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Defeating the Urban Decay Monster

But when the JSE (Johannesburg Stock Exchange) picked up its skirts and strutted off to glitzy Sandton that was the symbolic blow that brought home the reality that the Joburg inner city was defeated. Something else had risen up in the inner-city, a monster fuelled by crime, public filth, building vacancy, taxi violence, car hijacking, municipal mismanagement and maladministration. A visionlessness and hopelessness pervaded the city. It would take more than one heroic blow to bring down such a monster. So what was once the commercial hub of Southern Africa, reaching its pinnacle, in the 1980s, the inner-city was hit by the flight of business to the northern suburbs.

Ownership

Ownership has been among the blows to send the inner-city decay ‘monster’ into decline. By the time the JSE left, the mining houses and three banks (FNB, Standard and ABSA) had already resolved to stay and rejuvenate the city, this is where ownership really took root.  The Johannesburg Development Agency would be another blow to the doom and gloom providing initiative and vision. Throw in Business Against Crime and other civil initiatives and people began to believe.

By the time the Better Buildings Programme began the ownership was tangible. Alas BBP, an attempt by the city to take bad buildings and turn them into better buildings only achieved moderate success.  The process proved laborious, taking as long as two years to get one building through litigation and judgment.  Former Mayor Amos Masondo said: “It (the BBP) was hamstrung by factors such as the lengthy expropriation process, the screening of participants and the requirements to provide transitional housing to people who have been evicted,”. He said the BBP had been only moderately successful because of the lengthy expropriation process.
Now transitional housing, BBP’s biggest stumbling block, will be provided to current residents of buildings that will be refurbished by the specially formed Transitional Housing Trust (THT) which will manage the process.

The BBP has evolved into the Inner City Property Scheme (ICPS). In April this year Amos Masondo announced a new, arguably improved, scheme to deal with one of urban decay’s biggest symptoms: distressed buildings. The City of Johannesburg has thus created a restoration solution, though driven by the private sector. A large portion of the City’s property portfolio will be transferred to the ICPS through a series of structured sale transactions. Unfortunately during the BBP years, since 2004, out of 130 rejuvenation projects in the inner city only 2% have come from black economic empowerment (BEE) investors.

ICPS plans to put this right. Again ownership is the dynamic since the ICPS plans to empower historically disadvantaged people by creating the biggest black owned inner-city property scheme in South Africa. The City retains ownership of properties until it is satisfied with the regeneration of those properties.  Participants in the Broad Based Black Economic Empowerment (BBBEE) transactions were selected through a Request for Proposal process, and are required to provide a minimum equity contribution of R 5 million. The city would ensure that the option to buy was exercised only once the dilapidated property had been refurbished. Watch this space.

Residential Real Estate Restoration

Another blow to the monster has been on the residential front. In a R41 million finance deal, Nedbank has backed the redevelopment of the existing nine-storey building at 16 Frederick Street in Marshalltown into a modern residential apartment building!  Last year Nedbank provided finance for the R100 million redevelopment of an office building situated at 29 Kerk Street for sale to Diluculo Investments on completion of the refurbishment. Although there have been swings and roundabouts. Urban Ocean founders Alfonso Botha and Duan Coetzee had very lofty plans in 2004 buying up old office buildings with the view to turning the inner city into a stylish space to work, reside and recreate. But by early 2008, some of Urban Ocean’s renewal efforts had stagnated, and upmarket housing diminished. But two years down the line in 2010 Aengus Property Management was administering more than 2000 trendy apartments in the city, many of these units were snapped up for the world cup last year. Most of APM’s buildings in the Braamfontein area are now being let out to young professionals working in the city and student tenants attending university at nearby campuses.

In June Jawitz Properties sold an apartment of 147m² in the historic headquarters of Barclays Bank at 87 Commissioner Street for a cool R1,15m! CBD loft-style developments are comparatively more reasonable than the competition from the northern suburbs tempting the trendy set back to the city.

