By Ian Fife

The Rabie Group has bought one of Cape Town's most strategic development sites in Century City. Chairman John Rabie believes he can turn it into a mixed-use district to vie with the Cape Town CBD. But the purchase could also save investors in Island Club, Rabie's R400m high-rise residential development, from a speculative bloodbath. 

Nearly 1 000 flats are going up in Island Club, almost as many as there are in the Sandton CBD's "golden triangle", where rents have fallen from about R6 500/month to as low as R4 000 for a high-specification two-bedroomed flat.  But there are 45 000 commuters to Sandton each day and only 6 000 to Century City. And rents in the area, says Trafalgar CEO Neville Schaefer, are closer to R3 000 for a two-bedroomed flat.

Investors needing a 10% yield on an R800 000 unit will need R8 000.  Rabie sold 435 units last year in off-plan buying. Many bought to become permanent residents at Island Club, but about a third are investors and speculators. Then Rabie was faced with competition from Nedcor's Villa Italia apartments, launched late last year.  The test will come when units are ready to be occupied in the second half of this year.

But with control of the site, Rabie can install infrastructure to support short-term and furnished lettings to tourists and visitors. He can also "drip-feed" the market to keep prices and rents stable.  Century City has been dogged since inception by overoptimistic projects that led to financial stress and eventually a takeover by BoE, now part of Nedcor. 

Ratanga Junction, the ill-fated theme park, was meant to change the face of leisure. The 129 000 m² Canal Walk was to be an icon of "shoppertainment" - a phrase that has turned out to be short-lived in consumer consciousness. Property loan stock company Hyprop and the Ellerine Bros now own Canal Walk. 

Planners have had little doubt Century City is better placed as a CBD than Cape Town. But town planner Dave du Plooy says this will not happen. "Officials will not allow it to overshadow Cape Town CBD," he says. "Though northern Cape Town lacks a civic centre, Century City is too close to the CBD to play that role."  Rabie paid R118m for rights to 1 050 residential units, 112 000 m² of offices, 800 hotel rooms, an aquatic park, a "showplex" accommodating 20 000 people and a 1 800-seat theatre. That values the residential rights at less than R15 000 each and the offices at below R800/m². It also includes Ratanga Junction, which could be rezoned.