First it was City Improvement Districts (Cids) to boost cleanliness, security and housekeeping in commercial property areas. Now property owners are taking Cids to a new level and re-packaging these nodes with their own distinct brands. Detractors say it's just bells and whistles. But investors insist it's a move designed to protect and build property values. And they're putting their money where their mouths are.
In the newly launched Sandton Central precinct, Liberty Properties and its Cid partners are in for as much as an extra R2m/year. In the repositioned Rosebank Management District (RMD), Old Mutual Properties (OMP) is devising a refurbishment plan for the Old Mutual property it manages, thanks to strong and growing demand.
Old Mutual is the largest property owner in the node, with The Zone, Regent Place, Mutual Square, Admirals Court, Oxford Corner and Rosebank Boulevard as part of its portfolio, explains OMP's Rosebank centre manager Minesh Kathard.
Good news for Rosebank is the planned re development of Admirals Court and Knightsbridge in 2005. A new look for Cradock Heights is also in the pipeline, as is the next refurbishment of Mutual Square. And interest from residential developers wanting to capitalise on the planned Gautrain station is on the rise.
Jenny Alexander of the RMD points to renewed confidence in the shape of both retail and office re-investment. Extensions and renovations have taken place at The Firs and Rosebank Mall, and last year JHI House was completely refurbished. Alexander says property owners have asked for the RMD's western boundary to be extended from Bath Avenue to Jan Smuts Avenue. A management district, or Cid, is a business area where property owners contribute an additional monthly levy towards private cleaning, security and marketing. Legislation promulgated in the late 1990s enforces a Cid where at least 51% of property owners agree, ensuring that all landlords contribute to extra costs.
In Sandton Central, a similar financial commitment is evident. "We have to protect our investment, which stands at close on R3,4bn in Sandton," explains Liberty Properties asset manager Harvey Stott. Liberty owns 25% of the newly consolidated Cid. Liberty and its partners have already been spending close on R2m/year, over and above normal operating expenses, says Stott.
Almost R500 000 of that goes on security alone. The original Sandton City Management District (SCMD) was established in 2000, followed by the Sandton Business Improvement District (SBID) in 2002, which covered the remainder of the commercial area. These two initiatives have joined forces to form Sandton Central. Stott points out that the SCMD started out as a voluntary Cid. That meant any expenses were not recoverable from either tenants or other non paying landlords in the precinct.
Stott says the work of the two Cids and the new Sandton Central brand has had a positive impact on property values in the area. "I'd hate to think what Sandton would have been like without these interventions," he concludes. Liberty is sufficiently upbeat about the successful positioning of Sandton to have started work on a new brand for Braamfontein, where it owns 52% of the property in the existing Cid.
Added expenses for land owners in the precinct amount to R220 000/month. Stott says that the City of Johannesburg has asked for the Metro Centre and the Civic Theatre to be included in the Cid, but is quick to say that the recent murder of a member of an overseas group performing at the Civic occurred outside the Cid boundary. Though regular perception surveys are conducted in these nodes, sceptics argue that there is little real proof that branding boosts property indicators. Others say the re-investment is chickenfeed compared with the value of existing property holdings. "It's not spin-doctoring," argues Kagiso Urban Management director Anne Steffny. "In the Rosebank Management District alone, occupancies have improved by 15% in the past year or so."
