Melrose Arch to add to the mix - 2 February 2005

melrose arch to add to the mix


developers are queuing up to get a slice of the action at mixeduse precinct melrose arch as the new owners get ready to roll out new development plans.

owner southern palace, a wholly owned subsidiary of cape town-based property partners, will soon announce its development partners for the planned residential and retail component at melrose arch.

in the biggest property transaction to date in sa, southern palace announced in december that it had acquired melrose arch for r1,27bn.

melrose arch had been on the market since december 2003 and had an aborted sale in november, when a company that had won the bid to buy it, atlantic corporate finance property consortium, failed to raise the cash.

southern palace said in december it would buy the johannesburg landmark using funding from standard bank properties, as well as local funds from property partners' own balance sheet.

property partners ceo stuart chait said at the time that his firm placed the most value on the undeveloped land at melrose arch.

he said there was about 20000m² of residential land ready to sell to a developer.

chait also said they were looking to offload between 20000m² and 30000m² of retail bulk to a developer.

"we've got a queue of developers wanting to take up the residential offer," he says. of the about 20000m² of residential space available at melrose arch, 8000m² is currently being developed. this equates to 47 upmarket apartments.

"we want to maintain the standards and the quality of the aesthetic integrity of the scheme," chait says.

he says they are also looking at establishing a "very upmarket" boutique style retail complex, which will form the "nucleus" of melrose arch.

property partners will probably enter a joint venture with a developer for the retail and residential components, says chait.

"we will announce in four weeks who our development partners will be for the residential and retail component.

"we are looking for skilled, experienced developers with good track records."

chait says that once they have finalised the retail and residential components, they will start to offload the office bulk on the site. of the 250000m² land for development at melrose arch, 200000m² has been zoned for offices. "we have a few large potential tenants interested in part of this bulk."

chait says that they have potential tenants wanting space from 12000m² up to 30000m².

"one attraction (for the tenants) is melrose arch's logistical position. it's positioned at corlett drive and the m1 and this makes traffic flow easy," he says.

melrose arch is also a security gated estate and people feel safe walking the streets, chait says.

"they can live, work and entertain in the complex. we will also be bringing in a lot more restaurants, coffee shops, cinemas and a couple of top grocery stores to the area."

property partners says that if they feel comfortable with the developers interested in the office bulk, they will also enter into joint ventures with them.

chait believes the timing of the purchase of melrose arch "is spot on. from a logistical point of view, especially where the residential and retail markets are at the moment, we feel we will be able to move the retail and residential components quickly."

once these components have been completed, melrose arch will become a true mixed-use scheme.

"it will have the critical mass of people and foot traffic to be able to enhance large office users and stimulate the retail centre."

chait says there is r5bn worth of development "waiting to happen" and that the potential for job creation is huge.