The mixed-use development concept, well entrenched in Johannesburg and Cape Town, is starting to prove popular in other parts of the country with a R763m being development planned for East London.

Modelled on Johannesburg's Melrose Arch and Cape Town's Victoria & Alfred (V&A) Waterfront, the Triple Point development is the first mixed-use precinct for Eastern Cape, say developers Novate Property Investments.

Situated on the Quenera River between Gonubie and Beacon Bay, Triple Point will include 91000m2 of space. Retail and offices including basement parking will make up 52000m2.

The residential component of the development consists of 210 apartments and 35 riverfront estate homes covering 35000m2. The development will also include a four-star hotel of 4000m2. It is expected to be completed by 2010.

The precinct is in the new Quenera Development Corridor linking Beacon Bay with Gonubie. It is next to the new Life Healthcare hospital due to open in October next year.

Grant Wheatley, property development manager at Novate, says Triple Point was launched three months ago and that construction is to start at the beginning of next month.

Wheatley says East London's city council wants to join up Beacon Bay and Gonubie in the next couple of years. Anticipating this, Novate acquired a piece of land on the river to develop the mixed use precinct. "We visited various mixed-use precincts such as Melrose Arch in Johannesburg. We've used a lot of designers from Melrose Arch and we've taken that concept and scaled it down and brought it to East London," Wheatley says.

"It's the first mixed-use development in the Eastern Cape. I don't know of any others. It will have hotels, offices, shops, gyms and apartments."

Nothing of this scale has been built by Novate previously and they have joined up with strategic partners Group Five. "They are handling the construction; Investec is handling the finance," says Wheatley.

Novate has completed feasibility studies and the new development is viable, he says. The hotel component will be operated by an international hotel operator.

"We have done feasibility studies on all of the components of the development. Already 130 of the 210 apartments available have been sold. We've only released 140." Novate has also already sold 12 of the 35 estate homes situated on the river.

The question remains whether such a mixed-use development will work in East London, which is relatively small in physical size and population.

Property economist Erwin Rode, of Rode & Associates, says the East London property market together with the rest of SA is generally booming. "It inevitably follows that demand for various types of property use is growing apace."

But he says the danger lies in the residential component of the South African property sector in that this market has peaked.

"What with uncertainty surrounding inflation and interest rates, these macroeconomic factors potentially pose the greatest risk."

In spite of this, Rode says it is important to acknowledge that any development fronting on water always has a competitive edge compared with inland developments.

David Green, MD of Pace Property Group, says that across SA, mixed-use developments are "increasingly popular" because they offer the live, work and play environment within a secure setting.

"There is no doubt that office rentals and residential values tend to be higher within mixed use developments than they are immediately outside such developments," says Green.

He says appropriate research documents normally illustrate the demand for further retail accommodation and also fairly accurately determine the quality of retail customers.

"From an office point of view, East London has very low vacancy rates in respect of prime accommodation and it would be anticipated that 20000m2 to 30000m2 of new office space would let with ease." 
 

Business Day