Breathing life back into the city

2014-04-27 15:00

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They were all features of inner-city life: decaying buildings, pavement traders flogging cow or sheep heads and effluent trailing into the drainage systems below.

As the filth and grime crept closer to office buildings, companies bolted, rendering old CBDs obsolete.

In Pretoria, they left for the eastern suburbs, and in Joburg they headed north. Slumlords pounced on boarded-up buildings.

The government, despite various urban renewal programmes, appeared incapable to stem the tide. Then a few years ago, the SA Revenue Service introduced the urban development zone (UDZ) allowance.

It allows developers (or buyers purchasing buildings directly from them) to claim tax breaks for investing in buildings in 16 areas demarcated for urban renewal.

An annexure of the 2014/15 national Budget Review showed an estimated R176?million in tax revenue was forgone in the 2012 fiscal year because of the allowance. The largest amount spent in the four years reviewed in the document was R364?million in 2011.

Although it is unclear if they were taking advantage of this tax break, some companies have opted to stay and clean up the inner city.

Property developer Propertuity created areas such as the trendy Maboneng Precinct in central Joburg. Pretoria has also had its fair share of face-lifts.

City Property managing director Jeffrey Wapnick said instead of simply erecting new buildings or converting malls into multiuse developments, his company worked together with government to improve the areas in which it operates – mostly the Pretoria and Joburg CBDs.

The company has taken responsibility for getting the municipal authorities to come in and clean up the streets, ensuring that tenants do not live in pretty buildings in ugly areas.

“They come in with trucks and high-pressure water pipes to clean the pavements,” said Wapnick. “Every second week, the streets should be cleaned. It’s messy otherwise.”

Is that not their job anyway? Wapnick shrugged. “We can choose to leave it or do something and take responsibility for it.”

The company manages the residential and commercial property portfolios of Octodec Investments and Premium Properties, funds that are listed on the JSE’s real estate sector. Wapnick is the managing director of both funds.

Two of Octodec’s top 10 properties by value (between R118.6?million and R547.3?million) are based in the Joburg CBD, while eight of Premium Properties’ top 10 are in the Pretoria CBD, and are valued at between R72?million and R182.7?million.

City Property has a dedicated group of professionals including architects, interior designers, urban designers and an in-house projects accountant.

It also has specialists tasked with preserving heritage buildings that were built more than 60 years ago.

Their job is to go out and identify buildings and then motivate for their development. And, in keeping with the urban renewal gospel City Property consistently preaches, its head office is situated in the Pretoria CBD.

“There are more opportunities in the CBD,” said Wapnick.

“We understand that market. It’s a market that is currently ignored. There are real opportunities in the CBD that you don’t find in the more traditional areas.”

In Durban, the private sector committed just more than R1?billion to its UDZ by December 2010. The municipality contributed more than R5?billion to public infrastructure and flagship projects in the inner city, including the Kings Park Sporting Precinct, where the Moses Mabhida Stadium is located.

More recently, luxury hotel group Tsogo Sun invested about R200?million in upgrading two of its hotels situated along the Durban beachfront into a giant 734-bedroom complex called the Southern Sun Elangeni & Maharani. This came after the eThekwini municipality spent about R50?million rejuvenating the deteriorating area as part of a 2010 Fifa World Cup legacy project.

Results were already being observed in 2011.

“The UDZ incentive scheme has proved successful in Durban,” said Julie-May Ellingson, the former head of the municipality’s strategic projects unit.

“The city has attracted an investment of R1.6?billion since the inception of the scheme. I believe this will be a tremendous boost for our city and one which will give further impetus to the city’s regeneration,” she added.

Municipal spokesperson Thabo Mofokeng did not respond to questions on the city’s latest numbers.

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