Council undersold land by millions
Questions are being asked after developer gets property bargain.
The Joburg council may have lost R27-million when it sold off a prime piece of land for a mere R870000.
The council sold a portion of a farm, Liefde en Vrede, south of Joburg, to a developer for R12403 a hectare while the going rate for vacant land in the area was around R400 000 three years ago.
Now, questions are being asked about how the land was sold to Patroni Investments at the bargain price when it could have fetched as much as R28-million.
Patroni Investments director Rory Sheahan on Friday said the deal was 100% legal.
All standard procedures and requirements were followed, Sheahan said.
The 70ha land lies in prime property near Mulbarton, Bassonia and Glenvista. The latter two suburbs are among the citys most expensive.
Patroni Investments is selling stands for between R260000 and R1-million.
Lauretta Featherstone, an estate agent in the area, said the deal ensured that the developer would pocket an excessive profit.
I suppose it was a matter of willing purchaser and willing seller, she said.
Two other estate agents in the area said Patroni got the land for next to nothing.
All three agents agreed that, three years ago, the land should have been sold for between R350000 and R400000 a hectare.
DA councillor for Joburg, Mike Moriarty, this week called for a probe into the deal.
In the meantime, we will make our own inquiries and find out if the original decision [to sell the land at that price] was made validly or whether it can now be overturned.
Cynthia Barnard, the assistant portfolio manager for the Joburg Property Company, said the land was sold at a market value as established by a registered valuer to Patroni.
She said the council had earlier cut a deal with Patroni, in 2001, when it exchanged a portion of the Liefde en Vrede farm with the company for an environmentally sensitive site it wished to preserve.
The exchange of the 29ha piece of land involved no money and was a straight swap. But, at the time, it was valued at R8.4-million.
Two years later, and at the height of the countrywide property boom, the council sold another chunk of the Liefde en Vrede farm almost three times the size to Patroni for only R870000.
Sheahan said the council had obtained its own valuation for the land before the sale, while the council, in writing, said the land had been valuated by a valuer appointed by Patroni.
Moriarty, meanwhile, accused the Joburg Property Company of being hasty when selling off lucrative land.
This should have been picked up in our audits. Action must be taken and someone needs to be held accountable, he said.
Article By: Isaac Mahlangu - www.sundaytimes.co.za