Making the airport free zone cost effective for tenants.

Posted On Thursday, 14 November 2002 10:01 Published by eProp Commercial Property News
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Price is the most important inducement for industrial tenants in considering the possible advantages of locating to an industrial development zone.

Property-Housing-ResidentialIn order to make the Johannesburg International Airport free zone competitive, Blue IQ is negotiating with the Ekurhuleni Metropolitan Municipality for a rebate scheme on rates and taxes, water and lights and electricity supply.

Sipho Mhlongo, Blue IQ project manager for the airport free zone project, says this will make it more attractive and cost-effective for industrial tenants.

The model for SA industrial development zones (IDZs) is well defined. The cabinet recently announced that the airport free zone, a site adjacent to Johannesburg International Airport, has been designated as SA's fourth IDZ.

The trade and industry department has published a deadline of October 2002 for the submission of the provisional operator licence application for the free zone.

An IDZ is a duty-free customssecure area, the regulatory infrastructure of which already exists.

Companies will benefit from improved logistics and customs and freight-handling services.

The IDZ regulatory framework was drafted by the department, while tax and incentive-related benefits are still in the process of being drafted by the SA Revenue Services (SARS).

SARS is empowered to make recommendations to the finance minister on possible incentives that would be attractive enough to encourage manufacturers to locate within the IDZ.

The IDZ regulations were published in December 2000 and a white paper dealing with the issue of incentives is expected to be released later this year. Companies operating in the airport free zone would be entitled to the normal basket of government incentives available to investors.

The R213m project is part of a strategy by Blue IQ to attract foreign investors in a cluster of light manufacturing, avionics and aerospace industries. These will build on the inherent advantage that a sophisticated airport provides for the manufacture of high-value, low-bulk goods that would typically be air-freighted to overseas markets.

Blue IQ is developing the economic potential of the site in partnership with the Airports Company of SA (Acsa), Denel Aviation and the Ekurhuleni Metropolitan Municipality.

These business partners are expected to play a key role in linking the proposed industrial development zone to other developments at the airport.

For the past year, Acsa has been developing cargo and domestic terminal facilities at a cost of R458m.

The proposed IDZ will consist of about 288ha on the eastern side of the airport, bounded by the airport itself and Atlas Road. Both Denel and Acsa are major landowners in the area.

'The site was chosen to take maximum advantage of existing Denel aerospace and aviation facilities in the airport complex, and its proximity to current and future cargo terminals and the existing infrastructure.

'The development of the free zone will facilitate the clustering of not only avionics and aerospace industries, but electronics, information technology and telecommunications production and distribution, plastics, packaging, pharmaceutical and toiletries industries.'

Denel is expected to play an important role in identifying and targeting potential investors. Initially, Acsa would be contributing about two-thirds of the property designated for the IDZ.

R193m has been allocated for construction of three infrastructure projects in the vicinity of the airport. The infrastructure projects are the R138m construction of the R21/K157/K90 interchange that will link into Atlas Road; the R42m K157 (Atlas Road) upgrade; and the Elizabeth Road off-ramp from the N12 freeway.

The Elizabeth Road off-ramp is not considered critical in the short term but will be needed in about five years to cope with increased traffic.

The preliminary design for these infrastructure projects is complete.

Mhlongo says the infrastructure projects are aimed at improving accessibility particularly on the eastern side of the airport and to establish a ringroad system around the airport.

He says these developments will also open up land parcels in the area, with a resultant spin-off in new property developments along the newly upgraded Atlas Road.

'The focus is on creating logistics synergies between key manufacturing nodes in the province. The airport, the City Deep transport logistics hub and the Wadeville-Alrode Industrial Corridor form a transport triangle within which most manufacturing in the province takes place,' says Mhlongo.

Last modified on Thursday, 15 May 2014 12:55

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