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Mashaba unveils multibillion-rand investment for Joburg CBD

Derelict and abandoned buildings will be offered to private-sector developers and financiers on long leases.

RYK VAN NIEKERK: The Joburg mayor, Herman Mashaba, announced a massive new R20 billion property development in and around the Joburg CBD [central business district] today. It will consist of 24 different property developments, and construction work is said to start within six months.

On the line is Johannesburg mayor Herman Mashaba. Herman, welcome to the show. This seems to be a massive development, and it forms part of a very ambitious inner-city revitalisation programme. What is the background to this initiative?

HERMAN MASHABA: Well, this is actually without any doubt the biggest historic investment in the life of the City of Johannesburg, where you have the single-biggest investment happening at one time. In December 2016, I made an announcement during my 100 days, that I’ve identified an opportunity to provide affordable accommodation and student accommodation in the City of Johannesburg.

However, as the city, we don’t have the money but we have all these derelict abandoned buildings, hijacked buildings. We are going to take them back from druggers and criminal syndicates, and offer them to the private sector to build accommodation for our people. 

So far I’ve offered 164 buildings to the private sector. Today we were announcing the 81 buildings whose awards were finalised last week, all of those 81 buildings were awarded to the private sector to build affordable accommodation for our people.

RYK VAN NIEKERK: What do you mean by the buildings were “offered” to the private sector?

HERMAN MASHABA: What we did is, in the inner city development plan of the City of Johannesburg, I’ve identified roughly 500 buildings in the inner city which have been derelict. As we are aware, the city was allowed to decay over many years. There are hijacked buildings and some buildings were just abandoned. So we are taking back those properties and then we’ll offer them to the private sector to give us proposals. They don’t have to buy them from us. We’ll give them long leases so that they can make money in the process, but in the process we invest firstly in the city, to provide employment opportunities to our people and provide affordable accommodation.

That’s how I conceived this idea. Now it is reality. By this Friday I will be releasing another – putting on tender – another 70 buildings. So, for the 81 buildings that we released today, the proposals were received from the developers, with statements from their banks by way of over R20 billion. We’ve never really seen such a development in one sitting in the history of the City of Johannesburg.

RYK VAN NIEKERK: So all those derelict buildings, buildings that have been abandoned or hijacked – will the city expropriate those buildings from the owners, and then give them to developers?

HERMAN MASHABA: In fact, as I am talking to right now, within the next weeks and months there are 10 buildings where we’ve been looking for the owners and couldn’t find them, and we’ve already taken a decision as the City of Johannesburg to expropriate those buildings.

So there’ll be another 10 buildings within the next few weeks or a month, which we will expropriate and offer to the public sector to give us proposals to develop affordable accommodation – and, through that, investment back into the City of Johannesburg.

RYK VAN NIEKERK: And these buildings – are they being put out on tender?

HERMAN MASHABA: Yes. We’ll put them out on tender. One we announced today [was] on tender from October last year. We put them out and last week our procurement team finalised the city minutes, with letters to the winning bidders.

This coming Friday there will a further 70 buildings that I’ll be putting out on tender.

RYK VAN NIEKERK: Seven zero?

HERMAN MASHABA: Yes, 70. The 81 buildings are giving us a R20 billion investment. So the 70 – we’ll know by the end of September, at the latest. Our procurement team has put a team together that works on the proposals. So they are giving the guarantee that by the end of September they would have finalised those 70 buildings that we are putting out on tender. So probably we’ll get another R20/30 billion investment in the City of Johannesburg.

RYK VAN NIEKERK: So these buildings are being put on tender, and then the private-sector developers come with cash in hand, and they will now redevelop those buildings to affordable accommodation and some retail space, I would assume. Is that the business model?

HERMAN MASHABA: Absolutely. Retail space, and some of them are going to turn them into schools, some of them into hospitals, and so forth. At the expiry of the leases they will revert back to the city.

RYK VAN NIEKERK:  We’ve seen that the recent developer of the Maboneng Precinct in the city was liquidated, and a number of the properties were auctioned off. Now, that Maboneng development was seen as a case study for investment in the city centre. What went wrong there, and how will you prevent a similar a similar scenario with these new developments?

Read: Propertuity in Maboneng: What went wrong?

HERMAN MASHABA: Well, our approach is totally, totally different from what happened with the previous administration. Firstly, I think you had a government that was not really willing to work with the public sector. Corruption was a huge issue with officials in the City of Johannesburg. We did not have a professional public service that understood our role as government – what it is.

We are busy right now, and by the end of October [2019] we’ll have an additional 1 500 police officers to complement our existing JMPD. To build any secure development we will need the rule of law. So all those issues, wherever they existed in the past, right now you’ve got a government that’s ready, willing and openly wanting to work with the private sector.

RYK VAN NIEKERK: Who are these developers who have won these tenders?

HERMAN MASHABA: Today the team announced a few of them. But on Monday we have a big function. You are most welcome to attend, where the procurement team have now invited most of the willing bidders, with their bankers, to a big function. So you are most welcome to attend the function with some of these developers on Monday.

RYK VAN NIEKERK: But there are multiple winners. It’s not a single company or a single developer?

HERMAN MASHABA: Yes, multiple. No one company can afford the R20 billion investment.

RYK VAN NIEKERK: Thank you. That was Herman Mashaba, mayor of Johannesburg.

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The pioneer of Jhb inner city development closed doors and this fool thinks he can develop housing for lower income families? This will create a slum like you have never seen before!

Can only be an improvement on what it has already become.

oaktree How do you come to the conclusion that this will create a slum, it’s already a slum, developers will be repairing buildings for the better and uplifting the CBD. For someone to find only negative in this interview is astonishing and quite disturbing.

Tyran, be realistic, do you honestly think this will work???. Take a check in 20 years or even just 10 years. 100x worst than it’s today.
I can’t wait to see who those “investors and developers” are going to be?

So it isn’t actually a R20 billion investment. The R20 billion “value” is in the derelict buildings. Mashaba and his government are not contributing anything! They are taking crap buildings away from absent landlords/owners and expecting the private sector to take all the risks!

This is electioneering. Not a single one has been financed yet and I guess that 90% won’t be able to be financed at all as the risk of leasehold title for residential use compounded by social housing obligations make the vast majority of these projects unfundable.

This better pay off, taxpayers are getting fed up with paying more and more for no added value from coj and da.

Another pipe dream. Some basic questions I’m sure were asked before the billions start flowing…..
1. Why would people with money to spend go and live there? Its unsafe, unclean and falling apart. Businesses are all but gone out of the CBD, and it’s become a pool for all things evil. I would not sign a lease in that sh!thole, and then have to hope and wait for the hole to turn into something livable.
2. To oaktree’s point – the pioneers of the inner-city redevelopment in Maboneng district are winding up. That model at least attempted to also draw INCOME GENERATING businesses into the area, not INCOME CONSUMING private individuals alone.
3. Where will “your people” find the money to pay for the accommodation? The economy is tanking – thank you ANC and BEE. Unemployment is up. Thank you ANC and BEE.

Some free advice – pull the plug – NOW!

On the face of it this is a fantastic idea. Central JHB is a cesspool of garbage and a continuous slum. People throw their rubbish out the windows of skyscrapers and it piles up waist deep on the roofs below until it gets blown or washed away. These places are a match away from becoming infernos in some cases.

However, what I do hope is that they really can’t locate the owners and aren’t expropriating owned property. Fact is that if there was a proper rule of law many of these buildings would not have become hijacked in the first place.

With that caveat … go for it!

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