By Pauline Larsen
"Convert and rent!" is the cry of inner-city developers who realise that the huge demand for rental accommodation more than covers redevelopment costs.
Developers have snapped up Biccard House in Braamfontein and Castle Mansions in downtown Johannesburg, to convert office floors into residential accommodation. Long-empty Biccard House on Biccard Street was, until recently, a six-storey office building with a Telkom service centre on the ground floor. It was once the headquarters of Permanent Bank.
Today, the building offers 54 studio and one-bed apartments for rent. They aren't big, at about 40 m², but even at R1 500-R2 000/month, tenants aren't complaining. "The building is fully let for five years," says developer Richard Rubin of Aengus Property Holdings.
The cost of redevelopment was about R2 000/m² but Rubin points out that this included new lifts and a plumbing overhaul.
He predicts the developer will sectionalise and sell units when demand for buying is strong enough. Aengus wants to exercise its option to buy the building from listed fund ApexHi and talks are under way.
Castle Mansions, on Eloff Street, was sectionalised and the 10 office floors sold off to the Affordable Housing Company (Afhco).
The seller, ApexHi, elected to retain the ground-floor retail space. "There are 126 units and the conversions cost on average R70 000/unit," says Afhco's Renny Plit. He says they target tenants with household income of up to R7 500/month. The building is fully let. Rentals range from R1 150 to R1 800.
Publisher: Financial Mail
Source: Financial Mail
