Property investors eye old airport site

INLSA

The R430-million deal to buy the prime Clairwood- Racecourse land from Gold Circle appears to prove that investors are eyeing the South Durban Industrial Basin for development.

The government’s plans for a multibillion- rand dig-out port at Durban’s old airport site and a development corridor along the N3 into the city from Joburg has led to increasing demand for properties from developers and speculators in these areas.

The R430-million deal by JSE-listed Capital Property Fund to buy the prime Clairwood Racecourse land from the Gold Circle racing group was “a clear indication” that investors were eyeing the South Durban Industrial Basin, according to property experts speaking to The Mercury.

The racecourse deal, together with Transnet’s R1.8-billion agreement to buy the old airport land from the Airports Company of SA, effectively means that two of the biggest commercial and industrial property deals in SA have taken place in the South Durban area.

“Plans around the dig-out port and N3 logistics and development corridor into Durban are yet to be finalised, but property speculators are looking to get in early and are trying to snap up properties in these areas,” said Miles Taylor, a property executive at Standard Bank and past chairman of the SA Property Owners Association in KwaZulu-Natal.

“Demand for property around the Durban Port is already high, but a shortage of zoned industrial land in the city has pushed up prices in the last few years. This has seen Durban command some of the highest industrial land prices in SA. However, prices have come down marginally due to the slowing economic environment,” he said.

Taylor said Transnet was changing its land tenure agreements to accommodate expansions and upgrades at the port, which has also resulted in the “knock-on effect” of higher demand for properties in South Durban.

“Demand for property around the port is still high due to supply issues… The sale of Clairwood Racecourse and plans around its property development will help, but this will take years to come on line. There are rezoning and environmental impact assessment issues to deal with,” said Taylor.

“Due to the fact that this site is yet to be zoned for commercial and industrial development, it might be bogged down with all these approvals. The city is unlikely to allow the entire site to be developed and needs to finalise its spatial planning for south of Durban,” he said.

Taylor said it was likely the plan was to establish a property project along the lines of the highly successful Riverhorse Valley business park north of Durban and not heavy industry.

Capital Property Fund director Andrew Teixerria said the group intended developing an A-grade warehousing and logistics park to the tune of about R2.5bn on the racecourse site to service the new dig-out port.

“We are not looking at any manufacturing, but the park will be purely for warehousing and distribution. Capital Property Fund is the third largest property fund listed on the JSE, with assets of about R18bn. Property is our core business and the racecourse site caught our attention because of its prime location next to the harbour and South Durban industrial area.”

Teixerria said the deal to buy the site awaited approval from the Competition Commission.

The racecourse would be leased to Gold Circle for two years after the finalisation of the deal. During this time the group would sort out development plans, rezoning and environmental approval.

He said the total racecourse land size was about 76ha, but the whole site would not be developed as part of the company’s plans.

Gold Circle chairman Robert Mauvis told The Mercury last week that the sale was also dependent on a successful rezoning of the land and an environmental impact assessment, but local ratepayers and environmental groups had signalled they would oppose the proposed new land use.

According to the eThekwini Municipality’s development planning, environment and management department, the racecourse is zoned as “private open space”.

Rob McInerney, of Durban-based Share-List Property, said several companies were interested in the Clairwood Racecourse site and property speculators were eyeing sites in South Durban, around both the existing and proposed dig-out port.

“It ended up with the big boys, Capital Property Trust and the Cavaleros Group’s vying for the site… Since the beginning of the year there has been increased interest from local and international investors both in South Durban and the west or N3 highway area going up to Pietermaritzburg,” he said.

“In the harbour area, properties are fetching prices of around R1 600/m2, with very little land available and increased demand.

“In the new development node of Riverhorse Valley in north Durban, a price of R2 200/m2 was achieved recently, which highlights the demand in Durban for commercial and industrial land,” said Mc Inerney.

He said in addition to national companies, Indian and Chinese investors were looking at the N3 logistics corridor between Durban and Pietermaritzburg. He said several major investments were being planned or were already under way in areas such as Cato Ridge, Shongweni and Hammarsdale.

Anand Joseph, KZN regional executive of Nedbank Corporate Property Finance, said Durban’s role “as a key South African port city continued to drive steady demand for good-quality production and warehousing space”.

He said in spite of the challenging economic environment, segments of the property market in KZN were recovering, notably in the industrial property sector.

“A number of recent developments within the KZN industrial property market should serve to bolster this cautiously optimistic outlook… The most significant includes the possibility of large areas of land owned by Tongaat Hulett and land owned between the Durban-Pietermaritzburg corridor becoming available, as well as the finalisation of the deal by Transnet to acquire the old airport property for the purpose of extending its port facilities and supply network.”