Joburg CBD property market bucks recession

Property consultants told Business Times that, with about R7.5-billion invested in Johannesburg property since 2001 and a further R5.8-billion in refurbishment in the five main areas of regeneration in and around the CBD, the city is going to become Africa's residential hot spot.

Though a number of commercial projects have been undertaken, most of the refurbishing has been to redevelop buildings for residential use.

One company, Aengus Property Holdings, is due soon to announce a R1-billion investment in up to 4 000 residential units.

The Johannesburg Development Agency has been instrumental in the investment by private developers over the past years, though its financial contribution has been relatively small.

Lael Bethlehem, chief executive of the agency, which has been active in the city since 2001, said investments by the agency totalled R392-million and included the replacement of pavements, installing street lights, revamping public parks, providing sports fields, improving public buildings and adding artworks to public areas. About 20 projects have been undertaken.

Johannesburg city pays for the work the agency undertakes in partnership with Blue IQ. The agency works with property owners and developers.

Since 2001 and the first project by the Johannesburg Development Agency, the number of property transactions has increased from 186, rising to 1 907 in 2007 and to 1 521 by August last year.

Bethlehem believes that the rejuvenation of the CBD might take five to 10 years to complete, leading to lower vacancies, higher turnover and increased rentals.

According to a recent study by independent property consultants: "Over the space of five years, significant geographic areas of the inner city have changed from desolate no-go areas to attractive, sought-after locations."

Rentals range from abut R1 500 a month for a single-room apartment to more than R6 000 a month.

Aengus is a major contributor to the regeneration of the inner city. It has 1 500 residential units in the CBD at a 100% occupancy rate, said chief executive Richard Rubens.

The company recently paid R323-million for the residential portfolio in the CBD of ApexHi, a property loan-stock company.

A soon-to-be-announced acquisition will lead to the development of 3 500 to 4 000 residential units in the city, to be built at a cost of more R1-billion in the next 12 to 18 months.

Perhaps the largest group involved in the CBD is the Affordable Housing Company, which has about 3 500 apartments in and around the inner city, and over the next two-and-a-half years will spend R1-billion to refurbish a further 5 000 apartments, said Affordable's chief executive, Renney Plit.

His company is now letting phase one of a commercial building for residential use.

Plit said the project was the world's biggest of its type.

Source: The Times

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