Cape Town - Another multimillion-rand property development in the CBD is at risk of collapsing after appeals by social activists caused drawn-out delays to the investment.
This has raised the concern of the Western Cape Property Development Forum that developments within the Citys’ CBD are being stalled by social justice lobby groups. Property Investment group Growthpoint’s planned development on the foreshore has been marred by delays and appeals by social housing group Ndifuna Ukwazi.
The chief executive of Growthpoint in South Africa, Estienne de Klerk, said: “What we are struggling to confirm is the rights of the development. At the moment we are waiting for the Municipal Planning Tribunal (MPT) to decide on the matter. Currently it means we don’t have any development rights and can’t develop. Our hands are tied.”
Growthpoint Properties’ asset manager for the Western Cape, Timothy Irvine, said the company was between a rock and a hard place because of the stalled development. “We have lost a huge amount of money because of the delays. When you have these sorts of delays you start losing momentum on the development. We hope to have some progress made next year, but it still takes some time because you would have to plan all over again,” he said.
The Site B land on the foreshore was acquired by Growthpoint at an auction in 2017. The company received a copy of a publicly available prospectus from auctioneering firm Aucor, giving notice that the property was to be placed on auction and giving details about it.
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 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.
Western Cape Property Development Forum chairperson Deon van Zyl said it was concerning that business has been stalled by social justice groups.
“This confirms that property development is risky and nothing stops groups from appealing against developments. They are legally allowed to, but the message that this sends out is that there are risks for developments going up and investments coming into the local economy,” he said
Cape Chamber of Commerce and Industry president Geoff Jacobs said: “We believe there are two sides to a story. But what we are concerned about is anything that affects business in the CBD. We have developers investing billions in their projects, and it has a knock-on effect.”
Last month the historic St Monica’s old age home in Bo-Kaap came on the market again after a developer who acquired the property pulled out because of limitations put on the development after Bo-Kaap was declared a heritage protected area.
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.”
Mayco member for Economic Opportunities and Asset Management, James Vos, said he could not comment on the matter because he served on the appeals tribunal and could not make any pronouncements on an issue that must be considered.