Property bargain-hunters salivate over V&A Waterfront
Could Cape Town's most prized real estate be dumped by its Dubai owners for a song?

As Dubai's property woes deepen, speculation is growing in South African property circles that a sizeable stake in Cape Town's most prized real estate - the V&A Waterfront - could be dumped by its Dubai owners for a song.

State-owned Dubai World has sent shock waves through global financial markets and ignited new fears that the world is set to plunge deeper into recession after it asked creditors for a six-month standstill on billions of dollars of debt repayments. Dubai has spent enormous sums, and attracted capital from around the world, on developing a spectacular skyline of its own as well as on real estate investments elsewhere.

But, as the government and the ruling party appeared to distance themselves from the companies associated with Dubai's global building boom and acquisition spree, investors around the globe have got the jitters over its estimated $59bn in liabilities.

Dubai World's Istithmar PJSC is part of a consortium of investors, including UK-based London & Regional Properties, that outbid local players for the V&A Waterfront in 2006, paying a staggering $1bn for the rejuvenated mixed-use Cape Town harbour precinct amid South Africa's property boom. Dubai World Africa has interests in other South African real estate, like game farms. The V&A Waterfront bid surprised local real estate players, who put much lower values on the real estate and structured their bids accordingly.

Dubai World recently sold two prime properties in London - Marcol House in Regent St and an office building in Newman St - for a knock-down price when it couldn't repay interest on a loan. Istithmar bought the properties for £90m and sold them for £10m.

This was an early sign for some that the Dubai success story was starting to unravel, said the UK's The Observer newspaper at the weekend. Vulture funds are circling around Dubai as well as elsewhere where bargains are to be had as a result of Dubai's debt crisis, according to international media reports. Back home, South African property bargain hunters also seem to be salivating at the prospect of acquiring some prime property on the cheap.

Property company Hyprop Investments, listed on Johannesburg's stock exchange, is among the groups to have expressed interest in buying the Cape Town property, as is Growthpoint Properties, South Africa's largest listed property company in terms of market capitalisation.

Hyprop Investments (JSE:HYP) Ltd. told Bloomberg news service on Monday it would be interested in buying Dubai World's stake in the V&A Waterfront shopping mall in Cape Town if the state-owned company sold the holding to help repay debt. Growthpoint Properties (JSE:GRT) Ltd. is also interested, Sake24 has reported.

"If it comes onto the market, we'll definitely have a look," Hyprop Chief Executive Officer Mike Rodel told Bloomberg by telephone from Johannesburg. "It's a good property. It still has fantastic opportunities. It would be difficult for them to get their upfront price plus a premium," he is reported as saying.

Others agree that the V&A Waterfront is unlikely to fetch its most recent selling price.

The V&A mall, in which Dubai World and London & Regional each own 37.5 percent, is among South Africa's top tourist destinations, attracting 22m visitors a year, noted Bloomberg.

The Observer pointed out that Dubai's crisis has "brought home the fact that, despite the relative calm of recent months, the fundamental issues that caused the crunch - excessive borrowing and global imbalances - are still there".

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