Johannesburg is home to a lot of old and dilapidated buildings, which pose risks to any who live, work or otherwise venture into them.<\/p>\n
These fears were validated this past week, when a devastating fire\u00a0hit\u00a0the building of the Bank of Lisbon – also occupied by the Department of Local Government and Housing – which resulted in the deaths of three firefighters.<\/p>\n
But beyond the dangers these run-down buildings pose to human life, failure to renovate these structures could lead to massive insurance losses, and lost investment opportunities for the city.<\/p>\n
According to property data and research group, Lightstone, the Bank of Lisbon building was bought in 2005 for almost a tenth of its initial selling price.\u00a0After the municipal valuations by the City of Johannesburg earlier this year, the value of the building was set at R13.3 million.<\/p>\n
However, the group noted that the insurance replacement value was estimated at a mammoth R28.6 million.<\/p>\n
“After a health and safety inspection it was found that the building was only 21% compliant,” the group said. “This could possibly have a severe effect on any potential insurance pay-out after the fire, adding to the wave of devastation.”<\/p>\n
According to Lightstone, as early as 2005 talks have started to address urban decay and rejuvenate the CBD, and in 2015, former mayor Parks Tau allocated a total of R5 billion to project Kopanang in an effort to redevelop 21 buildings mostly tenanted by government departments.<\/p>\n
Government departments have now been ordered to evacuate the Johannesburg CBD while a probe is underway which will determine whether buildings should be demolished or restored.<\/p>\n
Lightsone said that leasing agents should take this move seriously as they may face government departments leaving their lease agreements earlier than initially agreed – though construction and development companies may benefit as the opportunity to redevelop and re-energise the city centre presents itself.<\/p>\n
Big opportunity for property developers<\/strong><\/p>\n The Johannesburg CBD is labelled as an Urban Development Zone and is particularly attractive to investors because of its tax incentives.<\/p>\n “Lightstone transfer data shows that when older buildings are bought and revamped, even on a minor scale, could easily be sold for two or three times their purchase amount after a refurbishment,” the group said.<\/p>\n One such example is 305 Fox Street. A recent Lighstone Commercial Property Report from Lightstone indicates the building was bought for R1 million in 2013. After the municipal value roll in 2017 it was valued at R2.8 million.<\/p>\n However after its refurbishment in the same year, it is now listed for R6,2 million.<\/p>\n The building now houses a coffee shop, restaurants and apartments proving a solid investment and social upliftment in the district.<\/p>\n “This is a prime example of how a refurbishment is a very lucrative investment in the long run,” Lightstone said.<\/p>\n As the details around the developments are continually being discussed, the group said that there is a great need for low cost housing, and earmarked these buildings as the potential solution.<\/p>\n “The current housing problem in South Africa attests to the urgent need to restore buildings and repurpose them as low-cost housing and other useful amenities.”<\/p>\n
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