Life in the city

Posted On Friday, 22 July 2005 02:00 Published by
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After years of decay, the core of SA's Big Apple is coming back to life
By Ian Fife & Linda Stafford

After years of decay, the core of SA's Big Apple is coming back to life
 Johannesburg's city centre is taking on new life, after nearly two decades in decline.

At Nino's on Hollard Place, in the heart of the financial district, an eclectic mix of lunchtime diners converses and jokes with Gallic ease around pavement tables bathed in wintry sunlight.

A similar air of bonhomie emanates from the busy cafe on Gandhi Square, in the Carlton Centre and the Absa precinct beyond.

A few blocks west, ad agency co-owner Karen du Toit is pondering the choice of decorations for her ninth-floor, R600,000 apartment , just a short walk from her office.

East of that, businesswoman Wendy Luhabe, wife of Gauteng premier Mbhazima Shilowa, has chosen a classical theme for the apartment they are modelling from an upper-floor shell in the magnificently restored, Edwardian-era Corner House on Commissioner and Harrison streets.

There's feverish activity, too, in Newtown, near the Market Theatre, on the western edge of the business district, as workmen toil to complete restoration of the long-derelict power station, Turbine Hall, that is to be the new headquarters of AngloGold Ashanti from March next year. The R400m revamp of the glazed, cathedral-like structure will add glamour, and value, to the R1m apartments of the refurbished Franklin building, just a block or two away.

Commercial activity is also picking up. Next year Pick 'n Pay will have a 3,000 m? store in the Carlton Centre, its first ever in the CBD, and follow this with a second, 900 m? store in Newtown.

By then, work will have begun on the large retail, office and hotel development at Constitution Hill, near Hillbrow, and the metropolitan centre.

This new, enlightened aspect of Jo'burg's central urban life has been obscured by incessant reminders of crime and grime over the years. Not that these issues do not still blight many parts of the city. Visitors to Joubert Park, for instance, must endure a gruelling passage through the noise and disorder of a vast informal taxi rank, for which the Johannesburg council has promised, but failed, to provide proper facilities.

Without the constant patrolling of security guards and the ubiquity of closed-circuit security cameras, the bright spots of development and normal human intercourse would almost certainly be impossible. Step beyond these beacons of light and one confronts a twilight world ruled by muggers, hijackers and worse, feasting on the harsh realities of poverty and decay.

But the steady improvements in selected parts, or development precincts, of the city mark the early phases of a renaissance that developers and city leaders hope will restore Johannesburg's status as the grandest city centre in sub-Saharan Africa.

"Jo'burg's decline is anything but unique," says development consultant Neil Fraser, CEO of the Central Johannesburg Partnership (CJP), which initiated the city's recovery plan.

"Migration of the poor into the cities, flight of business to the suburbs, poor local authority controls - they happened in Washington, Baltimore and Philadelphia in the US, for instance, exactly like that."

Johannesburg's decline began in the late 1980s, with the collapse of apartheid, the crumbling of the segregated city's management structure and a flood of poor migrants to the city centre. By the late 1990s, crime had reached epidemic proportions and slumlords held sway over the property market. Today the gritty pavements of Bree and Plein streets, near the station, are still an Afropessimist's nightmare.

Hillbrow and Berea, Johannesburg's densest residential areas, remain blighted as much by council incompetence as by drug dealers, flat hijackers and gangsters. This is despite investment by private capital. Poor wording of the Prevention of Illegal Evictions & Unlawful Occupation Act makes it slow and expensive to remove hijackers and squatters. Police refuse to act against property invaders, saying it is a civil matter, while magistrates refuse to take eviction applications because they say the legislation ensures the applicant will fail.

The turnaround began in 1999 when the CJP, a private-sector agency formed seven years earlier, devised a development strategy with the city council. It took its cue from urban uplift programmes in the US, which divided cities into improvement districts, or precincts. Fraser says US experience suggests it will take at least another 10 years for Jo'burg to become a successful city again.

Johannesburg now has a dozen of these precincts, from Newtown in the west to Ellis Park, 6 km to the east ; and from Faraday in the south to Constitutional Hill on Braamfontein Ridge in the north . They encompass a 25 km? city core. Emerging between them are the Braamfontein rehabilitation project, the Hillbrow health project, the fashion district, Jewel City, the high court precinct, the provincial government precinct, Gandhi Square and the old financial district.

Each precinct has cleared space to develop its own character. Each is aimed to have a ripple effect, slowly enveloping and clearing away the gritty, slumlord-ridden, mugger-threatened, hawker-choked streets and buildings beyond their expanding bounds. Each improvement district allows business to control the streets with security guards and cleaners, and buy or repair dysfunctional and abandoned properties.

Johannesburg CBD's revival will not mean a return to the city centre of the apartheid era - those days are long gone. It will be more cosmopolitan and residential than before - more like a typical European or American city, but with a strong African flavour. Thirty-one high-rise office buildings are being converted into flats, and are setting the tone for a city in which to live, work and play on a scale not seen since its birth as a mining camp in 1886.

New museums, art galleries, jazz clubs and theatres are enticing a tentative but growing stream of culture lovers and tourists. A cultural arc is forming from the Linder A uditorium in Parktown, on the northern edge of the city centre, through the constitutional court , Civic and Alexander theatres in Braamfontein, Wits University, across Mandela Bridge to the Market Theatre in Newtown.

The novel (for Johannesburg) integration of pavements, streets and buildings is encouraging more sidewalk cafe to open up in the most organised precincts, such as Newtown, the financial district and Gandhi Square.

What gives Johannesburg's city centre an advantage over other SA cities is its size and scope. Cape Town, Durban, Sandton and Pretoria CBDs could fit comfortably into Johannesburg's space. In addition, it has quality infrastructure, electricity, water supply and storm-water drainage - factors that many other urban centres lack and which are hindering their development. Johannesburg's facilities serve an urban fabric of high-rise buildings whose architecture ranges from Victorian and Edwardian through art deco to postmodern, and vibrant African street life equivalent to any urban centre south of Cairo.

Such advantages virtually assure the city's renaissance, despite its lack of natural features such as a river, seaside or mountain.

Being the Gauteng provincial capital, with a premier committed to its revival, is also a plus. Government has bought properties around Beyers Naude Square (formerly Market Square) for its capital buildings in what is known as the government precinct. It plans to demolish many of the buildings to create the city's biggest square between the financial district and First National Bank's headquarters at Bank City. But the province has been slow to act, and opaque about its plan of action. It needs the approval of Heritage SA to demolish many of the buildings.

Nevertheless, the province's Blue IQ development agency has a war chest of R19bn to develop major institutions as catalysts for the revival of surrounding areas. The R1bn conversion of the Old Fort into the constitutional court is already an aesthetic and economic triumph, and the Constitution Hill development is only a quarter complete .

The municipality, too, is committed to growth. It has formed a special inner-city team, and its highly regarded Johannesburg Development Agency (JDA) under Graeme Reid has initiated some key projects, among them the Braamfontein upgrade and the forthcoming Yeoville business district upgrade. The JDA also developed One Central Place, a mixed-use commercial building in Newtown, prompting private developers to complain that it infringed on their turf.

Businesses that have remained in the CBD - among them banks, mining houses, retailers and large property owners - have understandably leapt at the chance of enhancing their investments. But few have been as nimble-footed as private developers.

Visionary investors got in early, buying scores of buildings at fire-sale prices with an eye to upgrading them into prime office spaces for the banks, mines and corporations and companies that do business with them. The trickle of late-1990s risk-takers, like the Plit brothers' Affordable Housing Company and former attorney Gerald Olitski, has grown into a stream of investors.

The most leaden-footed have been SA's leading institutional and private property owners. In fact, some development analysts blame Johannesburg CBD's decline in part on big institutional property-holders like Sanlam and Old Mutual. These institutions were among the first to flee the city and concentrate investment in suburban office development in the late 1980s and 1990s. This emptied their policyholders' inner-city buildings, leading to overvaluation of those properties, delaying sales and urban regeneration.

