The construction industry is to receive a much-needed boost, with the first phase of the Salvokop Precinct Development in Pretoria to be developed as a public-private partnership (PPP), at an estimated cost of R6.5 billion.
Minister of Public Works and Infrastructure Patricia de Lille announced the initiative on Wednesday and indicated that the development has the potential to create more than 5 000 jobs during the construction of the first phase and the bulk infrastructure.
De Lille said the development will generate hope for the construction sector, which is currently in dire straits, and for communities.
“We look forward to the completion and delivery of this integrated development, that will contribute significantly to the economic stimulus and will be a catalyst to stimulate the construction sector in a very substantive way,” she said.
De Lille said consultation will continue next year with other cities, including the City of Cape Town, Buffalo City Municipality and the City of eThekwini, for similar precinct developments.
Webster Mfebe, CEO of the SA Forum of Civil Engineering Contractors (Safcec), said such investment in infrastructure will bring much-needed confidence to the already-depressed construction industry. The FNB/BER Building Confidence Index edged higher to 25 in 2019 Q4, after receding to a 20-year low of 22 in 2019 Q3.
Mfebe said it will also underscore the point Safcec has made in the past: that government has not sufficiently utilised the PPP model, which is the way to go because government does not have infinite resources due to the competing demands placed on the fiscus.
“This is a step in the right direction and I hope it will be handled well and in an open and transparent manner, as dictated to by Section 217 of the Constitution,” he said.
De Lille said the mixed-use development at Salvokop includes the head offices of an additional four government departments. These are the departments of correctional services, higher education and training, social development and its agencies (the SA Social Security Agency and National Development Agency), and home affairs.
The precinct is already home to Statistics SA’s 56 000m2 flagship head office, which was completed in 2016 at a cost of R1.4 billion.
De Lille said the total development opportunity in Salvokop involves a total of 524 000m2 at an estimated cost of R18 billion, which forms part of the broader City of Tshwane inner city regeneration programme.
“The precinct is one of five identified precincts located within the inner city, which will be a benchmarked precinct that will create a destination where citizens can live, work and play in a central location.
“Through the precinct development plans, DPWI (Department of Public Works and Infrastructure) will achieve safe, accessible and environmentally-sustainable development. This development model will also reduce the lease costs for government office accommodation,” she said.
De Lille said the first phase is expected to lead to the contribution of an estimated R6.5 billion of blended financing between the government and private sector.
She said National Treasury is assisting the department with accessing government grants and her department will also be applying for funding from the President’s R100 billion Infrastructure Fund.
De Lille said the DPWI has already issued a tender for the provision of bulk and internal services and the contractor will be appointed by March next year, with construction in terms of this contract commencing in April and set to be completed in December 2022.
She said the provision of government office space will be distributed over about 360 000m2 on five erven, with the rest of the mixed-use precinct allowing for the development of 240 000m2 of commercial and residential bulk.
“With the support from National Treasury, the planned commercial and residential development component will attract private sector investment.
“All planning processes and preparation of work is aligned towards having the sites ready for construction by 2022. The offices will be ready for occupation by the government departments by 2025,” she said.
The second phase involves developing sites zoned for business and commercial activity.
De Lille said the design guidelines and development parameters were finalised in March this year and will be packaged to go out to the market for uptake by potential developers for use as hotels, retail stores and coffee shops.
Planning in collaboration with the National Department of Human Settlements and the City of Tshwane Housing Division for the third phase housing component has already commenced.
De Lille said the DPWI will work with the City of Tshwane and the Department of Human Settlements, which will be responsible for determining how many housing opportunities and the types of housing that can be delivered on the site for residential development.