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City of Cape Town approves R4bn Amazon-anchored development

Online retail giant expected to set up African headquarters at River Club mixed-use precinct.
An artist's impression of part of the River Club development in Observatory, near Woodstock. Image: River Club Website

The City of Cape Town has given the green light to privately-held Liesbeek Leisure Properties Trust to develop a new R4 billion 150 000m2 mixed-use development in Observatory that will be anchored by US conglomerate Amazon.

Announcing the decision in a statement issued late on Monday, the city confirmed that the online retail giant will be the anchor tenant within the planned River Club development.

Amazon is expected to take up around 70 000m2 of space for its new African headquarters.

Read: Amazon to hire 3 000 people in South Africa

The group already has a strong presence in Cape Town, with smaller offices at the nearby Black River Office Park and data centres in the city, which are largely located in properties owned by JSE-listed Redefine.

Amazon’s current occupied space is mainly for its Amazon Web Services (AWS) business, based in the Mother City.

Amazon SA retail offering?

While Amazon itself has been keeping mum about its expansion in South Africa beyond the AWS business, the group’s plans to take up almost half of the space at River Club raises questions on whether it will launch an online retail business locally to take on the likes of Naspers-owned Takealot.com.

Read: Amazon launches data centre operations in SA

“Amazon will be the anchor tenant, opening a base of operations on the African continent,” City of Cape Town said in its statement, however, it gave little further detail on Amazon’s planned operations.

Opposition

The city’s approval of River Club – a planned precinct that will include office, retail and residential components – follows stiff opposition to the development from some sectors including certain members of the Observatory community and the Khoi and San people (referred to collectively as the ‘First Nations’).

“The planned mixed-use development will be a significant boost to the economy and the people of Cape Town in the aftermath of the national Covid-19 lockdown,” says Mayor Dan Plato.

“The city has carefully and thoroughly considered all of the submissions and concerns during the appeal process. We are acutely aware of the need to balance investment and job creation, along with heritage and planning considerations,” he notes.

Read: Amazon.com to invest in ‘utility-scale’ SA renewable energy project

“It is clear that this development offers many economic, social and environmental benefits for the area. We are committed to driving investment to revitalise the economy, which is slowly recovering following the impact of Covid-19,” he adds.

Cape Town businessman and property developer Jody Aufrichtig is one of the entrepreneurs backing the River Club development.

Aufrichtig, who is a trustee and spokesperson for Liesbeek Leisure Properties Trust, is yet to respond to Moneyweb’s request for comment on getting the go-ahead for the development.

He has however defended the development in the media, saying it has taken the local community and First Nations into account as part of the planning process.

What is envisaged

According to the River Club development’s website, around 20% of the 150 000m2 of floor area proposed in the project will be allocated to residential use, with 20% of this residential component being allocated for inclusionary housing.

“This imminent development strikes [a] balance, with a combination of well-located residential and commercial opportunities, the rehabilitation of the degraded riverine corridor, improved links with surrounding ecological resources such as the Raapenberg Wetland and the establishment of a high quality green space that will be accessible to the public,” City of Cape Town notes in its statement.

“The proposed development will meet the requirements of inclusivity and integration. It combines various land uses and a mix of income groups by offering market-driven and affordable housing opportunities – the latter of which will be physically integrated with the other residential units in the apartment complexes,” it adds.

Besides the residential, office and retail offerings, the River Club development will also include leisure and other amenities such as a hotel, gym, restaurants, a school as well as conferencing and event spaces.

According to City of Cape Town, while the development has been approved as a concept, conditions have been attached requiring further stages of approval. This means the developer must submit detailed plans on a range of development aspects.

“The development is envisaged to take place in phases, with construction set to take place over three to five years. The development of Precinct 1 includes mixed-use and a floor space of approximately 60 000m2. Precinct 2 will house the Amazon headquarters, which is 70 000m2 of floor space.”

The city says the project is expected to create more than 5 200 jobs in the first phase of construction. Some 19 000 “indirect and induced jobs” are anticipated to be created through the overall development.

