The City of Cape Town is paying R106 million to media group Naspers for an undeveloped open-air parking lot in what has been dubbed a “sweet deal” for a property valued at no more than R50m by independent property analysts.
The site in question is to make way for the expansion of the Cape Town International Convention Centre (CTICC) and will include 10 000m² of retail space, a hospital, an office tower, and basement parking bays.
The Competition Commission has to give the transaction the green light as it looks into “potential parking monopolies”.
The city has a 51 percent stake in the CTICC, the provincial government 25 percent and SunWest – which also owns the GrandWest casino – 24 percent.
Mansoor Mohamed, former City of Cape Town executive director who is now Amdec Property Development head of strategy and business development, said he was taken aback when he read about the purchase price last week.
“I am a little surprised to have read in the Cape Times that a valuation of R106m was achieved. It seems very high under the current market conditions,” said Mohamed.
The municipal valuation for the 6 427m² property is R28.9m which is normally less than the “market value”.
An official said “it’s an extremely sweet deal for Naspers”.
The Cape Times has also reliably learned that Naspers will sell the land to the city and then lease parking for a period of time at subsidised rates.
Top property analyst Erwin Rode, who authored the Rode Property Report, said few sales take place in the city centre and such transactions are not an “exact science”.
“My best estimate of the market value of an ‘average’ stand in the Cape Town CBD is about R2 000-R2 500 per bulk m² (about R48m).
“But, and this is the caveat, this is not an average situation as the City of Cape Town was probably in a disadvantageous position in light of the known precinct development plans. It’s not like the city had alternative options if Naspers were demanding too much. Well, this is my speculation, without having inside info, of course.”
He said R3 000 per bulk m² is higher than what an average vacant erf would fetch in the Cape Town CBD.
According to Rode’s Report, in the Sandton CBD the market value would be about R3 500 per bulk m², “but Cape Town CBD’s land prices are considerably lower than Sandton’s”. The market value of office and shopping centre land is measured as the value per bulk square metre.
“An easy explanation for the rather ‘highish’ price is that Naspers evidently had the city over a barrel – it’s not like the city had many, if any, alternative choices, given their plans with that precinct,” said Rode.
Deputy mayor Ian Neilson said the purchase price of R106m for the Naspers property was a “fair market value” and was based on valuations prepared by the city’s professional valuers and an independent valuation firm.
“The property is undeveloped and is currently used as an open-air tarred parking lot for staff of Naspers/Media 24.”
He said the city would only consider expropriation if the property is required for a municipal service and no agreement can be reached with the property owner on the value of the property.
“In this instance, market value was agreed to and therefore there was no need to expropriate,” said Neilson.
He said when Naspers bought Erf 246 Roggebaai in 2009, the price of R319 200 000 also included Erf 244 Roggebaai which is 4 742m² in extent and was improved.
Naspers financial director Carel Snyman wouldn’t confirm nor deny the R106m purchase price.
“This is the CTICC’s transaction and all we’re doing is selling.
“The purchase price has not been disclosed,” said Snyman.
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