Government's multibillion-rand plans to upgrade its office accommodation in the Pretoria city centre will have positive spin-offs for the general office market in the capital's inner city, say property pundits.
Government unveiled a plan last week to spend R10bn over the next 25 years to improve its office accommodation in Pretoria's inner city.
The Re Kgabisa Tshwane programme is led by the public works and public service and administration departments, and the City of Tshwane.
Government says the programme will include private-public partnerships for the erection of new buildings, the upgrading of existing ones and the redevelopment of private buildings leased to government.
The municipality will also spend R2bn over 10 years on urban management initiatives, safety and security and environmental management.
Government has developed a plan to determine city precincts where government offices are concentrated.
The 37 government departments and agencies involved in the project will be accommodated within seven nodes in the city: the Presidency, Mandela Corridor, Sammy Marks Square, Paul Kruger North, Church Square, Museum Park and Salvokop.
Jeffrey Wapnick, MD of JSE-listed companies Octodec Investments and Premium Properties, which owns several properties in Pretoria's central business district (CBD), says he does not think there "is any downside" to government's plans.
"Beside the cleanup of the CBD it will create additional employment in the CBD."
He says it will result in a lot more investment in offices in the CBD by local and provincial government. "This will improve the office market. The residential property market will also benefit from the demand for additional accommodation by people working for government."
Octodec and Premium have significant holdings in the Pretoria CBD, including offices and retail properties. The companies have also been very involved in the conversion of offices to residential space.
Wapnick says there has been "very little noticeable" investment in the CBD until now.
"Our groups are the only ones who've invested in the CBD. For us it's very pleasing that government is going to invest in the CBD," he says.
Wapnick says that as government continues with its inner-city programme, the two companies may find there is a greater demand for office accommodation as opposed to pure residential accommodation.
This could result in a change in tack as far as Octodec and Premium's residential conversion plans are concerned.
"If offices are in demand, we will use offices for offices and continue residential development outside the CBD."
Viruly Consulting property economist Francois Viruly says office-vacancy levels in Pretoria are low compared with the Johannesburg CBD.
"In many respects the Pretoria CBD has found itself in a better market condition than, for example, the Johannesburg CBD."
He says Pretoria has a relatively high proportion of B-grade office properties, which are properties that are 10-15 years old.
This type of office space is particularly well suited for government and for small and growing enterprises.
Viruly says it is important to ensure the precincts that are created are not just the "domain of government" but have an appropriate mix of private- and public-sector investors. "Then I think the public sector intervention plays a catalytic role.
These types of projects anchor government in the CBD and make government departments highly accessible to the public, Viruly says.
"A strong office sector in the CBD can also help to stimulate the residential component of the market. It comes back to the issue of creating home, work and play."
Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge
