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Propertuity in Maboneng: What went wrong?

Things were not as profitable as they seemed.
Almost 20 buildings went up for auction in the Maboneng precinct as a result of Propertuity's liquidation. Picture: Dean Hutton/Bloomberg

The company that led the development of popular hangout spots in the Maboneng Precinct in the inner city of Johannesburg auctioned off 18 buildings on April 15 as part of its liquidation process. Moneyweb previously reported that a total of R109.5 million was raised, with offers for the various buildings ranging from R400 000 to R32 million. This has brought a sad end to Propertuity, a company heralded as a pioneer of urban renewal projects.

Who is behind Propertuity, and what was their business model?

The company was started in 2007 by Jonathan Liebmann with an initial multi-million rand investment, the purchase of a building in Jeppestown, and a vision of creating a life in the city where people could work, play and live in a creative urban space. The business vehicle launched with property investments that collectively became known as the Maboneng Precinct. The company was a beacon of hope for greater investment in inner city regeneration.

As with a conventional property developer, Propertuity bought inner city buildings, often in a state of disrepair, to fix up and sell at a profit or retain and earn rental income from. The portfolio included a mix of residential, retail and office space that housed advertising agencies, art galleries and private studios, among other attractions for the young and upwardly mobile.

The model can be likened to redevelopment projects in cities like New York and London. It is speculated that, at its peak, the company sold millions of rands worth of property. It was on track to meet its 2020 vision of growing the precinct to an 11km2 radius with over 20 000 occupants.

Elements that were key to Propertuity’s initial success included:

  • Access to financial capital. Liebmann was able to secure an institutional investor with significant balance sheet capability early in the founding of the business, reclusive billionaire Jonathan Beare of Buffet Investments. This enabled the company to quickly buy up buildings and grow its portfolio.
  • Social capital. A key part of Maboneng’s creative and artsy allure was built on the support of the art community, which took up residence in art studios and galleries. Their early adoption of the neighbourhood fostered a network effect. The precinct enjoyed good publicity too. Forbes Magazine, for instance, listed Maboneng as one of the coolest areas to live in. In addition, Liebmann, the charismatic face of the business, spent a significant amount of time doing public relations
  • Taxation regime. In order to stimulate investments, the local government had enacted various incentives to attract property developers to the area. The Urban Development Zone (UDZ), for example, was introduced as a tax incentive in 2003, allowing buyers to claim 30% of the purchase price as a tax deduction against taxable profit over five years.
  • Further development. The success of Propertuity attracted additional investments from the likes of JSE-listed Arrowhead Properties, Delta Property Fund and Quorum Property Group. As a result, Propertuity moved from owning the majority of buildings in the area to a minority. Further investment led to the establishment of a local community organisation that collects levies from owners to spend on the general upkeep of the area as well as the deployment of private security.

What went wrong?

Towards the end of 2016, in what can be described as one of the most important testimonies of a job well done to Liebmann and team, RMB Investment Holdings (RMH) announced that it would be purchasing a 34.1% stake in the business for an undisclosed amount. The firm introduced additional funding as well as some much-needed corporate governance structures. On paper, this investment made sense. RMH had announced its intention to create a property investment business and was looking forward to partnering with an entrepreneur such as Liebmann.

However, it soon became apparent that things at Propertuity were not as they seemed. Some of the challenges stated in RMH’s annual financial statements were:

  • Material underperformance in terms of property sales
  • Overly optimistic asset selection
  • Limited management capacity, and
  • Excessive gearing and operational challenges.

Most concerning is that RMH stated that it had underestimated the operational complexity of expanding the business, which is strange given that it manages a multi-billion investment portfolio. One would think that quite a few of the issues raised were discoverable at the due diligence stage of the acquisition process.

What were some of the interventions to salvage the business?

A few strategic measures were taken, including: 

  • A rights issue: The business undertook a rights issue to raise additional shareholder capital. This resulted in RMH increasing its shareholding from 34% to 49%, resulting in a total investment value of around R300 million.
  • A change in management: The board initiated a change in management,  reported as an amicable development, and brought in a more “experienced” team of seasoned property managers and developers. Propertuity parted ways with its founder, Liebmann, in May 2018.
  • Portfolio rationalisation: Propertuity’s initial strategy was to acquire as many buildings as possible with little consideration of any possible change in the economic climate. The slowdown that hit the South African economy affected consumer incomes, and this dampened demand for units in the precinct.

