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Steyn City takes form to be an ‘estate like no other’

Residential component ready to go to market.

Steyn City, the mega mixed-use development by insurance magnate Douw Steyn, is starting to take shape with the rise of residential units and promises of more expected to unfold.

The first phase of the multi-billion rand, 2 000-acre development – nestled between Dainfern and Diepsloot – was launched to the media on Thursday. It features 93 apartments, 19 clusters with a further 45 clusters to be built off plan and to be introduced to the market from March 12.

On top of this, six homes have been completed and there are 220 freehold stands – allowing owners to build their own homes.

The idea is to develop an “estate like no other” with a hospital and 50 000 square metres of commercial space in the pipeline. The commercial offering will follow the establishment of Auto & General’s head office, which was completed in 2013.  A retirement village, a primary and high school and two retail centres are expected. These pending developments are part of phase two.

Kent Gush, who is responsible for the marketing and sale of Steyn City’s residential offering, says one school and a 4 000 square metre convenient retail centre anchored by Spar will break ground in the next three to four months. 

‘Affordable’ property?

The bidding starts high. A basic one-bedroom apartment sized at 74 square metres starts at R1.6 million. Two- to three-bedroom apartments covering up to 149 square metres will cost up to R3.9 million. Rental options are available with a basic unit estimated to be in the region of R10 000 per month. Freehold stands, between 400 to 600 square metres in size, range from R2.3 million to R16 million.

Cluster homes range from R6.2 million to R8.4 million and include mostly four bedrooms with an average floor size of 350 square metres.

Gush says homes in the mixed-use development are “20% to 30%” more expensive than what is offered in Dainfern estate. Gush adds that the average home in Dainfern, relative to Steyn City properties, costs on average R4.6 million.

The development also has a luxury apartment offering, which costs R13.9 million with a 350 square metre floor space. With the rate per square metre of the luxury apartments at Steyn City fetching R30 000 to R40 000, Gush says this is in line with what is offered in Sandton and Melrose Arch.

Steyn City Properties CEO Giuseppe Plumari refutes the perception that residential offerings like Steyn City only cater to well-heeled individuals. “If entry level is R1.6 million, you are appealing to a broader section of society. It is affordable; it’s not only for the rich …” he says.

The development boasts an 18-hole Nicklaus design golf course, parklands, a mountain bike track, a clubhouse, gym, equestrian centre, spa and jogging tracks.

The start of Steyn City

The development, which started in 2006, has seen infrastructure investment to the tune of R6.5 billion, as part of the first phase. At the start of the development Plumari, who has been in the construction industry for 40 years, owned close to 200 hectares of land between Dainfern and Diepsloot. He partnered with Steyn to accumulate 800 hectares.

“I met Douw at a braai more than 30 years ago and we became good friends. I built a house and a private game farm for him,” Plumari says.

The master plan was drawn up to relocate about 20 000 citizens of Zevenfontein, a squatter camp which was located on the Steyn City site to Cosmo City. 

The developers also partnered with the government to roll out new surrounding roads, sewerage and water infrastructure in a bid to obtain municipal planning approvals. The R511 William Nicol Road was upgraded in the vicinity of Steyn City, to expand arterial routes into six lanes as well as pedestrian and cyclist lanes – a laborious exercise which set the developers back by R300 million.

The total completion of the development is still fluid and is expected to cost more than R30 billion. Plumari cautions that the return on investment might take a while to materialise, with estimates of ten years. “It is going to take a very long time for us to recover R6.5 billion [spent already],” he says.

On the quiet

Although Steyn City has been less publicised than similar developments of its kind, press coverage has centred more around Steyn’s R250 million private residence, which trumps the cost of President Jacob Zuma’s Nkandla home.

But Steyn has hit back, saying he could have invested his money in Europe or the United States but chose South Africa – a vote of confidence in the country’s investment climate.

Plumari says it would not have made sense for information on the development to be announced if there was nothing to sell or show.

He says the construction and investment community is used to developments which market and sell off plan, but this was not the case for Steyn City.

“We are only launching on March 12 and that has been the case for a long time. We started breaking ground … The reason we did that is because we did not want to sell a dream or a piece of paper; we wanted to sell the real thing,” he told Moneyweb.

Not so mixed-use

In the last decade, South Africa has seen the emergence of mixed-use developments, offering work and play living such as Waterfall City between Johannesburg and Pretoria.

Associate professor at the University of Cape Town Francois Viruly says the challenges with many mixed-use developments is that they target higher-end individuals and are not accessible to the middle class.

Viruly adds: “Mixed-use developments need to come down a notch. The two worlds [high and middle class] can mix.”

Also, the large nature of mixed-use developments tends to put pressure on existing infrastructure. “Mixed-use developments are more complex than doing individual developments; you have to get the sequence right. When you do it, you have to consider doing the residential component first or commercial. They can alter the city and how it operates, but they also play a role in upgrading the environment,” he says. 

More stories from Moneyweb
Stephen Katzenellenbogen

Stephen Katzenellenbogen

NFB Private Wealth Management
Moneyweb Click an Advisor
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