When murmurs emerged a few years ago that Hong-Kong listed Shanghai Zendai would turn the quiet and remote town of Modderfontein into a mammoth mixed-use node, some dismissed it as a pie in the sky dream.
But the Chinese developer is proving critics wrong, as it presses ahead with its bold plans of turning the area, situated east of Johannesburg, into a city of its own.
It all started when Shanghai Zendai bought the 1 600 hectares of barren land in Modderfontein from chemicals and explosives company AECI for a cool R1 billion in 2013.
Since then, plans to build the so-called “New York of Africa” have started to take shape. So far the developers have spent more than R400 million on roads, electricity and other municipal services infrastructure. This signals a start to the project expected to have a development cost to the tune of R87 billion over the next 20 years.
The man at the helm of the development and CEO of Zendai Development South Africa (the local subsidiary of Shanghai Zendai) Anthony Diepenbroek says work on existing road and other infrastructure might cost more than R1 billion, as parts of the development start to emerge.
This includes the extension of Centenary Road connecting to Marlboro Drive, making for better access to the node.
News of China’s economy cooling down was expected to mothball the development, but Diepenbroek says this is not the case. “Chinese people are long-term thinkers and the economic events in the country are short term,” he says.
China, SA’s main trading partner, is anticipated to post a tepid economic growth rate on the back of faltering manufacturing activity and low commodity prices.
While some may feel that the domestic property sector is insulated from a China and global commodity price slowdown, nothing could be further from the truth, says FNB’s household and property sector strategist John Loos. “Granted, by the time the impact reaches property it may be watered down,” Loos explains.
There were further concerns that that the developers would import skills from China to roll out the development. Diepenbroek dismisses this.
“We are a team of 40 people and we have 12 Chinese people. The contracts for the project will be awarded to local companies. This is not a development for Chinese people.”
Zendai is forging ahead with the first luxury residential development, where 150 units will emerge by the first quarter of 2016. The residential scheme, called The Centenary, will cover 12 hectares, with one-, two- and three-bedroom apartments fetching up to R2.8 million. This translates to a rand price of R20 000/square metre.
Jacques Klynsmith, head of marketing and sales for The Centenary project, says the apartment offering is affordable, given that Sandton and Rosebank are seeing schemes being launched on average at R35 000 to R45 000/square metre. “The apartments are going to suit those guys who don’t necessarily want to pay the hefty price tag for luxury living,” says Klynsmith.
Penthouses, priced between R30 000 to R35 000/square metre, or up to R7.7 million, are in the pipeline for a later stage. But launching the apartment units is the main focus currently. “Our design lends itself to reconfigure apartments,” he says. “One would be able to take a one-bedroom apartment and make it into a large two- to three- bedroom penthouse.” Also, the demand for apartment units will dictate the penthouse offering.
The residential precinct, accounting for 77% of the Modderfontein development, will be backed up by a Gautrain route, nestled on the Sandton-OR Tambo International Airport line. Construction on the route will start in early 2017 and open in 2018.
The master plan of the development also allows for small convenience retail centres, offices, warehouses, a 200-bed hospital and schools. On the latter, Zendai has signed an agreement with private education group AdvTech to build a school.
Modderfontein’s new city is set to rival insurance magnate Douw Steyn’s 800-hectare Steyn City, between Dainfern and Diepsloot, and Attacq’s 323-hectare Waterfall City; nestled between Sandton and Midrand.
About 100 000 people are expected to live in the new city. Shanghai Zendai will use the development as a springboard to grow investments into SA and the rest of the continent.