Savvy investors are snapping up properties along the Quigney beachfront in East London, and the taxman will pay them for it as long as they use the property for business purposes.

The Quigney beachfront area and the lower central business district have been zoned and designated to attract investors back to the area and give a much-needed boost to the province's economy.

An investor who builds property in the area for business purposes will get a 20% rebate from the taxman in the first year, and thereafter 5% for the next 16 years.

If the building is renovated, the investor can claim 20% of the costs for five years.

The tax incentive scheme is part of a national plan announced by Finance Minister Trevor Manuel in October last year and is being implemented countrywide to regenerate decaying urban areas.

"Unfortunately, judging by the attendance at our meetings, it seems a lot of people are not aware of the scheme. However, residents in the area have shown great interest in renovating their homes into guesthouses," said Gaster Sharpley, Buffalo City Development Agency CE.

The agency has been tasked with overseeing the tax scheme, as investors would need to get certificates from the municipality to verify the investment in the designated area.

Sharpley said the municipality had conducted pre-feasibility studies on what would be the best use for the land. "Early next year, we will tender three pilot sites (to be made available for development)."

Johan Allers of Sotheby's International Realty said only the big investors was taking advantage of the tax incentives. "But anybody who has a minimum of R200,000 to invest will benefit, as there are three-bedroomed homes at that price."

Allers said for the current property boom to be sustainable, land owned by the municipality and government should be made available for development. "There are large plots owned by the government and the municipality, and if those are sold to private developers, this (tax incentive) scheme will translate into a sustained property boom as there is a lot of potential for offices, retail and student lodging."

It was hoped the scheme would have positive spin-offs for the tourism market in the area. "The beachfront is a hot tourism attraction in the area. Any improvement of the beachfront would be good for the tourism industry," Buffalo City Tourism Agency CE Mickey Mama said.

Daily Dispatch
Publisher: I-Net Bridge
Source: I-Net Bridge