THE sale of the landmark Victoria & Alfred (V&A) Waterfront to a foreign consortium for $1bn is likely to act as a catalyst for further foreign investment in SA. The move by sellers Transnet and its pension funds is likely to promote confidence in SA’s ability to compete with other international investment destinations.

Transnet announced yesterday that the joint venture of Dubai-based Istithmar and UK-based London & Regional Properties was the preferred bidder for the V&A Waterfront Company, owner of the Cape Town property. The successful joint venture also included a consortium consisting of a number of South African broad-based black economic empowerment investors. The V&A was established by Transnet in 1988 and now attracts more than 22-million visitors a year. Property economist Francois Viruly of Viruly Consulting says it is “good to have foreign investors looking at the South African property market”. “It does say that our investment environment is on par with what these same investors would find in other property investment destinations in the world,” says Viruly. He says that from a yield perspective, South African property is properly priced.  “I think it sets the platform for further investment and developments by foreigners in SA. It also shows that we can compete against other investment opportunities that investors are being offered across the world,” he says.

Adrian Saville, chief investment officer at Cannon Asset Managers, says the foreign investment is “positive, going on the assumption it is a foreign direct investment”. This “means it is capital that is going to come into South Africa that is of a permanent nature”. But Saville says that it is “very difficult” to say whether it would necessarily encourage other foreign investors to follow suit and invest in the country. “You could make the case that if foreigners are fairly confident to move a large block of capital into the South African economy, it is going to instil confidence in others and it is going to instil confidence by foreigners and domestic investors,” says Saville. Penny Karpodinis, MD of property company and developer Cavaleros, which was one of the short-listed bidders for the V&A, says the foreign investment “is a good thing” for the country.  “It shows confidence and it brings outside investment which South Africa has been trying hard to get,” says Karpodinis.

Nyameka Madikizela, deputy president of the SA Institute of Black Property Practitioners, says she “imagines that Transnet was looking to find an empowerment party, as well as a player who could add value in terms of the sale”. “I am happy there is empowerment in the consortium that was awarded the bid,” Madikizela said.

She says the empowerment parties will benefit financially and in terms of skills transfer. “The empowerment parties have a role beyond just the financial benefits. Beyond being a share-holder, we hope they add value in terms of procurement. “I would hope that in terms of skills development they will add value,” she says. Madikizela says she hopes there will also be “more recruitment to fill affirmative action positions available at the V&A and all the property sector transformation charter targets that we have signed off in the past year”. Transnet announced plans three months ago for the sale of the V&A Waterfront Company and more than 60 South African and international companies took part in the bidding process.