Mvelaphanda Properties heads for success with its first project
Tokyo Sexwale's Mvelaphanda property arm, Mvelaprop, has confounded critics. Tyger Falls, its mixed-use development in Cape Town's northern suburbs, has racked up land sales of R23m in the first quarter, which is a third of the development.
Another R13m in sales is in the pipeline, says Mvelaprop director Stuart Chait.
The company is turning an 11 ha disused quarry next to Tygervalley shopping centre into a waterfront precinct with shops, offices and residential units. But competing developers have rubbished Tyger Falls, saying it will lose out to nearby Century City, which is attracting the lion's share of Cape Town office tenants.
They also cite poor access from the nearby N1 highway, which they believe will be only partly relieved by an offramp to the precinct.
But Chait has said all along that there are two fundamentals to support the decision to buy Tyger Falls. 'The area has the lowest vacancy - at 4,8% - of any A-grade office node over 100 000 m² in SA. And the poor planning of existing offices and shops on the island along Durban Road has meant that it is full of tenants eager to move elsewhere.'
Rather than undertake the full R500m development on its own, Mvelaprop is limiting its role to township developer and selling portions of the development to 'subdevelopers'. This reduces its exposure to a little over R50m for buying land, installing services, professional fees and holding costs.
Most subdevelopers are locals who understand the market intimately, says Chait. They bought all the residential units first for R14,3m. Only three of the 31 stands are not being negotiated and two stands are being held back by the developer.
Mvelaprop should get a return on gross cost of more than 25% by the end of 2002. This is expected to boost the developer in two ways: One, management will have funds and the confidence to get going on the bigger, R1bn Silvermine development above Cape Town's Tokai and Lakeside. And, two, more developers will want to do property business with Sexwale.
Publisher: Financial Mail
Source: Financial Mail
Mvelaphanda Properties heads for success with its first project.
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