In one of the largest private sector led property developments in the Johannesburg CBD in decades, R2 billion will be invested in the makeover of the landmark 30-storey Absa Towers Main building and the nearby Jewel City new mixed-use urban renewal precinct, which spans six city blocks.
Divercity Urban Property Fund, a new company that is eyeing a JSE listing and is backed by Atterbury, a heavyweight property developer and investor, launched its ambitious plans in the CBD yesterday. Other partners and main shareholders in Divercity include Ithemba Property, led by Rian Reyneke; and Talis Property Fund, founded by Tebogo Mogashoa.
The Absa Towers Main redevelopment has been on the cards for several years and will see the building being transformed into a mixed-use property, including 520 residential apartments, a floor of coffee shops and restaurants, office space and convenience retail on the ground floor. Divercity acquired the building from Absa, following a competitive bidding process. The deal is conditional on approval from the Competition Commission.
The new Jewel City precinct, which is located between the trendy Maboneng district and Absa’s head office precinct, will see several old buildings being redeveloped and the area transformed into a ‘live, work, play’ mixed-use property node. It will include some 20 000m2 of commercial space, retail space and 2200 residential apartments over two phases.
Speaking at the launch, Mogashoa said: “Divercity is a partnership between some of SA’s leading property development companies. Our property fund has an inner city focus and aims to create functional neighbourhoods within our cities, with affordable housing being a cornerstone of our developments. We have committed to invest R2 billion in the current financial year into our developments in the Johannesburg CBD. When complete it will represent about R4 billion worth of investments in the city centre.”
Wouter de Vos, CEO of Atterbury Property Fund, said: “The Absa Towers Main and Jewel City projects are iconic and symbolic of where Divercity is going. Besides helping to transform our cities, Divercity itself is committed to transformation in the property sector. Tebogo (Mogashoa), who developed the Pan Africa Mall in Alexandra, played a key part in the formation of Divercity. He also recently secured a 30% stake in Atterbury Property Fund and has been appointed its chairperson.”
De Vos told Moneyweb that both Divercity and Atterbury Property Fund were set to list on the JSE within the next few years. However, he said the current focus was to scale up its property portfolios and development pipeline.
Mogashoa said: “Divercity purchased the Jewel City properties from JSE-listed Redefine. Jewel City was once the hub of Johannesburg’s diamond and precious metals trade, but the buildings have been largely vacant and closed off to the public for years. With the success of the Maboneng precinct, Jewel City is in a prime location to extend the regeneration of the city towards Absa Towers.”
He added: “Our plans will see Jewel City reopen to the public with a fully pedestrianized streetscape, effectively connecting Maboneng to the Absa precinct. Divercity will be launching more than 2 600 affordable apartments, covering some 75 000m2 of new residential space, over the next 18 months in the Johannesburg CBD.”
Following the success of the Maboneng precinct, which was spearheaded by urban renewal pioneers, Propertuity, the Jewel City development represents a new wave of investment in the Johannesburg CBD. Maboneng has attracted over R1 billion in investment over the last decade and recently was named by Forbes Magazine as one of the coolest neighbourhoods in the world.
Rand Merchant Bank Holdings’ growing property division, RMH Property, is a shareholder in both Atterbury and Propertuity. Mogashoa said Diversity’s cornerstone investors would be RMH Property and Nedbank Property Partners, subject to Competition Commission approval.
Divercity’s plans also represent a major boost to Johannesburg Mayor Herman Mashaba’s efforts to attract investment and regenerate the CBD. Speaking at the launch, Mashaba hailed Divercity’s investment.
“I am overwhelmed by what I see here today, especially the scale of the projects and commitment shown by Divercity. We have a housing backlog of more than 300 000 in Johannesburg, so a project of this scale that addresses the affordable housing challenge in the city is heartening. We want to create an enabling environment for the private sector to invest in the city,” he said
Mashaba added: “I have said that we want to turn the Johannesburg CBD into a construction site. What inspires me about Divercity’s plans is that it is not part of the 84 buildings that the council has released for development. Their investment is going to spur other private sector led projects and also the take up of the city’s urban regeneration property development opportunities.”
Divercity has R2 billion in current assets that also include Atterbury’s stake in the Newtown Junction Mall; the iconic Turbine Hall, which it purchased from Growthpoint Properties; Pan Africa Mall from the Talis portfolio; and, 4 500 residential properties from the Ithemba stable.