Heartland, the property subsidiary of explosives and speciality chemicals company AECI, is allegedly in talks with a large Chinese consortium for the sale of land in Modderfontein – a process that, according to some property developers, is cutting out local buyers.
The portion of land under discussion is 2 500ha, which is being developed as a mixed-use zone. This falls within a 4 300ha area, located east of Johannesburg, that includes residential, commercial and retail developments. Heartland said previously that the whole site was valued in 2008 at R1 billion.
This week AECI released a cautionary statement saying it was in discussions to sell the land but it would not confirm who the buyer was.
Barry Gould, the managing director of construction company Capco, said portions of the Modderfontein development were initially set to be sold separately to different buyers.
Gould said he was in the process of buying a portion of the land when he was told that his and other applications had been rejected because Chinese buyers were going to buy the whole piece of land.
“I was told that the Chinese would be bringing their own people to develop the land. It’s more convenient for them [Heartland] to sell the land to one buyer,” Gould said.
Gould’s company was looking for industrial land worth about R10 million. He now had to look elsewhere, which was difficult because “we are up against the big developers”.
“You can’t exclude the whole market because you want to sell to the one buyer just because it’s convenient,” Gould said. “Hundreds of developers wanted to develop the land… It’s just unfair that they are the only ones who get it.“
Another bidder that was in the running to buy land was property developer Abland, whose marketing manager, Grant Silverman, said he was aware the land was going to be bought by a foreign buyer but he did not know the details.
“If they are bringing their own people it’s obviously not great for our economy,” Silverman said. “We can’t afford to buy the whole thing; the buyers obviously have deep pockets.”
Not all developers are pessimistic.
The sales manager at Seeff Properties, Chris Hajec, who has recently completed a deal with New Hope China for a commercial space in Johannesburg, said Chinese buyers were good for the market.
But he remained cautious on the long-term implications.
“I think it’s fantastic for the market. In a slow market we need to look at all avenues of making new business,” Hajec said. “As long as the authorities have safeguards in place to ensure that the country does not lose out – like if they hire local contractors for building.”
Laurie Wener, the managing director of the Western Cape for Pam Golding Properties, said: “We have had a fantastic run from foreign buyers because of the erosion of the rand recently.”
Wener said Chinese buyers were are “very shrewd business people” who were always extremely prepared and very aware about the South African property market.
Hajec said: “I noticed that the Chinese are more aggressive negotiators than South Africans are. They have a lot of pressure from head office not to lose money and not to lose face.”
AECI public relations manager Fulvia Petero said buyers were chosen on whether they could pay for the land and on a willing-buyer willing-seller model. AECI declined to comment on why the land was being sold to one buyer.
AECI’s share price dropped 0.35 percent to close at R115.50 on the JSE yesterday.