Then there is the Maboneng Precinct: opened with Arts on Main. What was originally a complex of five out-of-commission warehouses is now home to 28 sectional title studios and offices. Even the traditionally industrial south eastern node of the city is rejuvenating. Led by Jonathan Liebmann’s ‘Propertuity’ who is turning Fox Street, bordered by Main, Berea and Kruger, into a pulsating hub to live, work and play for artists, designers and other creative professionals.
And so there’s Main Street Life, a five-storey apartment building of 194 residential units, restaurants, a cinema, a theatre, a hotel and more. All very trendy and pulsing with life and activity. Liebmann is also redeveloping three other buildings in the precinct bringing the redevelopment value up to R100 million

Investor Confidence

More recent news is the sale on auction of Entire city block (New Doornfontein) in the Johannesburg CBD for R18.7 million. Thud, another blow bringing down the monster, investor confidence.  ABSA’s sprawling head office expansion of 50 000m² has boosted interest in the eastern side of town. This has had infrastructural improvement spin-offs for the whole area.

Infrastructure Renewal

Bringing the monster of decay to its knees has to have infrastructural initiatives: Previous sales type pitches for the city citing the proximity of rail links and the highways and buses has been met with indifference until now. The Urban Development Zone, (UDZ) covering an 18km² area east-west from Fordsburg to Jeppestown and north-south from Bellevue to the M2, has reportedly contributed R8 billion to Johannesburg’s CBD with its proximity to transport hubs. Throw in the refurbished and new taxi ranks, Rea Vaya bus service, the Gautrain and both ends of the transport market are covered.

Of course the UDZ tax incentive is part of a national scheme to encourage inner-city renewal across South Africa, so Government must be thanked for that blow. The incentive offers tax allowances covering 100% of the total cost of property refurbishments over a period of five years, while new property developments can claim the allowance over 17 years.

Enter the Johannesburg Development Agency (JDA) and Central Johannesburg Partnership’s City Improvement Districts.  CIDs are designed to improve services. Specifically geographical areas where property owners agree to pay additional levies for enhanced services, including security, cleaning and maintenance. The results are visible and office workers are remarking that they feel safer, with the new CCTV cameras and visible policing. Ellis Park, Joubert Park, Gandhi Square and the Braamfontein Corporate Precinct have all seen impressive changes.

Fox street, from the Carton Centre to Eloff Street has undergone a stunning beautification project. Investments of this nature have got the ball rolling for further improvements and increased confidence in the inner city. Retail has picked up remarkably in Kerk Street after its refurbishment. The Johannesburg City Hall and the Oppenheimer Park have been appealingly upgraded reversing the wind of dereliction that had blown their way in the last decade.

It has been reported that infrastructural plans have been made for a mixed-use development to be known as Stimela Square at the corner of Sauer and Hall Streets, the historic old mining camp also known as Ferreira’s Camp. The plan is for it to be an attractive garden square with retail and residential buildings surrounding.

The Newtown cultural precinct continues to grow as Gauteng's cultural hub. Johannesburg Metro Council has been a huge player here.  A further 35 000m² of retail space, called the Potato Sheds, as well as the 7 800m² Majestic office complex, of which The Majestic Hotel will be the last phase, are being developed in the area too. The development of Anglo Gold’s head office and Ashanti are a notable presence inspiring investor and consumer confidence in the area.
Looking up toward Braamfontein, infrastructure improvements haverevolved around 20 buildings in particular being converted into student accommodation for Wits university students. There has also been a spill over into Parktown where a nine block commercial development, The Hill Office Park, is currently underway. The expansion of Empire Road and the construction of the BRT station is already taking place.

So when you hear that a beautiful old Johannesburg building on the corners of Biccard and Stiemans Streets will be auctioned on the 28th of September you should expect to hear the sound of investors feet. Another is the old Stuttafords building on the corner of Pritchard and Rissik. Property is moving in the Johannesburg CBD.

On the 19th of August on the Joburg website the new Mayor of Johannesburg Parks Tau pledged to continue on the path of his predecessor and recommitted himself to the ICPS.  Time will tell if the Mayor and his co-workers have the political will to keep the momentum going, facilitating the demise of what was the monster looming over the city.

And what is to make of the proposed decking of the railyards dividing the CBD and Braamfontein...but we digress.

It’s clear that it’s taken many blows to send the monster packing. Now the mopping up is being done it’s clear it takes a team to get a city on its feet. Council can’t afford to sit back now. Infrastructure must never be allowed to fall into the state of disrepair of the 1990s. Maintenance with vision for even greater things is required.  With a Civil society prepared to go the extra mile and the residents of the inner city prepared to take ownership of their city, there will be investor confidence enough for Business to invest in and see buildings restored, maintained or even replaced.

Retaining and building on existing investment will remain critical. Belatedly but ever hopeful: “JSE and others it’s safe now, all is forgiven, come home”.


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