Posted On Friday, 28 September 2001 03:01 Published by
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There could be rich pickings for developers along the planned route Sceptical property developers

There could be rich pickings for developers along the planned route Sceptical property developers are beginning to look more closely at the rich pickings that could come their way if plans for a Gauteng high-speed rail system aren't derailed.
Provincial premier Mbhazima Shilowa recently confirmed proposals for a R7bn train link between Johannesburg, Pretoria and Johannesburg International airport. In theory, it will run every 15 minutes, 18 hours a day. Planners say it will carry up to 60 000 people daily at speeds of more than 160 km/h. The proposed journey time between Johannesburg and Pretoria is 35 minutes, and between Sandton and the airport, 15 minutes.
Most of the potential for developers will lie around nine new stations between the three main destinations. Already named are Rosebank, Sandton, Marlboro, Rhodesfield, Midrand, Centurion and Hatfield. They may be joined by Menlyn and Pretoria's Sunnyside flatland.
Speculators have not begun buying up land in these areas. They say there is no point until an environmental impact assessment is completed in December 2002 and the station sites are finalised. In any case, some still doubt whether the rail link will actually happen.
They could change their minds in December, when Gauteng transport (Gautrans) chief Jack van der Merwe is due to identify a shortlist of four bidding consortiums that want to finance, build and operate the system. Even then Mike Crawford, head of one of SA's biggest developers, RPP Developments, says there will be no rush to snap up properties. That won't happen until the end of 2002, when Van der Merwe is due to announce the two finalists.
Though the high-speed train system is expected to cater for only 1% of the region's daily 6m commuters, international experience suggests it will transform shopping, office and residential dynamics in Gauteng. Construction of new rail stations in other world cities immediately pushed up rents and property values. Generally, it helps to have property within 700 m or 10 minutes' walk.
Peter Sloane, partner in the Canary Wharf branch of London estate agent Knight Frank, says residential rents rose 20% around stations on the new Jubilee Line on London's underground rail system. He estimates retail and office rents rose similarly.
'But it is difficult to be precise about new values because other factors like the economic cycle affect prices, too,' he says.
There could be even greater rewards for Gauteng property owners. Johannesburg and Tshwane (Pretoria) unicities want to stop urban sprawl and are likely to rezone low-rise areas around stations. This would allow developers to convert small office and apartment blocks into high-rise buildings. This, in turn, would increase the number of train passengers by raising local populations.
Tim Middleton, a former city planner, is the developer of a new office node between Rosebank and Sandton. He says the proposed rail link is well timed for two main reasons: the new policy of unicities to densify business nodes; and the decline in new development because of an oversupply of shops and offices.
'As a result, some of the bigger property investment decisions could be made around those stations,' he says.
Each station should act as a hub to spokes of bus routes, light rail links and taxis running to smaller centres. Van der Merwe sees smaller centres using buses. CBDs like Sandton could have light-rail systems riding above the traffic congestion to get people to homes, offices and entertainment. Sloane says London Docklands' rents along its light-rail route rose 10%.
Among the proposed centres that will host stations, the big winners could be Rosebank and Marlboro. There are already 15 000 office workers in Rosebank and 50 000 in Sandton, says Dirk Prinsloo of research company Urban Studies. Van der Merwe believes the railway will encourage Rosebank to grow and relieve congestion in the Sandton CBD. Prinsloo disagrees: 'Sandton will keep growing.'
Rosebank is well positioned in an established residential area between the Johannesburg and Sandton CBDs, says Middleton & Corpcapital property head Marc Wainer. Bus routes from Parkhurst, Zoo Lake, Killarney, Melville, Norwood, Balfour Park and Melrose Arch would turn Rosebank into a central focus for Johannesburg's near-north, he says.
Owners of industrial and residential property in Marlboro will find themselves in the middle of a new commercial, high-density residential and entertainment centre catering to Alexandra. As conditions in the township inevitably improve, analysts say Marlboro property values will rise.
Van der Merwe says his planners were not asked to suggest the size and density of station precincts. 'That will be a matter for developers, the local authorities and their integrated development plans,' he says. Like Middleton, however, he expects council policies to favour high-rise, high-density development.
Among the biggest beneficiaries of the rail link could be Old Mutual Properties, which owns large developments in three key areas. It is the biggest property owner in Rosebank, where a railway station could transform the stumbling R200m Zone retail development. The company also plans SA's largest retail and mixed-use development, the R4,5bn Zonkisizwe on the east side of Midrand, close to where the station is planned. And Menlyn Park, Old Mutual's successful 'shoppertainment' centre, will be further enhanced by a nearby station.
Another beneficiary could be the environment. Most of the 60 000 travellers targeted to use the train each day currently travel by car. It's estimated the 260 000 daily car trips on the N1 between Johannesburg and Pretoria drop 30 000 t of carbon monoxide on the population each year. The cancelled car trips could reduce that by 7 000 t. Sadly, car traffic will continue to grow at 7%/year and, despite the conversion, there will be more than 300 000 trips/day on the N1 by 2006.
At that density, traffic will be at a standstill much of the time. But that is nothing compared with the Thai capital, Bangkok, where hours spent stationary by the average car in rush-hour traffic each year amount to 44 days.
Growing delays on Gauteng roads will convert more people to trains, predicts Van der Merwe. Middleton hopes an upgraded taxi service will also persuade drivers to take the train.
Not everyone along the train route will win, however. Between Marlboro and Johannesburg's Park Station, the train will travel mainly underground. Gautrans has R800m for land acquisition but it will not go to homeowners along that stretch - even as the train rumbles 20 m below the foundations of houses costing up to R10m in suburbs like Saxonwold, Rosebank, Dunkeld, Illovo Inanda, Houghton, Melrose, Sandown and Strathavon.
Properties will not have to be expropriated but Van der Merwe says there may be compensation for loss of value. Two valuers will estimate that loss and Gautrans will make an offer. Unhappy homeowners can appeal through the courts.
Properties beyond Marlboro, where the train travels above ground, will be expropriated at market value.
Knight Frank London-based international researcher Steve Mallen questions the route chosen by Gautrans. 'It's a city of many nodes but no centre,' he says. 'People live close to their work, so who is going to travel, for instance, between Rosebank and Sandton? The experience of Docklands is that the greatest development will take place when stations create new nodes. The planners seem to be missing an opportunity.'
But Van der Merwe says he is happy with the model, which was prepared in conjunction with Leeds University. He says it must be seen as part of Blue IQ, a broad-based Gauteng strategy to increase development, investment and job creation. 'We believe it will be achieved through this route,' he says

Publisher: Financial Mail
Source: Ian Fife

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