The Eastern Cape Development Corporation (ECDC) is on a drive to raise R900m in private investment and R468m in public funding by the end of the 2027/28 financial year.
The money will be used to modernise its massive property portfolio, which has an asset value of R1.2bn.
Properties & infrastructure head Craig Thompson said: “The clear message we are sending out is that the ECDC is open for business and will approach proposals which have a catalytic economic impact with an open mind.
We have to ensure that these public assets generate economic value and that they respond to the economic challenges facing the province
“We have to ensure that these public assets generate economic value and that they respond to the economic challenges facing the province.”
“The corporation is engaging the private sector to invest in its strategic property assets in return for long-term leases up to 60 years.
“The corporation is actively engaging the private sector through tenders and targeted meetings while soliciting expressions of interest or realistic proposals which are mutually-beneficial and financially-sound.”
He said the ECDC is one of the largest property owners in the public sector, with 1,771 rental units across a portfolio spanning vacant land, residential, commercial and industrial properties.
The properties are concentrated in Mthatha (industrial, commercial and residential), Butterworth (industrial, commercial and residential), Buffalo City Metro (industrial and commercial) and Komani, (commercial and residential).
“Although the ECDC has a property refurbishment programme aimed at modernising the portfolio to improve its sustainability and profitability, it realises that there is limited capacity and funding. The corporation is looking at maximising benefit and risk for the economy by partnering with the private sector.”
There is an opportunity for the private sector to invest in greenfields developments in ECDC’s large vacant plots for residential, commercial or industrial purposes, depending on the location and zoning of the land.
There is ample opportunity to invest in the ECDC’s existing properties by refurbishing, operating and maintaining them. Investors will recoup their investment and generate profits over the duration of the 60 year lease. In return, the ECDC will benefit from nominal rental from the refurbished properties.
“The ECDC welcomes proposals from investors that are financially sound and beneficial to both parties,” said Thompson.
“We are already doing our part, and have initiated a R468m property refurbishment programme of our existing properties which is being implemented and earmarked for completion by the end of 2026.”
He broke the R468m down into a R184m recapitalisation allocation from the provincial government and R284m which has to be raised through the ECDC’s property disposal programme of non-core assets and from private sector partnerships for large-scale commercial investment.
ECDC’s core properties are in the commercial and industrial property sector, as well as large tracts of vacant land.
“There are further opportunities to invest in commercial properties in Mthatha and in open vacant land in Mthatha, Butterworth and Mdantsane to develop the large tracts of land,” Thompson said.
Property sales steaming ahead
ECDC is on track to complete its property disposal programme of non-core properties by the end of March 2026.
The programme aims to raise R262m, with the proceeds of the disposals ploughed back into the refurbishment programme. By the end of September 2023, the programme had already raised R63.6m from the disposal of 139 non-core properties at public auctions.
ECDC has clustered properties in Butterworth, Mthatha, Komani and BCM around 13 projects. It has appointed consultants to run the refurbishments and they are assessing properties and putting documents together to engage contractors to start refurbishments.
The programme is well under way, and there should be a continuous stream of tenders for construction between now and March 2024
“The programme is well under way, and there should be a continuous stream of tenders for construction between now and March 2024,” he said.
The corporation describes non-core properties as vacant land below 2,000m², as well as standalone residential properties. The standalone residential properties are being disposed of on a first-right-of-refusal basis for existing tenants.
“We are on track to meet the disposal deadline which will free up capital for reinvestment into the modernisation of the portfolio.
“The ECDC is pleased that the property disposals are contributing in changing and improving property ownership patterns with the houses being mainly bought by previously disadvantaged individuals.”
“There is a limit of two properties for bidding per person at each auction.
“Furthermore, if you had made an offer at a previous auction, you must have followed through on the transfer of that property in order to qualify for bidding on a following auction.
“The auctions are online and onsite to reach as wide an audience as possible,” said Thompson.
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