Major Cape development for BEE firm

Posted On Wednesday, 26 November 2008 02:00 Published by
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Kagiso steps to Somerset West to expand its presence in the property market and plans to develop office space at a cost of R27m.

KAGISO Property Holdings, through its development arm Kagiso Property Developments, views the De Beers precinct @ Paardevlei as an opportunity to expand into the Western Cape, even though the general economic downturn has dampened the South African property market.

Despite the slowing economy and higher interest-rate environment, office and industrial property are still performing strongly with both having relatively low vacancies.

The company has acquired land in the Paardevlei Development in Somerset West from Heartland Properties. It plans to develop about 2200m² of office space at a cost of R27m.

Heartland manages the land and property-based asset portfolio of the AECI Group and focuses on development projects on land that has become surplus to AECI’s operational requirements. One of these is the 730ha Somerset West site now called Paardevlei.

The development of the Paardevlei site will be rolled out in phases over the next few years, with the first phase of what is called the De Beers precinct @ Paardevlei ready to be handed over to developers.

The De Beers precinct @ Paardevlei measures 43ha and will on completion allow for development of 590 residential units and about 100000m²² of commercial development.

The office development being undertaken by Kagiso is situated within this precinct.

Justin Jones, development manager of Kagiso Property Holdings and a director of Kagiso Property Developments, says the rationale behind the development is that Somerset West has matured to become an office precinct in its own right. The area is now giving Stellenbosch a run for its money in terms of being a top office destination in the Western Cape.

“The strategic importance of the Paardevlei land holding is its proximity to Strand, Somerset West, Stellenbosch, the N2 highway, the airport and the ocean,” says Jones.

Kagiso plans to start development on its site in April next year. Heartland’s vision for the De Beers precinct @ Paardevlei is to create a mixed-use environment where people can live, work and play.

The company says that it combines the best of the Cape’s natural landscape, including coastline, mountain views and wetland areas.

The site is about 20 minutes from the Cape Town International Airport, 10 minutes from the Cape Winelands, and offers direct access to the N2.

The look and feel of the De Beers precinct @ Paardevlei is contemporary and includes streetscape features such as modern street lights and paving in muted tones.

Storm-water drainage has been designed in such a way as to create a feature, adding a natural water element.

“We made a call to purchase the property portion before the global economic crisis; we are confident about the quality of the node and the forces driving the demand for property space in the Helderberg Basin, where the Paardevlei Precinct lies, and Heartland’s ability to put in place infrastructure and create precincts, ” says Jones.

“They (Heartland) are experienced and skilled at infrastructure installations and creating precincts and that gives us the confidence that our investment will be successful.”

Jones says that there has been strong interest in Kagiso’s office development and even though there has not been an official launch yet they are receiving inquiries for about half the space available.

“What drives the quality of the development among other things is the strict design guidelines imposed by Heartland.”

He says installations, including finishes and surface treatments, are high quality and set the tone for future development at the site.

Jones says Heartland’s initial release of 15 properties for development in the De Beers Precinct was four times oversubscribed by interested developers. He says Kagiso and other parties interested in developing portions of land in the precinct had to submit their design proposals before the end of December last year.

What has made this precinct unique is the existence of several Sir Herbert Baker and Francis Masey buildings on the site, dating back to the early 1900s. Architectural guidelines for this phase stipulate that developments on site are to complement the original buildings.

Jones says there are in total about five to six Sir Herbert Baker buildings on site and that Kagiso’s development will emulate this architecture.

Infrastructure and services, including roads, lighting and storm-water, has been completed. It includes an extension to Beach Road to facilitate traffic flow for future residents, tenants and their neighbours.

“Paardevlei will be a premier office address in the future because of the quality of design, together with the presence of historic buildings.

“It is most likely going to rival Stellenbosch in terms of address and rental demand, Jones says.

He says the site has 180º views of the Helderberg and Hottentots Holland mountain range, and that the De Beers precinct @ Paardevlei is only the first phase of Heartland’s grand scale vision for Paardevlei, which will help to entrench Somerset West as a quality commercial node.

“What we are noticing, and the banks are also noticing, is that a substantial number of top decision-makers are now living in the Somerset West and Stellenbosch areas.

“This is encouraging a move to decentralised quality office space in Cape Town away from the central business district.

“Decision-makers ask: “Why should I drive to Cape Town when I can have a five to ten- minute drive to the office, Jones says.

He says Kagiso believes that a company that wants to have a quality address will favour the Paardevlei Precinct over Stellenbosch. “Stellenbosch is crowded and has lost its focus as an office node.”

He says traffic congestion has made driving between Cape Town International Airport and Stellenbosch a time-consuming exercise.

The project in the De Beers precinct @ Paardevlei is not Kagiso’s first development in the Cape, but it is further evidence of the group’s plan to gain a solid foothold in this property market.

Its other major development in the Western Cape was Willowbridge Mall in Tyger Valley, which was developed jointly with Intaprop last year.

Jones says Kagiso Property Holdings is 100% black-owned and is SA’s top black empowerment property company.

Kagiso Trust, a leading black led nongovernmental organisation established in 1985, is the major shareholder of Kagiso Trust Investments, which in turn owns 100% of Kagiso Property Holdings.

He says Kagiso Property Holdings has positioned itself as a developer of special neighbourhoods and commercial properties within new urban nodes, but is also interested in developing in other property segments such as retirement and student accommodation.

Besides property, Kagiso Property Holdings also owns Kagiso Urban Management, which specialises in precinct development and management, and Kagiso Integrated Services, which provides facilities management to big corporate or institutional property owners.

Jones says Kagiso Property Holdings also owns a 40% interest in Johnson Controls, which is a facilities management company.

It also holds a 30% stake in Coffey Projects SA, which is the South African division of a project management company listed in Australia.

Source: Business Day

Publisher: I-Net Bridge
Source: I-Net Bridge

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