‘R1 billion property’ up for auction in Cape Town

 ·11 Mar 2024

The City of Cape Town and High Street Auctions will be auctioning off a 99-year lease agreement for a 25,000 square metre development block in the city’s Foreshore district.

The city previously stated that it anticipates R1 billion worth of investment going into the site.

According to High Street Auctions, the development block is adjacent to the Cape Town International Convention Centre (CTICC). It is expected to be a hot-ticket item for private investors, given its proximity to areas like the V&A Waterfront and other tourist attractions.

Greg Dart, Director of High Street Auctions, said extended commercial leases on strategic city property place the development onus on private investors, while the city council ultimately retains ownership of the land and, eventually, all the site improvements.

“The Foreshore Tower Block development rights offering within the CTICC precinct stands as an unquestionably bold move, given the prime site and investment scales,” he said.

The auction will be held on 27 March at the DHL Stadium in Green Point starting at noon (Central African Time).

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 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,” he said.

The auction house said several favourable conditions have been drafted into the City’s Pro Forma lease agreement to incentivise developers ahead of the Foreshore Tower Block development rights auction.

The process will start 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 for processing and ratification. The highest bidder, upon acceptance by the city, proceeds to sign the lease agreement.

The city will then give the developers 36 months to focus on design, planning approvals and fulfilling statutory requirements essential for the project.

“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,” the group said.

One of the most significant conditions 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,” High Street said.

The city has been deliberately non-prescriptive about what should be built on the site as long as it is in line with zoning and development rights.

Mayoral committee member for economic growth, James Vos, said the development of the property will have a ripple effect that will boost Cape Town’s local economy, creating jobs and contributing significantly to the metro’s GDP.

High Street noted that the Foreshore Tower Block lease will be one of two substantial City of Cape Town development opportunities going under the hammer.

The second is a sale auction of one of the few remaining development sites in the Century City precinct with a permissible bulk of +/- 25,000sqm on GB3 zone.

The Century City site is located in the proximity of a mixed-use development combining office, retail, residential and leisure components.

Read: Cape Town’s luxury property market vs the most expensive cities in the world

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