Richard Balfour-Lynn, MD of Marylebone Warwick Balfour Group, a UK property investment and development company, says that his greatest concern is in the relatively negative stance towards property of many major South African financial institutions, such as pension funds and insurance companies.
Speaking at the Blue IQ Smart Partnerships conference at the Sandton Convention Centre about potential international investor interest in the Newtown regeneration project, Balfour-Lynn said financial institutions were not investing enough in Newtown and if they did it was in small amounts.
"If your large financial institutions have a relatively negative view, it's quite hard to convince international investors to take a different attitude," he said.
Balfour-Lynn said the exposure of South African pension funds' and insurance companies' portfolios to property was declining. "They think that property is an uncertain market. It is an illiquid asset so they prefer to hold government bonds and stocks on the JSE," he said.
Newtown was rapidly becoming a symbol of urban renaissance and, despite the many challenges and a long history of failed attempts, the indications were that it may succeed this time.
Balfour also talked about parallels between London's Docklands revival and Newtown.
He said he believed one of the key successes of the Docklands revival, with its centrepiece Canary Wharf development, was the successful partnership between the public and private sectors.
"Both parties need to make a proper commercial return on their investment, not just the private sector," he said.
Balfour-Lynn said that the Docklands revival involved having in place the London Docklands Development Corporation. This was similar to the Johannesburg Development Agency (JDA), a wholly owned agency of the City of Johannesburg, which has announced it would invite tenders for the development of public land in Central Place, Newtown.
He said the London Docklands Development Corporation invested heavily itself and provided finance for developers to galvanise private investor initiatives.
The corporation effectively replaced the financial institutions by doing this.
"If Blue IQ (part of Gauteng) and the JDA want to kick-start private investment on a major scale, they will have to provide financial support either through subsidised loans or, if it is public land that is to be developed, they need to provide cash by providing land as part of the development and getting paid for it on completion," he said.
"For private-public partnerships to work, both parties need to make a profit. Public profit comes from community-led projects funded by private developers from the profits of the scheme."
Balfour-Lynn said that people in the UK had a very negative perception of the Johannesburg central business district, which hampered international investment in Newtown. "The difficulty is changing the perception."
He said that both Blue IQ and the JDA needed strong promotional activity to change the international perception about the central business district.
Balfour-Lynn said the private sector had to develop massive schemes, which included mixeduse shopping, leisure and cinema outlets, as well as hotels.
"You also need residential loft conversion. This is the whole concept of living, working and playing in the same area. That's what will bring the CBD back to life."
