Durban - The eThekwini Municipality is moving ahead with its plan to call for bidders to lease prime beachfront properties that are currently home to Tsogo Sun’s Maharani and Elangeni hotels.
The matter was discussed at yesterday’s Executive Committee (Exco) meeting, and will be tabled at a full council sitting tomorrow for adoption that would see the city grant a long-term lease at a rental of R3.4 million a month.
According to a report from the city’s Real Estate Unit which came before Exco yesterday, the history of the leases dates back several decades. It said from 1961, the leases were registered in favour of various parties and had been ceded to various entities, last being Southern Sun Hotel Corp, now known as Tsogo Sun.
The report said: “The leases all expire on the 31st December 2025 with no right of renewal. The current gross rental for the leases is R15 060 per annum (R1 225 per month) with no escalation.”
The report noted there had been engagements with Tsogo Sun over the years, but the city decided to undertake a public participation and competitive bid process regarding the leases. It said the market value of the properties was R430m, and a market rental of R3.4m each month had been assessed by an independent valuer.
The city has stated that local job creation and security would be among the conditions in the lease agreement.
According to the report, the new occupant could be exempted from paying rent for three years pending upgrades of the properties.
DA Exco member Thabani Mthethwa had certain questions around the matter, and whether the city had a bidder in mind.
“The process itself just leads to more questions, and we are left wondering whether there is a premeditated outcome already about this from the city,” said Mthethwa yesterday. He said they would have a party caucus to discuss the matter before the council sitting.
“The main concern here is that this is prime property, and the tourism sector is very sensitive. People’s jobs and livelihoods are at stake here and that is why we must tread carefully,” Mthethwa added.
IFP Exco member Mdu Nkosi echoed the sentiment that the process undertaken by the city raised questions.
“The fact of the matter is that the area of tourism is a sensitive industry, and a matter that deals with it should be treated delicately,” said Nkosi.
He pointed out that the industry was still recovering from the Covid-19 lockdown during which many jobs had been lost, and this meant many businesses in the sector were still recovering.
“As public representatives we need not take rash decisions, we need to think long term before taking any decisions,” Nkosi said. He indicated that the party would also hold a caucus meeting before the council sitting
EThekwini mayoral spokesperson Mluleki Mntungwa said the city had been transparent about the process.
“The city is very mindful of the economic implications and has been very careful in how it has handled the matter, because we understand that this is a sensitive matter and have sought to consult as widely as possible so that all the inputs can be considered,” said the spokesperson.
Approached for comment yesterday, Tsogo Sun director of operations KwaZulu-Natal, Samantha Croft, said they were still keen on operating at the premises.
“This is the first time that one hears about the item being discussed at council, and once such calls for expression of interest are made, we will definitely make our submissions,” she said yesterday.