Richards Bay can expect an investment of about R1 billion in the development of the John Ross Interchange (JRI) Business Park, with the Liberty Group announcing plans last week to buy the development site from the Arctic Sun development company for an undis- closed amount.
The deal marks Liberty’s first greenfields industrial property development in Richards Bay on land identified by the local uMhlatuze municipality and KZN government as a high-potential development site. The 195 000m² site is strategically located at the entrance to Richards Bay from the N2 highway on the upgraded John Ross Parkway which links up with Empangeni.
Samuel Ogbu, CEO of Liberty Properties, said: “This prime acquisition gives the Liberty Property Portfolio much-needed exposure to modern industrial buildings, as well as better representation in KZN, where the group already has substantial investments in retail, offices and hotels in Pietermaritzburg and uMhlanga.”
Liberty did not disclose the amount it would pay for the site, but it is likely to be well over R100 million considering that this is a fully packaged project that would include all the approvals and bulk infrastructure requirements.
Liberty said the investment in JRI Business Park provided the group with a significant opportunity to facilitate development in a high-potential developmental node.
It said that given the planned infrastructure spend of about R33bn in this area by Transnet over the next seven years, investment in this region was expected to increase significantly, which would push up demand for real estate and land.
“The development of JRI Business Park is an important step in the process of bringing greater diversity to our core portfolio by extending our reach into industrial property. The acquisition is strategically important for Liberty Properties, mostly because of its ability to facilitate sectoral and regional diversification,” Ogbu said.
Arctic Sun, a land development company specialising in the development of growth nodes on holdings previously farmed by Mondi SA, started earthworks for the Richards Bay development last year. Liberty’s purchase of the project is likely to see a more high-profile development – Liberty’s extensive R27 billion property portfolio includes flagship properties like Sandton City and Liberty Midlands Mall.
Liberty Properties said it intended to create an industrial and commercial mixed-use development over 30 sites, with top structures that included warehousing and showrooms. Construction was expected to start in 2013, as soon as the infrastructural services were completed by Arctic Sun and subject to approval by the Competition Authorities.
The Arctic Sun consortium comprises the enterprise development arm of Mondi SA, Mondi Zimele, Laurusco Developments and Tiawana Investments, whose directors include Moses Tembe and Themba Ngcobo, both former presidents of the Durban Chamber of Commerce and Industry. Tembe is also current co-chair of the KZN Growth Coalition.
Laurusco Developments is headed by KZN property heavyweight Neels Brink. He is a well-known former Tongaat Hulett director having been involved in several of the company’s major developments, including Zimbali Coastal Resort, River Horse Valley Business Park and the development of the Gateway node, north of Durban. Laurusco also manages the Durban Point Waterfront Development.
Brink said the Liberty deal represented a major vote of confidence in Richards Bay as a growing industrial hub. He expected that Liberty’s investment in top structures as part of the business park development would be about R1bn.
“Only once the bulk infrastructure such as roads, sewerage works and power lines are complete will the deal be finalised and we will exit the project. We are essentially selling the planned development to Liberty. Two sites of the original 31 hectares developed were already sold before this deal. This included a site for the development of an Italtile and a petrol station site with 3 000m2 for a small retail centre,” said Brink.
More than R10 million had already been invested by Arctic Sun for bulk infrastructure, with another R100m to be invested before Liberty took over the business park development, Brink said.
Other Arctic Sun projects – either in the planning approvals or marketing phase – include the Nkodibe Interchange Project at Mtubatuba and the N3 Hilton development in the KZN Midlands.
Liberty said that beyond the infrastructure spend, it expected the JRI Business Park project to make a significant contribution to job creation in northern KZN.
The development of the site is likely to spur further development of the surrounding area and bring a higher level of sophistication to Richards Bay.