‘Once-in-a-lifetime opportunity’ as ‘R1 billion property’ is set to go for auction in Cape Town
The City of Cape Town and High Street Auctions will be auctioning off a 99-year-lease for a 25,000 square metre development block in the Foreshore precinct.
The City of Cape Town has previously stated that it anticipates R1 billion worth of investment will be going into the site.
The site is adjacent to the Cape Town International Convention Centre (CTICC) precinct and within walking distance of the V&A Waterfront. The site is also a few minutes from Table Mountain and many of Cape Town’s beaches.
Greg Dart, director of High Street Auctions said: “The initial lease duration is set at 60 years, with a 20-year renewal option followed by an additional 19-year optional extension. Cumulatively, the total lease option is 99 years.”
According to Dart, the City’s incentivised timeline underscores its commitment to driving progress and development in the heart of Cape Town.
Dart said that they again partnered with the City to auction extended commercial leases on strategic City property that places the development onus on private investors, while the council retains ownership of the land, and eventually all the site improvements.
In the auction, registered bidders will enter bids reflecting the monthly rental (exclusive of VAT) they are willing to commit to under a Triple Net Lease agreement, which encompasses all costs of repairs, maintenance, and insurance.
The auction will take place on March 27 at the DHL Stadium in Green Point starting at noon (Central African Time).
The lease auction method is now a tried and tested formula proven to generate significant revenue streams for the City that goes directly towards improving infrastructure and service delivery, without giving up ownership of the core asset that is being held in trust for future generations, according to Dart.
Various favourable conditions have been drafted into the City’s Pro Forma lease agreement to incentivise developers ahead of the development rights auction.
The timeline starts with competitive bidding at the auction, which will eventually lead to one winner – the person or entity that makes the highest bid.
That bid then goes to the City of Cape Town for processing and ratification. The highest bidder, upon acceptance by the City, proceeds to sign the lease agreement.
However, the Lease Signature Date does not signify onset of rental payments. Instead, the City will allow developers 36-months to focus on design, planning approvals and fulfilling statutory requirements essential for a project of this magnitude.
This is among the favourable conditions afforded by the City in finalising all statutory land use applications and building planning approvals prior to the lease commencement date.
According to Dart, a significant condition revolves around the Deferred Rental Period and Rental Commencement Date.
“In this instance, the lessee has conditional options to defer all or a fraction of the monthly rental during the deferred rental period, which is envisaged to coincide with the construction phase,” Dart said.
Dart said that the City has been deliberately non-prescriptive about what should be built on the site however, in his professional opinion, the first choice for this site would be a hotel, given the location as well as the rapidly rising domestic and international traveller numbers.
“More importantly, the development will have to complement and seamlessly integrate with the CTICC operations,” Dart said.
“And for both business and leisure tourists, this Foreshore Tower Block development site being auctioned by High Street, couldn’t be in a better location from a hospitality perspective.”
Alderman James Vos, Mayoral Committee Member for Economic Growth, City of Cape Town said: “The development of this property will certainly have a ripple effect that will boost Cape Town’s local economy, creating jobs and contributing significantly to the metro's GDP.”
High Street Auctions MD James Dall called it a once-in-a-lifetime opportunity for developers to benefit from a 99-year leasehold in a metropole attracting significant economic investment.
Dall says the Foreshore Tower Block lease will be one of two City of Cape Town development opportunities going under the hammer on March 27.
The second is a sale auction of one of the few remaining development sites in the Century City precinct with permissible bulk of +/- 25000sqm on GB3 zone.
The Century City site is located in the proximity of mixed-use development combining office, retail, residential and leisure components in an integrated, stimulating and aesthetically pleasing urban environment.
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