Cape Town's celebration last month of a proposed R350m development by Ireland's Howard Holdings Plc is premature. Howard has not yet signed for the purchase of Nedcor's historic buildings around St George's Mall and Wale St, says Nedcor executive director Peter Hibbert.

But that does not change the fact that Howard and other offshore developers are moving into SA - and especially into Cape Town. Their capital and experience is about to teach local developers a lesson or two, while quickening the pace of our first property upswing in nearly 20 years.

The SA property industry is burdened with large numbers of small, hand-to-mouth developers. After decades of high interest rates and boom-and-bust volatility, they tend to stick timidly to unspectacular projects that can be built and sold quickly.

The few exceptions - Martin Wragge's multibillion-rand Century City project just outside Cape Town is one - suffer from a lack of experience in mega developments. UK developer Allan Collier, whose main projects are in Liverpool, says it was outsiders who saw the big opportunities in his home city.

"Until 15 years ago , Liverpool was a small, regional city with slums and other problems," he says. "But developers from southeast England moved in and saw opportunities we had missed. Now it's a city transformed." He believes Cape Town will go through an identical process. Collier, based in Cyprus, holidayed in SA last year and discovered Cape Town.

He bought, then sold, a CBD office building, Thibault House, and a block of flats on High Level Road, Green Point. Next week, Collier will sign to buy land in Clifton, on which he intends building a R125m, five-unit gated development.

He is about to break ground on a R155m mixed residential and commercial project at Mvelaphanda Properties' Tyger Falls in Bellville. And he is finalising a R120m joint venture on a large piece of land at Constantia Nek, where he will develop a vineyard surrounding 30 houses, each expected to sell at about R4m. But Collier has decided to concentrate most of his SA property interests in his mezzanine finance company, Property Partners.

He formed the company with Mvelaprop cofounder Stuart Chait and Phil Biden's Javelin Capital. It offers developers high-risk top-up finance to fill the cash gap between the project cost and what banks will lend (see Property April 11). Collier has injected R100m of his own funds into Property Partners, which already has interests in projects worth R500m. It will also be a conduit for other financiers with an appetite for this market.

It takes a shareholding in each project in lieu of interest charges. Howard Properties chairman Frank Gormley discovered Cape Town 10 years ago, while on a golfing holiday. He bought a holiday home six years ago and, last year, some sectional title units as investments. "But it was [finance minister] Trevor Manuel's budget speech a few months ago that really impressed me," says Gormley.

"The capital allowances for inner-city development - a speciality of ours - was one attraction, capital repatriation another. And it is clear that SA's economy is in a good position for growth." Now he is finalising his due diligence on the Nedcor portfolio and hopes to sign it up and start construction this year.

Gormley agrees with Collier that many South Africans are blind to prospects here. While some local developers worry that rising property inflation will lead to a price bubble, Gormley predicts Cape Town prices will double again in the next five years. "Cape Town is seven or eight years behind Dublin," he says. "The growing inward investment is central to creating a settled property market. It will give locals the confidence they need to do major developments."