All these endeavours, however, proved to be in vain; months later, in October 2018, the shareholders commenced the liquidation process.

What does the ending look like?

The impairment of around R300 million incurred in the collapse of Propertuity is estimated not to have a material impact on earnings for RMH given its multi-billion rand investment portfolio. Although things may not have ended well with Propertuity, RMH still sees value in the inner city property company Divercity. Since leaving the management of the company, Liebmann has become involved in a new property app called Flow. In early 2019, it managed to raise R20 million, South Africa’s biggest seed investment for the new industry to date.

Sinesipho Maninjwa is a CA(SA) and financial news commentator.


The views and opinions shared in this article belong to their author, cannot be construed as financial advice, and do not necessarily mirror the views and opinions of Moneyweb.


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Why does the author not tell it like it is- cbd’s in africa are destined to fail gentrification because there is :
A No long term confidence from white capitalism- it is get in, make a buck and get out
B No proper support from african authorities in security and services(everything around Mboneng looks like a warzone) which confirms point A
My son went to a party at one of these clubs- had to be limoed in with bodyguards and escorted by an army of bodyguards swarming around the entrance- reminds me of the movie ”The Omega Man” a story of post nuclear fallout with mutants trying to kill Charlton Heston the good guy.

This is completely incorrect. Regeneration takes time and does not happen over night. Maboneng is testament to that. Just because it did not work financially does not mean it has not improved the area a thousand times. I have invested in the inner city and mainly in Hillbrow and I have witnessed a massive turnaround over the last 10 years and we were not in the business for a quick buck and are still invested.

Your son did not have to be ‘limoed in’ with bodyguards. I go to Maboneng all the time and have never ever had a security issue.

I do wish writers would use “LOSS” in stead of the euphemism “impairment” let’s get real – this is actual MONEY! Not fairy tales. Like Donald Trump “misstepped” … hahaha …

Regarding the failure, yes they failed, of the company, it’s probably;y pretty simple. Idealism isn’t a substitute for ensuring that valuations are correct and that tennants pay their rent on time.

And, thanks to the ANC everyone has less money to spend in artsy hangouts.

This is how I how am reading this piece:

1. Propertuity was running well and had a founder/manager who understand its business and the industry.
2. RMH came with its ill-earned money (exorbitant bank fees charged to FNB clients and swindling car owners via interest rates by WesBank) to “invest” in Propertuity
3. RMH changed the business model and structures of Propertuity and subsequently fired Libyans (the man whom the business relied on).

So much for the “skills and experience” of the wealth managers at RMH!!!

My take was rather different — RMIH got involved and didnt do proper due diligence so they belatedly realized that things arent actually going as well in the engine room as the story promoised. Quite possibly Liebmamn pulled a fast one on them and they paid him off and tried to spin it so they dont lose too much face with their own investors.
They bought a lemon basically and were too embarassed to admit it.

You might be right, though, but my interpretation was a bit different.

Also, RMIH is very different company from Firstrand (who owns fnb and rmb).

I agree with you David on what you said but I don’t think Liebmann pulled a fast on RMH. As the piece states, RMH “…….brought in a more “experienced” team of seasoned property managers and developer……”. This is a problem with some investors: they pump in money and want to call the shots on thing they have no knowledge and experience of.

FirstRand is owned by RMH, thence there’s a nice roll-up of revenue from FNB and WesBank to the top.

Yeah I read it the same way – Liebman pulled a “public relations” fast one, RMIH thought they were beating everyone else to a gold mine and got left with an overinflated story. Liebman walks away wealthy and laughing.

This is a problem found a lot in other parts of Africa, that of impatient capital operating in hijacked nodes.

This became RMB vs 25 years of ANC metropolitan misrule.

Jonathan Liebmann is an incredible entrepreneur and visionary. What he created in Maboneng really is unbelievable. He created something from nothing in an extremely difficult location. He got people to buy in to his vision and continued to build it over many years. If you have been to their market on a Sunday you will see what a vibe he has created. Inner city property is not an easy business and is very management intensive. I think Propertuity’s business model was too speculative and there were no predictable, sustainable cashflows to support the on going running and development of the precinct. To continue building the neighbourhood he would have needed the income to pay staff, costs etc and also would have needed more and more people to buy up the apartments (for more than they cost to build), I just don’t think there are enough people in this market that would take up these apartments. In summary I take my hat off to Jonathan for what he created and the foundation he set for further development and regeneration of this part of town

End of comments.





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