Construction on KZN’s new mini city Westown to finally begin

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12-08-2022
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Moneyweb
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After Covid-19-related hiccups and Tongaat Hulett’s financial woes saw an almost four-year delay to the development in sugarcane fields in Shongweni.



Developers Fundamentum Property Group and JSE-listed Tongaat Hulett finally broke ground on Westown, a new mixed-use mini city west of Durban in KwaZulu-Natal (KZN), with a ceremonial sod-turning on Thursday, almost four years after they announced plans for the initial development.



The multi-billion-rand development planned for land under sugarcane fields in Shongweni will be anchored by Westown Square – a “high street” shopping centre expected to have a R1.3 billion price tag.



Westown Square will be surrounded by medium-to-high-density residential developments, a school, private hospital, office buildings as well as warehousing and logistics capacity that is expected to be the halfway house for truck drivers en route to Johannesburg.



Shoprite Group will anchor the retail centre with a flagship Checkers Hyper new generation store, while Woolworths will be the other key anchor.



Infrastructure rollout



Infrastructure development for the mega-project will be first on the list for developers, with the first phase focusing on an upgrade of Kassier Road – between Alverstone Road and MR559 – to a two-by-two lane with medians and sidewalks.



The road work – which is set to officially begin construction in September – will take place in tandem with the construction of the 45 000m² shopping centre.



Westown is being driven by Durban-based Fundamentum, a private property group invested largely in retail and commercial real estate in KZN and Gauteng that was founded by Carlos Correia, a seasoned property developer. He was formerly involved with Lazarus Capital, which in 2005 purchased a 25% stake from Sanlam in JSE-listed Vukile Property Fund, where he served as a director until 2011.



Correia has secured backing for the development from Durban tycoons, brothers Sean and Don Bergsma – the duo behind The Ignition Group and Impresa Capital, which recently bought out Gumtree’s Southern Africa business from eBay-linked Adevinta.



The Bergsma brothers are now shareholders in Fundamentum, with Sean Bergsma on the group’s board.



“Fundamentum is committed to changing the tide on developments of this nature, by leading a mixed-use urban sustainability agenda at Westown – inclusive, environmentally sustainable, high-energy, safe and secure,” says Correia.



“Westown is a new place – the new City of the West. A ground-breaking, locally-driven initiative that connects people with spaces and experiences, bringing new opportunities to live, work and thrive,” adds Correia.



“Now that the first tender for the upgrade of Kassier Road has been awarded to a stellar local development team, including contractors Stefanutti Stocks and engineering consultants SMEC South Africa, we are eager to get moving,” he says.



Ownership



The Westown development is modelled on Johannesburg’s Waterfall City in Midrand, which is being driven by JSE-listed Attacq, on land owned by the Mia family.



As developers of Westown, Fundamentum has obtained development rights of around 517 000m² of bulk at Shongweni, through a rolling 99-year leasehold agreement with landowners Tongaat Hulett.



This deal is a positive move for debt-laden sugar and property company Tongaat Hulett, as it will retain ownership of the land and receive rental income from commercial end users – raking in more income than what the old sugarcane fields would have generated.



Durban-headquartered Tongaat Hulett has battled financial struggles in the last few years, with the company registering two suspensions from the JSE since 2019, due in large part to an accounting scandal implicating former executives a few years ago.



The group’s financial woes, as well as the disruption caused by the Covid-19 pandemic in 2020, played a big role in the almost four-year delay on construction around what was once known as the Ntshongweni Urban Development.



Unlocking Tongaat Hulett land



This delay, according to Correia, necessitated many trips back to the drawing board and negotiating table for Fundamentum.



Questioned about the land leasehold deal, Tongaat Hulett chief business transformation officer Dan Marokane told Moneyweb that “this is the first such land lease” the group has concluded.



“[It comes] post the review of our strategy to unlock value out of our land in a manner that increases [the] ultimate value realised in comparison to outright land disposals. We have since embarked on another land lease which we will announce quite soon,” he noted.



“It is our stated strategy to explore, to the extent possible, land development opportunities that allow annuity income rather than outright land disposals, along the lines of what is being done in Gauteng’s Waterfall area,” he added.



“The Westown development entails some R900 million of infrastructure to enable the more than 500 000m² of development, which will include a regional mall development by Fundamentum, a new hospital,  and commercial and residential developments… It will further unlock some 2 000 hectares of the Shongweni Precinct, owned by Tongaat Hulett,” Marokane added.



As part of the agreement between the stakeholders, Fundamentum and the eThekwini Municipality (Durban City Council) will take joint responsibility for covering the infrastructure development bill for the development, with the city carrying the majority of this cost.



According to the developers, Westown holds new private sector investment potential of more than R15 billion over the next decade to 15 years.



Fundamentum said it is currently in talks with other retailers and major brands to take up space at the retail centre anchoring the overall development.



The group claims current estimates are that the development will create over 15 000 jobs over time just in construction, while post completion Westown is expected to create at least 7 000 permanent jobs.

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