The historic Newlands Rugby Stadium in Cape Town is up for sale. This comes after the Western Province Rugby Football Union decided to move to the Cape Town Stadium as the new home base for Western Province and the Stormers.
The union has been under financial pressure and tried to have joint-venture deals to unlock development on the land within the Newlands Rugby Stadium precinct, first with Investec Property a few years ago, and then another private group. However, both deals fell through.
But the latest development is that SA Rugby is now involved, and the decision has been made to sell the stadium through a transparent bidding process.
Commercial property services company Galetti has been appointed to handle the sales process. In this latest episode of The Property Pod, Galetti’s associate director Wes Cowan joins us to tell us more about the sale.
Highlights of his interview appear below. You can also listen to the full podcast above or download it from iono, Spotify or Apple Podcasts.
“We started the [sale] process in February. We were actually appointed about a month before that … to run a sealed-bid process on the property, which commenced on February 15. At the moment, we are expecting the initial bids from potential bidders to come in this week.”
“So, at the end of this week, the first non-binding bids are due and [we are] hoping to close out the process by the end of May.”
“There has been a lot of interest, obviously with it being such a landmark in the Western Cape … [from] your typical listed and private property entities, landlords and property owners, as well as a couple of international developers and investors … So we expect a number of bids … from a varying group of investors.”
How large is the property in terms of scale and what will a prospective buyer get from buying something like this?
“The property is currently zoned for community use, which allows a hospital, place of worship, place of instruction and then consent-use of boarding house or conference facilities.
“So, we expect that it will go through a rezoning and planning process. The property is, as it stands, registered at 43 000 square metres.”
“The current zoning allows for 60% coverage and a floor factor of two. Obviously, it’s been a stadium. The current height is around six floors, so we expect that kind of bulk to be unlocked once it’s gone through the zoning process with the new owner.”
Will we possibly see the stadium being demolished for residential or mixed-use development? What do you think could work there?
“There are some developers that have got the idea to utilise some of the infrastructure that is there, and others that will just essentially knock it down.”
“With regard to the use and the area … In the [nearby] Newlands Cricket Ground, they’ve just developed about 15 000 square metres of commercial space, which has been taken up really well by the market.”
“Given its location, with the iconic view of Table Mountain, it’s [a] really sought after office node.”
“Then the [broader] office node in itself of Claremont and Newlands trades very well, fetching some of the highest rentals in the country – and even through Covid experienced very little vacancies. So, from an overall office point of view, it trades well.”
“I foresee a mixed-use type of development, similar to that of a Harbour Arch or a Melrose Arch, where there’s the live-work-play kind of setup residential property in the area.”
“I think the area is looking for a new, funky retail type of setup, similar to that of Melrose Arch in Johannesburg. So yeah, I think the three sectors [office, residential and retail] could do very well in that space.”
Are you confident that everything will be finalised by the end of May?
“Yeah, we expected most of the bids to come in by the end of this week, and those initial bids are actually non-binding. Thereafter, we will short-list [and] select a few bidders and put them into the final round. That then gives them the opportunity to really deep-dive into the property, and do some more homework and spend the time and money they need to be confident in submitting a final binding bid by May 31.”
“Thereafter there’ll be an adjudication, a selection process, and we are hoping to notify the successful bidder during the month of June.”
How valuable is this property and what are you hoping to achieve in terms of sale price?
“There isn’t a reserve price. That’s definitely not there. I think what we are trying to do is achieve fair value for the property.”
“You touched on the history of the asset and the proposed developments and owners that there have been in the past. I think what we are looking to do is just create a transparent process whereby the property achieves its value; that’s the reason why we’ve given the potential bidders the length of time we have given, and the information up-front to really go and do their homework and see what they can achieve once the property is fully developed and achieves its highest and best use.”
“What that price will be, that’s anyone’s guess at the moment. I have my suspicions, but I won’t divulge those right now.”
“There is a municipal valuation. It goes towards the rates calculation and is not really one to take into consideration [in relation to] the transaction of the property. I think it’s more determining the achievable bulk and the usage of the property and where its value would lie then, and reverse-engineering that to determine a base land value.”