Bruma Lake's retail white elephant has given miserable returns to its local investors for 10 years. But a Chinese investment group is about to turn the waterfront into what it hopes will become a gold mine. And Johannesburg is about to get another ethnic landmark.
A Hong Kong consortium has bought Bruma and, after redeveloping it, will rent it to about 100 Hong Kong manufacturers as a wholesale centre called Asia City.
The development will entrench the suburbs of Cyrildene and Bruma, a few kilometres east of central Johannesburg, as the city's most important Chinese quarter . Cyrildene's Derrick Avenue, about 150 m from Bruma, is already a thriving district with businesses, retailers and about 35 restaurants.
The consortium, led by Chinese business chamber chairman Sam Ng, paid R8m to the listed Allan Gray property fund and has started construction. Project manager Spencer Ho says the present 7 000 m², consisting mainly of restaurants, will be converted to about 40 shops and 11 000 m² of new space will be added to its east end.
The centre will be secure . But it will be open to the public, offering a low-cost eastern suburban answer to Fordsburg's Oriental Plaza, the once-struggling but now thriving bazaar in Fordsburg, west of the city.
"We expect to have the first tenants operating by July this year," says Ho. "We expect to fill it at rents between R30/m² and R80/m²," he says. Assuming average rents after operating costs of R45/m², the consortium should net just short of R10m/year. This will give an initial yield of nearly 39% and repay total costs in 30 months. Even if the value of the rand halves, it will hit pay-back in five years.
Financial Mail
Publisher: Financial Mail
Source: Ian Fife
