The area on the foreshore which has been proposed for development. The development will include shops, apartments and a hotel.
The area on the foreshore which has been proposed for development. The development will include shops, apartments and a hotel.

Growthpoint says Cape Town Foreshore land sold at 'fair price'

By BULELWA PAYI Time of article published Dec 9, 2018

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Cape Town - Growthpoint Properties - one of the most profitable companies listed on the JSE - says city officials are satisfied it purchased a prime piece of municipal land in the CBD for a fair price, despite suggestions it was undervalued.

The news comes amid a forensic investigation into the sale of the land, known as Site B, by the City of Cape Town.

Growthpoint said it had met officials of the city’s property management department - which oversaw the auction of Site B in September 2016 - last week.

“They (officials of the department) are of the view that Growthpoint purchased Site B for a fair price, through a transparent and legitimate process,” said company spokesperson Mahlatse Bojanyane.

Growthpoint bought the site, which according to the sale prospectus had permitted bulk rights (allowed extent of building) of 17500m², for R86.5m excluding 14% VAT.

But the company claimed in a notice published by the city regarding the development of the site that it had bulk rights of 46000m² on the land, more than double the bulk rights advertised.

Over the past few years, inner city land has sold for between R4000 and R5000 per square metre and sometimes for much higher prices. If Site B had been advertised as having bulk rights of 46000m², it would have fetched a far higher price.

Ndifuna Ukwazi, an organisation that supports those struggling for access to land and affordable housing, said with 46000m² bulk rights, Growthpoint had paid less than half of what the land was worth.

Bojanyane claimed this week that the company had no knowledge of bulk rights exceeding 17500m² for Site B when it bought the land, and had intended to apply for additional rights. “Only in April 2017, after appointing our town planner, did we discover through public records that there were more bulk rights already attributed to the site. The City of Cape Town’s zoning records confirm rights of approximately 46000m² available to Site B.”

She said when valuing the site, Growthpoint had also taken into account its prime location, current and potential future property rights and usage, as well as factors such as the shape of the site and servitudes.

Ndifuna Ukwazi said because Growthpoint had already owned buildings adjacent to Site B, and was a highly successful developer, it ought to have been aware of the history of zoning in the area and the maximum permissible bulk rights for Site B.

In addition, the organisation said, Aucor, the auctioneers that conducted the auction of Site B on behalf of the city, would have had the current and previous title deeds for Site B, to determine the bulk rights for the land.

“In effect, Growthpoint captured some of the most valuable land in our city. Had Growthpoint paid a market price, we estimate the land could have sold for between R185m and R240m. (The sale left) the city out of pocket by at least R100m, and possibly more,” Ndifuna Ukwazi said.

Growthpoint, which is the 21st-largest property investment holding company on the FTSE/JSE top 40 index, owns about 547 buildings across three continents. In the Western Cape the company owns R17.2 billion worth of property assets over and above its 50% interest in the V&A Waterfront, valued at R9.1bn.

The company has applied to the city to develop a mixed-use building with retail, offices, collaborative workspace and a hotel and is waiting for the municipal planning tribunal to decide on the application.

Earlier this week, land activists, including members of the groups Reclaim the City, the Social Justice Coalition and the UniteBehind coalition, gathered at Site B to “reclaim” the land.

“Public land should never be sold in a housing crisis. And if it is, the money should be used for basic services or affordable housing for poor and working-class people. Our constitution places land at the heart of transformation of our city. And yet, if our well-located inner city land can be captured in plain sight, then what hope do we have for the rest of our country?” the organisations said.

They said the “best public land was being captured by the wealthy few”. It’s not clear what the organisations’ plan of action is after they were interdicted from being on the site.

The city said it had made progress in its investigation into the sale of Site B and would comment on the matter when the investigation was completed.


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Weekend Argus

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