The V&A Waterfront. Photo by Michael Walker
CAPE TOWN - Listed Growthpoint Properties and the Public Investment Corporation (PIC), the equal joint owners of the Victoria and Alfred (V&A) Waterfront, are exploring the feasibility of establishing a desalination plant to mitigate the risk to their investment in the precinct caused by Cape Town’s water shortage crisis.

The property assets in the V&A Waterfront are valued at a total of R17.4 billion.

Norbert Sasse, the chief executive of Growthpoint, confirmed this week that the company and PIC were exploring the possibility of building a desalination plant to serve the precinct.

Sasse said advisers were appointed about two months ago to advise Growthpoint and the PIC on the positive and negative aspects of such a plant that would “be pretty much for our own use”.

“There is scope to expand it to make it bigger to also on-sell into the city, but we haven’t been through those discussions as yet.

“We would have to take it through process in the V&A board to see if we want to do that. The city would probably be keen for us to do something like that. We haven’t quite worked out all the risks, all the pros and cons and have to go through the process.

“But certainly in terms of supplying our own needs, we are looking at it pretty seriously at the moment,” he said.

Sasse said the PIC had been supportive in early discussions about the possibility of building a desalination plant at the V&A Waterfront.

Sasse was unsure what it would cost to build such a plant for the precinct, but indicated they would not get any change from R100million.

“It’s going to be hundreds of millions. I have not seen a definitive number,” he said.

Sasse stressed the proposed plant needed to make economic sense, adding that if they could produce the water at 30c a kilolitre (k/* ) when they were paying the city of Cape Town 60c k/* , then it obviously would make a return.

“But it’s very early days in the evaluation and financial feasibility and assessing all the risks.

“Bear in mind the coast is very hostile and recently the storms in the Cape were a one-in-a-100-year event, with rising water and there was damage at the Waterfront.

“So you have to be conscious of the fact that you have a very hostile coastline as well,” he said.

More than 2percent of the total k/W power usage at the V&A Waterfront is provided by solar power production over a 12 month period.

Sasse said they were not able to generate sufficient solar power to take the precinct completely off the grid from an electricity perspective, particularly as the storage of solar power was difficult.

“But from a water perspective, I think there is a real prospect that we can be off the grid,” he said.

The V&A Waterfront is the “jewel in the crown” of Growthpoint’s South African property portfolio.

Investment income from Growthpoint’s 50percent shareholding in the precinct grew by 11.7percent to R479m in the six months to June from R429m in the prior period.

Revenue from the precinct increased slightly in this period to contribute 8.6percent to Growthpoint’s total distributable income for the period.

The development of the 110000m² Silo district will be completed next month when the Zeitz Museum of Contemporary Art Africa and the new 250-room Radisson Red hotel are scheduled to open.

This district had a residential component, including the development of 79 apartments that generated gross sale proceeds of R800million, with only one remaining unsold.

Sasse said the residential had been exceptionally profitable and they were targeting a gross profit of about 25percent, but ended making almost 50percent gross profit on the sale of these apartments.

He said the average sale price was R83000m², which was “pretty high”, with the most expensive apartment measuring almost 400m² selling for R84m to a local buyer.

The development focus has now shifted to the 120000m² Canal district, which is anchored by the opening the offices for British American Tobacco and Ernst & Young.