JSE-listed real estate investment trust (Reit) Octodec is undertaking two new development projects in the Pretoria central business district (CBD), comprising 1 on Mutual and the Centre Forum, at a total cost of R537-million.
These projects would enhance the company’s portfolio and contribute positively to urban renewal in the Pretoria CBD, Octodec MD Jeffrey Wapnick said during a media tour of Octodec’s developments earlier this month.
Octodec’s property development projects are outsourced and managed by a specialist team from property development group City Property. The group sources service providers that meet Octodec’s requirements in terms of aesthetics and operational efficiencies.
“People are flocking to CBDs all over the world to seek financial opportunities, and Pretoria is no different. We are passionate about the Pretoria inner city and are proud to play a part in restoring South Africa’s capital to a vibrant epicentre of culture, arts, government and business,” he said.
He also noted during the tour that the South African-listed property sector had a market capitalisation of R343-billion and that the sector had delivered strong results during the past few years, mostly on the back of declining interest rates and strong property fundamentals.
“Investors are prepared to pay a small premium for exposure to property that yields above-average income returns and steady capital growth, with risk mitigation through a broad spread of assets,” Wapnick stated.
He commented that the 1 on Mutual project broke ground in June last year. It is a R161-million mixed-use development, situated just off Church Square in the CBD. It will consist of 400 m2 of prime office space and a 1 550 m2 quality retail offering.
The 1 on Mutual project is scheduled for completion in April 2016 and offers a favourable forward yield.
“In addressing the requirement for more upmar- ket accommodation in the CBD, this development will include 142 modern city apartments, encompassing bachelor, one- and two-bedroom units. The building will also provide 210 much-needed parking bays,” Wapnick pointed out.
The red-brick VolksBank heritage building will be included in the mixed-use development and, in embracing the city’s legacy, the outside façade of the building will remain unchanged.
The double-storey office building will be refurbished internally and an outside landscaped courtyard will be created between the existing and the new building. A new arcade, linking 1 on Mutual to the existing Capitol Towers building, will offer further retail opportunities.
“National retailers have already expressed interest in the retail offering available at 1 on Mutual and our offering of more upmarket residential accommodation is in demand. This new development will be popular with upcoming young urban professionals who are looking for a place to work, stay and play in the city,” Wapnick said.
Meanwhile, Centre Forum, a convenient shopping destination for those who frequent the area between Lilian Ngoyi, Struben and Johannes Ramokhoase streets, will be redeveloped into a people-friendly residential and retail hub, in close proximity to where Tshwane House will be erected.
The gross floor area of the retail component will comprise almost 5 000 m2. Two parking levels will accommodate up to 258 parking bays and the residential section will offer 400 modern, upmarket city apartments, with a choice of bachelor, one- or two-bedroom units.
“This R375-million project started in January and is estimated to be completed in mid-2017,” he said, adding that these developments were in line with Octodec’s strategy to unlock value and continue delivering above-average returns for its shareholders.
Wapnick commented that South Africa’s Reits have shown high resilience in earnings throughout the long-term global financial crisis and a weak local economy. Distribution growth has accelerated to between 8% and 9% during the period from October 2013 to October 2014.