“Before we purchased the property we had no prior knowledge that the property had more bulk rights,” said Timothy Irvine, Growthpoint Properties’ asset manager for the Western Cape.
Growthpoint found out about the sale of the property through a newspaper article in April 2015. The company received a copy of a publicly available prospectus from auctioneering firm Aucor in August 2016, giving notice that the property was to be placed on auction and giving details about the property. In it, they stated the property had 17500m² of bulk rights.
The auction took place in September 2016 at the Cape Town International Convention Centre, where Growthpoint paid R86.5million (excluding VAT at 14%) for the land. The transfer of the land took place in March 2017.
According to social housing advocacy group Ndifuna Ukwazi, the land could have been sold for between R185m and R240m.
The group said Site B had 46.104m² of bulk rights, which meant GrowthPoint paid about R1880 per square metre of bulk rights, which was less than half the current going rate for inner-city land. The group has stated that the city “botched” the sale by stating in the prospectus that the land had 17500m² of bulk rights.
“The inaccurate valuation stated by Ndifuna Ukwazi has been widely and repeatedly published, despite our persistent assertions that the valuation calculation is wrong. An explanation as to why their figure is wrong follows, but we urge you to get your own independent verification of the facts from a professional, accredited property valuer,” Irvine said.
Growthpoint obtained an independent valuation for the property in December last year and based on appropriate valuation principles (based on 46000m² of bulk), the valuation was R92m.
Growthpoint chief executive Estienne de Klerk said it wasn’t party to the city’s forensic investigation into Site B. “The forensic investigation in question was an internal city process. We weren’t consulted during the process and are not in a position to comment on the report. We would welcome the report being made public,” he said.
The company plans to develop a mixed-use development with retail space, offices and a hotel. De Klerk said the company had suffered a massive loss during this time. “The delays have a massive financial impact on us and we are suffering a massive financial loss,” he said.
City spokesperson Luthando Tyhalibongo said: “It was an internal forensic investigation into the city’s processes. Growthpoint purchased the property for R86.5m on auction, which was considered market value for the property.”
Ndifuna Ukwazi said: “Our argument has always been that the city sold the property for less than it was worth because they advertised the site as having 17500m² of bulk rights when in reality it actually has 46000m² This is not necessarily Growthpoint’s fault, and instead reflects on the City of Cape Town’s failure to accurately value and advertise the property.”@MarvinCharles17