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Cape Town's Foreshore Precinct Sees R1 Billion Lease Auction Opportunity

Published March 12, 2024
2 months ago

In an unprecedented event that has the potential to reshape a significant part of Cape Town’s urban landscape, the City of Cape Town, in partnership with High Street Auctions, has announced the auctioning off of a 25,000 square meter development site in the thriving Foreshore precinct. This momentous property sale carries a 99-year lease and has been optimistically valued at a staggering R1 billion investment potential.

Strategically located adjacent to the Cape Town International Convention Centre (CTICC) and within walking distance of the V&A Waterfront, this site is also minutes away from the majestic Table Mountain and Cape Town’s picturesque beaches, making it an investor’s dream. This development block represents not only a prime piece of real estate but also an extraordinary opportunity for long-term urban development and economic growth.

Greg Dart, the director of High Street Auctions, recently shed light on the lease terms. Initially set at 60 years, the lease comes with a 20-year renewal option and an additional 19-year optional extension, culminating in a comprehensive 99-year leasehold. Dart emphasized the City of Cape Town’s commitment to development and progression within the metropolis's heart, expressing confidence in their past partnership for strategically auctioning commercial leases.

The leasing process will take center stage at the DHL Stadium in Green Point on March 27 at noon (Central African Time), where registered bidders will propose their monthly rentals under a Triple Net Lease agreement. This particular leasing structure ensures that all costs relating to repairs, maintenance, and insurance are covered by the tenant, providing a stable revenue stream for the city while retaining land ownership for community future benefit.

This upcoming auction is a testament to the efficacy of such events in generating essential funds for infrastructure and public service enhancements, without the city relinquishing control of valuable communal resources. To further encourage developer participation, favourable conditions, such as a Deferred Rental Period and Rental Commencement Date, are drafted into the Pro Forma lease agreement, allowing developers up to 36 months of concentrated effort on design, planning approvals, and statutory requirements crucial for large-scale projects.

A potential lessee can take advantage of the opportunity to defer monthly rent payments during the construction phase. While the City does not dictate the specific type of development to be built, Greg Dart suggested that a hotel would be an optimal choice, considering the site's location and the growing trend in tourism numbers. Such development must integrate with the operations of the CTICC and the existing cityscape.

The property’s development is expected to have substantial positive repercussions for Cape Town's economy. According to Alderman James Vos, Mayoral Committee Member for Economic Growth, the initiative is set to create numerous job opportunities and significantly contribute to the metro's GDP. This sentiment is echoed by James Dall, High Street Auctions MD, who labels the auction as a once-in-a-lifetime opportunity for developers aiming to capitalize on Cape Town's economic magnetism.

The Foreshore Tower Block is not the only auction highlight; a second promising development site in the Century City precinct will also be up for grabs, located among mixed-use developments typified by office spaces, retail zones, and recreational areas—an exemplary model of modern urban planning.

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