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Not surprised this went to CT and not Jhb.

Jhb, under the ANC is dysfunctional.

Another precious Greenbelt destroyed by greed.

Joburg-by-the-sea, except filled with cliquey (s)nobs.

That can hardly be called a functional green belt – its unsafe and full of trash. A company like amazon will at least gentrify the area and improve the greenbelt because they have the money and incentive to do so for their employees. Unlike the govt.

Yep … a “greenbelt” is what has been created upriver alongside Riverside Road in Newlands at huge expense to the locals.

It’s not greenbelt it’s swamp that has to be constantly cleaned of reeds.

Do you wake up like this ?

So much anger. I recommend yoga.

I would have prescribed 2xValium and 1x 150mg cyanide for this idijit.

I rest my case…an instant inbred Cape Town clique formed for Tweedle Dee, Tweedle Dumb, and Tweedle Dumber…

what the heck, if we don’t develop the country you are angry, if we develop the country, you are angry. Make up your mind

A functional and investable city in hardly a Joburg

Seems most see Amazon as a retailer and don’t realise their biggest growth and profits come from Web Services. This new centre has little to do with retail.

Money talks it seems. I wonder how the kickbacks got to the councillors in the this case?

The building of this type of thing can only be disasterous for the ecology of that area.

As it is, Amazon as company has a terrible reputation as a place to work in Cape Town.

You all sound very negative.

The plans for the Amazon buildings and gardens look beautiful and upmarket.

I don’t understand what expense it will be for the locals as Amazon will be spending money locally and creating many jobs.

Why does SA allow Amazon to come into SA. SA needs to establish its own character

True. However competition is good for consumers otherwise we are the mercy of Naspers/Take-a-lot. There are no local players to take on Naspers. If they emerge Naspers will either cut their prices or buy the emergining entity.

We always want those shiny investors in the country, yet when they make their mark in the country we want to shout “voets**k” at them like Malema did??

Perhaps consider strong measures against arsonists !

Amazon already has a terrible reputation as an employer. Even at the white-collar developer level it seems a lot of people find them to have a very toxic culture compared to local SA employers.

We also know from the experience of other countries how the relationship with Amazon usually goes: Government welcomes with open arms the big multi-national flashing cash and promising big investment. Fast forward 5 years later and we see article after article in local news of how Amazon is paying a fraction of the tax local competitors pay due to corporate tax avoidance enabled by the ambiguities of online retail.

Look forward to see you all in the comments section a few years from now.

Amazon already employs a large amount of people in SA within the AWS space, and whilst they may not pay a lot in corporates tax, those employees pay PAYE, which is the biggest contribution to tax collection in SA.

We need to encourage job creation and GDP growth.

This is not an Amazon development, but rather a development with Amazon as the anchor tenant.

Please, I’m interested in this comment “very toxic culture compared to local SA employers” as it might affect me personally. Can you provide more context or links please?

I’m going to take a flyer here. It means that they expect a full 8 hour day.

To the critics of Amazon: I am not a fan of the vast consumer-corporate culture creating more waste than we really need but, this is the society we live in and Amazon has been an important global creator of opportunities for small home-businesses and superb revenue for shareholders. Unfortunately I am not directly one, but many of us are indirectly through funds.

Read the annual letter and decide whether the world would be a better place or worse without Mr Bezos.

Regarding the Cape Town site, it’s cheap property (but central) because it’s essentially a wetland and is going to need excellent management, but the billion rand Century City/Canal Walk started off on the same kind of wetlands and now have linked canals and wetland bird life which is an improvement on the previous swampland.

We have no option but to be grateful that Amazon is coming here because one thing is certain and that is we cannot rely on government policy to create jobs and wealth.

https://www.aboutamazon.com/news/company-news/2020-letter-to-shareholders

Amazon choice and prices are much better than takealot and Amazon salaries are better than no salaries. Let’s go with flow people.

Agree. we need more competition in SA

End of comments.

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