BEE - firm in R390m CT CBD development

In what will be the first major inner city development in South Africa for a black economic empowerment (BEE) group, South African empowerment group Coessa Holdings, acting in partnership with Johannesburg businessman Wandila Mtolana, plan to develop a new 390 million rand residential, commercial and retail lifestyle centre, to be known as Icon.

The centre, to be marketed by Seeff properties, will be situated on a currently vacant 4,000 square metre site (site of the old power station) in the Foreshore area of the city's central business district, adjacent to the new Investec head office building and very near the Cape Town International Convention Centre (ICC), as well as the Victoria & Alfred Waterfront.

It will comprise a total of 24,000 square metres of space, of which 3,000 square metres will be devoted to retail space, 5,000 square metres to office space and the balance to apartments.

Launching the new centre in Cape Town on Wednesday, Seeff managing director for the city bowl area Ian Slot said that the residential component would consist of three apartment blocks, of which two were 18 storeys high and the third nine storeys high.

A total of 176 apartments would be on offer, ranging from 55 square metres to 156 square metres in size and priced from a minimum of 995,000 rand (including VAT, transfer duty and parking) to as much as 5.7 million rand for the top penthouse - equivalent to 25,000 rand per square metre.

This compared to the prices of apartments on offer at the V&A Waterfront, which were currently selling at over 40,000 rand per square metre.

The ground floor of the Icon complex would offer retail space for boutique shops and restaurants, with the first to third floors designed for office space. Secure undercover parking would be provided in a two-level basement as well as upper level parking on four floors.

Coessa Holdings director Shabodien Roomanay said that as part of the group's commitment to empowerment it had pledged to set up a trust to which it would donate a share of the company's profits from the project to be used for the construction of housing for previously disadvantaged individuals, among other empowerment uses.

Coessa would contribute a flat 1.0 million rand to the trust up front, as well as 20% of the difference between a baseline of 17,000 rand per square metre and any price achieved above this level.

A tender for the construction of the complex was expected to be launched in August, and construction was scheduled to begin in November and last for 18 months, thus making Icon ready for occupancy around June 2006.

Andrew Boraine, head of the Cape Town Partnership, said the new development was in line with the Partnership's goals of attracting residents back to the central business district and bringing 24-hour life back to the city by offering a space for new shops, residences and other activities. It also met the group's aim of getting developers to put back something into the city on a social development basis.

Western Cape Premier Ibrahim Rasool added that the new development would be on previously derelict ground, and would therefore add substantial investment value to the area, as well as attracting new businesses and residents to the city.

According to Slot, the Icon centre was not just another of many new property developments unveiled for the Cape Town city centre over the past year. Rather, due to its position near the Waterfront and the ICC, it could offer attractive long-term rental and rental pool opportunities for investors.

"The ICC is already booked for a considerable time to come, while the Waterfront is the most visited tourist destination in Africa," he noted. "This positions Icon in a unique rental environment."

He said that according to conservative rental pool projections, an investor could expect a net return of 7.37% on an investment after one year with an occupancy level of only 50%. The net return would increase to 9.11% in the second year with a 55% occupancy level and to 14.59% in year four with 70% occupancy.

Article By: Lynn Bolin - www.sundaytimes.co.za