One outstanding new developer is Urban Ocean, which stunned observers last year by buying a modern office building, The Franklin. Next to the former JSE building in the old financial district and previously occupied by Ernst & Young, The Franklin was sold for flats at prices from R500,000 to more than R1m. The company also successfully launched 1 Rissik Street, a 1970s high-rise office block next to the M2 motorway, converting its top floors to flats.

Urban Ocean is headed by two Karoo-born businessmen, Duan Coetzee and Alfonso Botha, who decided to start the venture in 2002 on a whim developed out of a late-night conversation at a wedding in Worcester.

Botha is cagey about his other development plans, which could include the conversion of historic landmarks such as the old Stuttafords building on Rissik and Pritchard and others on Commissioner Street. Earlier this month they announced they had bought two early 19th-century buildings on Commissioner, Shakespeare House and the CNA building, from Old Mutual.

Botha and Coetzee appear to have limited sales - just 15 at Corner House, 32 at 1 Rissik, 125 at The Franklin - to generate enough cash flow to buy more properties, but keep as much as possible for the massive increase in value they expect over the next few years. It is also an indicator of what they paid for the buildings. For instance, the FM estimates they bought Corner House for about R300/m? - 1/30th the cost of a Sandton flat - in 2002. But, by 2004, they were paying R1,000/m? for the Ernst & Young building.

Botha, who has the magnificent penthouse in Corner House that was used by the team filming SABC TV's The Apprentice, says they launched their top-range products to shock the market into realising what the city has to offer. It worked, creating a frenzied rush by mainly young, creative buyers, and newspaper publicity.

"We will now start supplying the middle-income range for the same creative people earning R10,000/month or more," says Botha. "To them, the city centre is an oasis of individuality and style that contrasts with a suburban mediocrity of pseudo-Tuscan villas and dull retail malls."

Nearly half of the buyers of apartments in The Franklin will move in themselves, says Urban Ocean marketing manager Katy Essa. She has bought a flat in 1 Rissik. Having grown up in the city, she says moving back to the CBD is more than an investment - "it's a sentimental, spiritual experience".

"It's all about the soul and the buzz of being part of a new, reinvented Jo'burg," she says. "There's so much life in the city. People here are so rich in spirit. And besides, Johannesburg has always given me a sense of belonging."

But will there be enough coffee shops, restaurants, cinemas, supermarkets and leisure facilities in the CBD to satisfy the needs of the new residents, who could be paying R10,000/month rent? Botha maintains that such facilities will grow rapidly to meet the new demand. If not, he and other investors might have to align their rents more closely to inner-city levels of R3,000- R5,000/month.

More established developers have been active, too. Zenprop, a big Sandton property owner, has 40,000 m? of office space in the financial district "and we would buy more if we could", says director Rodney Wainstein.

Pretoria-based City Properties, headed by Alec Wapnick and his son, Jeffrey, has brought its experience of successfully converting old offices in Pretoria to Johannesburg. It has bought properties from ApexHi, the listed major CBD property owner, and Old Mutual. Like the Plit brothers, City Properties is concentrating on providing affordable rental accommodation for tenants earning between R2,500 and R8,000 a month.

International investors, too, have entered the market. London-based private equity investors Fleming Family & Partners have spent close to R100m since 2002, buying properties in the old financial district in the name of Johannesburg Land Company. Their representative, local developer John Dewar, has been assembling a large site of mainly empty properties west and south of the magistrate's court next to the financial district.

But, the greatest investment in the CBD remains the SA mining houses and banks that stayed behind when other institutions fled the city.

Gauteng's new Gautrain commuter train project, expected to be contracted soon, will be the seal on Johannesburg's future growth, say development lobbyists like Fraser and JDA marketing chief Tshepo Nkosi.

New investors looking for opportunities in Johannesburg centre will find that, as with the gold on which the city grew, they must dig deep and hard to find the richest veins. Those who got there first may have found the best deals in the rehabilitating areas. But new opportunities lie in other precincts, waiting for enterprise to work its way through the danger and decay to prise them out.

Fife owns property in the inner city

Financial Mail


Publisher: Financial Mail
Source: Inet Bridge

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