Irish investors launch Cape property development

Eurocape Investments Limited, a company formed from major Irish-UK propertydevelopment group Howard Holdings, has launched a new residential, hoteland commercial development project in the center of Cape Town valued atover R500 million.

Unveiling details of the development, to be known as Mandela RhodesPlace, on Thursday at a press briefing in Cape Town, Howard Holdings andEurocape chairman Frank Gormley said that all of the equity being investedin the deal came from Ireland, representing a substantial amount of foreigninvestment into the city. Currently Eurocape was in the midst of discussionson financing with a number of local banks, with about 75% of the totalcost-a standard portion - expected to be provided by the banks.

According to Gormley, the development is expected to be the first in South Africa to benefit from the tax incentives unveiled by Finance Minister Trevor Manuel in the government's 2003 Budget, which offered write-offsfor initiatives that aim to redevelop designated areas in the country'sinner cities. In Ireland, similar tax incentives had helped to providea significant impetus for inner city development, Gormley said, and thegroup was hoping to receive approval from the government in the next month.

Almost 18 months ago Eurocape purchased seven buildings on two historiccity blocks in the Cape Town central business district (CBD), most fromthe now-merged BoE and Nedcor (NED) groups, which included the BoE buildingin Wale Street, the Cape of Good Hope Bank building in St George's Mall,the old Reserve Bank building in Wale Street, the Nedcor Investment Bank(NIB) building in St George's Mall, the old Cape Times/Syfrets buildingin Burg Street, and numbers 21-23 church Street (the former Cafe Royal).All of these buildings, many adjoining, will together form Mandela RhodesPlace, which takes its name from the adjoining Mandela Rhodes building.

As the former landmark Rhodes Building, it was donated to the MandelaRhodes foundation recently by diamond mining giant De Beers, and will notbe developed. However, as Mandela Rhodes Foundation CEO Shaun Johnson explainedto I-Net Bridge, the foundation had agreed to lend its name to the areasurrounding its building due to the marketing benefits for the Foundation,as well as the contribution to the upliftment of the CBD resulting fromthe development.

"We believe in the Old Town concept being developed by the Cape Town Partnership and are happy to help with raising awareness about an importantconstituent part of it," he commented. "The rejuvenation of the Old Townis obviously very important, but beyond that, we hope it can be a modelof development which will attract further international investment. Working in Mr Mandela's name, we are convinced that Africa's time has finally come,and this kind of innovation is an important expression of that."

Mandela Rhodes place will comprise 163 luxury apartments to be constructedwithin the Nedbank Syfrets Private Bank building, the NIB building, theold Cape Times building and numbers 21-23 Church Street. The first phaseof sales of the apartments, to be handled by Pam Golding Properties, willbegin on Friday, with prices ranging from R1.1 million to about R5 millionfor a range of apartment sizes from 32 square meters to 145 square meters,from studios to one- and two-bedrooms and penthouses.

A 150-room "Old World" luxury hotel will be developed in the landmarkold Reserve Bank building, the BoE building and the old Cape of Good Hope Bank building. According to Gormley, it will be up and running in between18 and 22 months, and the group was at a "very advanced stage of negotiations"surrounding the hotel operator.

Gormley said Eurocape had gone to great lengths to preserve the historiccharacter of the buildings, including undertaking extensive research andconsultation to retain architecturally and historically significant facades,structures and even fixtures and fittings.

Located within the residential block will be a range of restaurants,bars, food halls, and the CBD's first winery. These will be complementedby a state-of-the-art rooftop wellness centre and clinic, offices, gymnasiumand in-house parking. Once completed, the development will boast a spectacularnew 22-story glazed tower, which Gormley said would be "sensitively dividedand constructed" between the historic structures while providing residentswith unparalleled views of the city, V&A Waterfront and Table Mountain.

According to the Eurocape chairman, the tower would be the most demandingstructure of the development in terms of engineering and costs. It hadbeen designed, but a contractor for the project had not yet been chosen.The tender was expected to be launched within the next two months, he said.

Gormley added that 30 apartments in the complex had been pre-releasedin Dublin last week, and all had been sold at prices ranging from E140,000to E500,000. Demand had been excellent, coming largely from locals witha particular interest in Cape Town-those who had already been to the cityand knew the potential of the new development.

"They have seen that Mandela Rhodes Place is going to be a landmarkdevelopment and that it will change the face of the inner city," he elaborated.

"Based on experiences seen in other cities around the world and particularlyin Dublin, I believe the opportunity here is huge and there will be anenormous amount of international and local interest in buying into thedevelopment."

The development is expected to create over 1,000 direct jobs duringthe construction phase and thereafter the resulting rejuvenation of theCBD should also lead to many new jobs in the area. Part of the Eurocapeinvestment also includes the company's commitment to upgrade the area aroundSt George's Cathedral, to be named Cathedral Square.

Article by: Lynn Bolin - 18/06/2004 Business Day