The previous group was stopped in its tracks by the recession, just as in central city areas worldwide. In an economic downturn investment in such areas dries up. The latest developer to tackle the challenges of the Johannesburg city centre is Propertuity with its Maboneng project.
Propertuity was established in 2008 by Jonathan Leibmann, who bought the old DF Corlett offices and warehouses and converted them into his flagship development, Arts on Main, which is a combination of sectional title offices and art studios.
The development has been so successful that the group started to spread to the surrounding area with the Maboneng Precinct, a mixed-use development. Maboneng, which means “place of light” in Sotho, includes offices, retail space, dwelling units, art galleries and other creative spaces.
Unlike previous city-centre renewal projects which are largely in the northern and south-western parts of the city centre, Maboneng is to the south-east, alongside Jewel City.
The company’s vision is to take over the entire city, says Propertuity financial manager Eric Herr, one of the speakers at the 10th annual Investment Property Databank (IPD) property investment conference held in Cape Town last week.
He says that following Arts on Main the company has developed five other projects, including Main Street Life, its first residential development. This involves 182 dwelling units with a boutique hotel –12 Decades – on the 17th floor.
The highest price so far achieved for one of the 130m² dwelling units is R1.4m. Prices start at R350 000 for a 33m² unit and there is a long waiting list. He says buyers are unusually young professionals.
By the end of last year the company had seven properties. “We have since bought another 20 and are now moving in the direction of Doornfontein,” says Herr. The aim is that Maboneng will become a mini-city within the Johannesburg city centre.
Professor François Viruly, a lecturer in property studies at the University of Cape Town’s School for Construction Economics and Management, says the opportunities in city centres are more a densification story than a population story. He believes these are the only areas that can be inclusively developed for different income groups.
“The big question is what the impact of the integrated transport system will be in the city centres.” The advent of the Gautrain and the Bus Rapid Transit makes a city centre lifestyle attractive to those who previously had to be content with a home in the suburbs.
Viruly says there is talk of the tax incentives for urban development zones being reviewed by 2014. Developers in city centres are currently benefiting from the incentives. An owner upgrading a building qualifies for 20% depreciation, written off over five years.
Herr says that although these incentives play a role, Propertuity’s vision is much broader than that.
Viruly believes the next wave of residential development in the Cape Town city centre will target lower income groups because the best buildings have generally already been converted into luxury accommodation.
Rob Kane, chairperson of the Cape Town Central City Improvement District, says the price per square metre for buildings in the Cape Town city centre is high and therefore too expensive to justify low-cost developments.
The Arts on Main development in the Maboneng Precinct to the south-east of the Johannesburg city centre is an attraction for creative people.
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