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Growthpoint taps desalination to ensure V&A water supply

New plant will supersede Cape Town’s smaller waterfront effort.

Growthpoint Properties, South Africa’s largest retail and office space owner, is protecting its premier investment, the Victoria & Alfred Waterfront in Cape Town, from water shortages by building a desalination plant.  

First the JSE-listed real estate company, which owns a half-share valued at R7.5 billon in the V&A Waterfront, donated land to the City of Cape Town for a desalination plant that began a two-million-litre-a-day operation from May last year, Growthpoint South Africa CEO Estienne de Klerk said in an interview in Johannesburg.

Now Growthpoint is studying the location and water sourcing for a separate R180 million five-million-litre-a-day plant that is set to be ready in 2021 when the city will remove its facility, V&A Waterfront CEO David Green said by phone.

“We have determined that there is commercial viability in us putting in our own plant,” Green said. “It would have sufficient capacity to provide for the entire Waterfront development and effectively take it off-grid.”

The V&A, which is half-owned by government pension fund The Public Investment Corporation, is one of Cape Town’s leading tourist attractions with a large mall, a dozen hotels, numerous restaurants, the ferry to Robben Island and the recently opened Zeitz Museum of Contemporary Art Africa. An active harbour creates a seaside industry vibe, and it is also one of the few places in South Africa that still shows strong demand for new offices.

Ferrari, Investec

PwC occupies the site’s recent Silo development, while the just-finished Waterway construction houses E&Y, British American Tobacco and Ferrari. Deloitte has moved into about 8 000m² at the V&A and Investec’s bank division will occupy about 10 000m² by 2022, De Klerk said. Woolworths is adding 4 000m² for its outlet to become the city’s flagship store.

“The integrated nature of this asset into the broader Cape Town city tourist offering is immense,” De Klerk said. “As such it is key for us to continue to ensure that the asset can provide all the infrastructure that it needs.”

The growth at V&A is set against a generally bleak climate for commercial property, drawn by a South African macroeconomic backdrop that “remains constrained and there is no real prospect at this stage that we see improvement there,” De Klerk said. For the most part, property yields have increased by 150 basis points to around 9% and property valuations have fallen, he said. 

The desalination plant is, he added, part of a larger trend whereby developers are left filling in service gaps left by municipalities despite compound annual increases in rates and taxes of 12%, according to the South African Property Owners Association. Another example is having to increase municipal water pressure to meet fire regulations, he said. “We’re bearing the brunt of infrastructure decay,” he said.

Severe drought

Cape Town is only recently recovering from severe drought conditions over the past four years and water use restrictions remain in place for the city that uses some 600 million litres a day, councillor Xanthea Limberg, a member of the Mayoral Committee for Water and Waste, said in an emailed reply to questions.

The city buys water at R40 per kilolitre from three temporary desalination plants owned and operated by private contractors, including the V&A site, Limberg said.

It isn’t clear why the plants are temporary as a draft water policy for the city envisions desalination as “very likely to become an increasingly significant share of the mix because it is scalable and not dependent on rainfall”. Cape Town plans to increase its water supply by more than 300 million litres a day in the next decade at a cost of approximately R5.4 billion, according to the draft policy.

It is is estimated that the city’s V&A plant will cost about R57 million over two years including the cost of buying water, Limberg said. The Monwabisi and Strandfontein plants in the False Bay area can produce seven million litres a day, according to the councillor. Their cost estimates including water purchases range from R240 million to R260 million each over a two-year period, she said.

Six dams

The city currently gets about 95% of its water from six large rain-fed dams that hold about 900 million kilolitres plus a number of smaller dams, the draft says. It forecasts that the city will still get more than three-quarters of its supply from dams by 2029.

Back at the V&A, Green expects to sell water to tenants at the same rate as the city and repay the cost of the Growthpoint plant within nine years. The development uses an average of 2.5 million litres a day and has cut water pressure to conform with the city’s Water Restrictions Guidelines, he said.

The Day Zero declaration by the city in January 2018 – that there would be no water left by that April – knocked tourist numbers to the V&A by as much as 25% and visitor tallies are still down by as much as 10% a year later, Green says. Retail revenue has remained largely flat with a higher spend from a smaller crowd, he says.

The primary cause of the Cape Town water crisis was low rainfall. The combined inflow for the years 2015 to 2017 was lower than for any other consecutive three-year period in the city’s 90-year record and was calculated as a 1-in-590-year event, according to the city.

“Cape Town was a water-abundant city – we washed our cars, we filled our swimming pools, we irrigated our lawns with drinking water,” Green said. “What this water crisis has done is taught us is that we’re subject to climate change and we cannot continue to run the city as if it is water abundant.”

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For a country that has severe water PROBLEMS, You would think government has a plan?? Just more proof of the inept on the job trainees at work!!!!!

Quote,
The primary cause of the Cape Town water crisis was low rainfall.

Followed with the line climate change as culprit.

Staying by Capetown. The place is known, from landing day one, for the perfect climate. For Europeans that means no rain and plenty of sunshine. Today all this is blamed on change. From confused minds who can not handle freedom of thinking. Blinded, they blame, never switching to the thinking, solution part.

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