By Nick Wilson

The massive Madiba Bay Leisure Park development and Coega project in Port Elizabeth are likely to have a catalytic effect on property development in the city, says Gauteng developer Flanagan & Gerard.

The development is also expected to boost the city’s economy and help retain consumer spending in Port Elizabeth.

Flanagan & Gerard, which is developing the commercial component of the R5 billion Madiba Bay Leisure Park development, says natural and manmade constraints such as the coastline and salt flats could encourage residential densification in the city.

Madiba Bay Leisure Park’s commercial property component, which includes two retail centres, ranks among the biggest commercial properties in Port Elizabeth. Flanagan & Gerard will also own 20% of the commercial property component of the development on a 50-year lease.

Madiba Bay Leisure Park will be rolled out over five to seven years and will include an integrated leisure and lifestyle park on the 6000ha site. A R1,3 billion links golf course and related residential units will be developed.

Flanagan & Gerard principal Pat Flanagan says: “If you look at Port Elizabeth, it’s got a number of manmade and natural elements. You have the constraint of the coastline. Port Elizabeth is almost on a peninsula. It has a coastline on two sides and its development can only go to the north and the west.”

He says the Baakens River acts as another divide.

“You also have the salt flats, which separate metro PE from the Uitenhage area.”

Port Elizabeth’s CBD has the constraint of the coastline and the north-south highway, as well as a steep topography. “It is very constrained in terms of physical development and the city will continue to function profitably and viably, with people who frequent it being those who use public transport, because all public transport routes focus on the city.”

Flanagan says policy at all spheres of government is to “densify to the most efficiently used existing infrastructure. That’s a countrywide policy. There is likely to be a lot of housing densification within the existing urban edge of Port Elizabeth. The corollary to that is that growth outside the urban edge is likely to take a long time and is some years off, because to get new infrastructure into these areas is hugely costly and relatively inefficient.”

He says existing infrastructure next to Madiba Bay Leisure Park will support the development.

Strong macroeconomic conditions, together with the Coega project, will encourage further urbanisation in Port Elizabeth, as in the rest of SA, he says. “With that broader economic base there has been a drop in unemployment, a broadening of the earnings base and a higher demand for consumer goods and services.

“The benefits of the Madiba Bay Leisure Park development would mean a broader consumer base. It’s going to see the retention of a lot of consumer spending that is going out of PE to places like Cape Town.”

He says institutional demand for property in Port Elizabeth is strong as the fundamentals support the property market. Five years ago it was regarded as a “negative place to invest but that has turned. I think you’ll see solid, steady appreciation.”

There is little in the way of office supply in Port Elizabeth because there is “very little land zoned” for office development.

“Consequently, offices are being set up in older residences such as Cape Road, Newton Park and 6th Avenue Walmer.”

This shortage of office space, together with the Coega project and Madiba Bay Leisure Park, will bring about more demand for offices. “It could be we see further applications for town-planning rights for offices.”

Research conducted independently by Urban-Econ shows that over the next 10 years, Port Elizabeth will need about 50000m² of additional office space. In the hotel industry, the same research indicates there is demand for 1-million bed nights a year. “That is expected to grow to 1,14-million by 2010 and 1,8-million by 2020.”

Flanagan says there is potential to develop a new 180-room four- to five-star hotel.

“There is a shortage of residential property in Port Elizabeth. Developments like Coega and Madiba Bay Leisure Park will bring about job creation and demand for further residential accommodation and broaden the economic base of PE. ”

This will boost demand for hotels, offices and housing.

Business Day