Last year, the JDA says it planned three co-funded municipal environment projects. The first involves plans to upgrade the Braamfontein alleyways in partnership with the Braamfontein Improvement District. The other is to upgrade streets in the Maboneng Precinct; and the third to upgrade streets in the Hotel Precinct. This upgrade is scheduled for implementation in 2013/14 at a cost of about R2.5m.

· Hillbrow Tower Precinct

Last year, the JDA says that it began “a new area based development in the Hillbrow Tower Precinct” which will include capital works to support pedestrian networks, accommodate art traders, upgrade recreation facilities and improve safety.