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Cape Town - To deliver on its social housing objectives, the City is selling a piece of prime property in Salt River to Communicare well below its market price.

Communicare bought the 1.7hectares of land, currently valued at R144million, for R1.8m to build a R715m high-rise building.  

In exchange, 300 of the 850 housing units in Salt River would be allocated to social housing - reserved for households with a monthly income of between R1500 and R15000.

The sale of the land in Albert Road was proposed by the City’s department of transport and urban development, and the council agreed to dispose of it.

“The affordable rental units in high-rise buildings are only financially feasible and sustainable if the land is transferred at less than its fair market value and with a high level of cross-subsidisation from its mixed-use development concept,” mayoral committee member for transport and urban development Brett Herron said.

“This is key to densified social housing projects in Cape Town. This site is undeveloped and is associated with anti-social behaviour.

“The proposed development presents the city with an opportunity to re-purpose the site to the benefit of the whole community,” he said.

Herron said the purpose of the development was to mitigate the impact of gentrification on long-standing families from Woodstock and Salt River who cannot afford to rent or buy properties in the private market due to the unprecedented growth in values in these areas over the past decade.

He stated in the report the development cost of this City-owned site was considerably higher than would be the case for other social housing developments because it was required to meet the city’s densification objectives given its location, access to public transport services, and proximity to the CBD.

“The proposed development will also assist in the regeneration of this area, given that a formal building will be built and managed by social housing giant Communicare. Currently, there are 29 families on this site who are living in informal structures.

“Communicare will receive a subsidy of R80m for building the 300 units and also 550 homes that would be rented at market prices.

“The city will engage with the families should council agree to the disposal of the City-owned land. Some of these families may qualify for the social housing opportunities that will form part of the development, and those who do not qualify will be accommodated in the transitional housing site in James Street which is currently being planned,” Herron said.

In recent weeks, the city has been slammed for selling off public land to private developers. Last week, Ndifuna Ukwazi obtained documents which raised serious questions about top officials implicated in an alleged botched auction of prime land. The city gave notice in newspapers of an application by Growthpoint Properties to develop the land on the Foreshore.

Communicare chief executive Anthea Houston said the City had been engaging with it on the Salt River market site development since 2014. It previously resolved to explore the viability of developing a mix of housing and other uses - ensuring at least 30% for social housing.

Reclaim the City spokesperson Bevil Lucas said: “When it comes to social housing, we need to come up with alternatives. We cannot sell public land. We welcome the number of people that will be accommodated, but have to look into the detail.”

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Cape Argus