Details of the Cape Town Foreshore Tower Block lease auction have been confirmed. The rental bidding process is focused on prime 25 000m² bulk development on the Cape Town International Convention Centre (CTICC) site.
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The Foreshore Tower Block lease will be one of two substantial City of Cape Town development opportunities going under the hammer at DHL Stadium in Green Point starting at noon (Central African Time) on 27 March, 2024.
The second is a sale auction of one of the few remaining development sites in the highly desirable Century City precinct with permissible bulk of +/- 25000sqm on GB3 zone. The Century City site is located in the proximity of mixed-use development combining office, retail, residential and leisure components in an integrated, stimulating and aesthetically pleasing urban environment.
Foreshore Tower Block
The City is anticipating a state-of-the-art integrated high-rise development by the successful bidder, who lands a 99-year-lease for a 25 000m² bulk Tower Block development nestled in the Foreshore precinct adjacent to the CTICC.
The City’s incentivised timeline also underscores its commitment to driving progress and development in the heart of Cape Town.
So says Greg Dart, Director of High Street Auctions, that has once again partnered with the City of Cape Town to auction extended commercial leases on strategic City property that places the development onus on private investors, while the Council ultimately retains ownership of the land, and eventually all the site improvements.
He comments that, “The Foreshore Tower Block development rights offering within the CTICC precinct stands as an unquestionably bold move, given the prime site and investment scales, but the lease auction method is now a tried and tested formula proven to generate significant revenue streams for the City that goes directly towards improving infrastructure and service delivery to the residents of Cape Town, without surrendering ownership of the core asset that’s effectively being held in trust for future generations of Capetonians.”
Monthly rental bids
“As before, in the auction on 27 March, registered bidders will enter bids reflecting the monthly rental [exclusive of VAT] they are willing to commit to under a Triple Net Lease agreement, which encompasses all costs of repairs, maintenance, and insurance.
“The initial lease duration is set at 60 years, with a 20-year renewal option followed by an additional 19-year optional extension. Cumulatively, the total lease option is 99 years.”
High Street Auctions Associate Director Shawn van Jaarsveld says several favourable conditions have been drafted into the City’s Pro Forma lease agreement to incentivise developers ahead of the Foreshore Tower Block development rights auction.
“The timeline, at its most basic, starts with competitive bidding at the auction, which will eventually lead to one winner – the person or entity that makes the highest bid. That bid then goes to the City for processing and ratification. The highest bidder, upon acceptance by the City, proceeds to sign the lease agreement.”
“However, the Lease Signature Date does not signify onset of rental payments. Instead, the City allows developers a generous 36-months to focus on design, planning approvals and fulfilling statutory requirements essential for a project of this magnitude. This is among the favourable conditions afforded by the City in finalising all statutory land use applications and building planning approvals prior to the lease commencement date.”
“One of the most significant conditions revolves around the Deferred Rental Period and Rental Commencement Date. In this instance, the Lessee has conditional options to defer all or a fraction of the monthly rental during the deferred rental period, which is envisaged to coincide with the construction phase.”
Integrate with CTICC operations
Dart, who has decades of expertise in commercial real estate, notes that the City has been deliberately non-prescriptive about what should be built on the site as long as it is in line with zoning and development rights.
“In my professional opinion, though, first choice for this site would be a hotel given the location, rapidly rising domestic and international traveller numbers and Cape Town’s constant stream of awards indicating its preferred global destination status for tourists. More importantly, the development will have to complement and seamlessly integrate with CTICC operations.
Hospitality hotspot
“Just a few months ago Cape Town was again voted Best City in the World in UK Telegraph reader poll of 27 000 people. It also cleaned up at the World Tourism Awards in October, and in January this year, it was ranked second in Time Out’s World’s Best Cities ratings for 2024.
“And for both business and leisure tourists, this Foreshore Tower Block development site being auctioned by High Street, couldn’t be in a better location from a hospitality perspective.
“The site is on the Foreshore, within the CTICC precinct, in walking distance of the V&A Waterfront and just minutes from Table Mountain and many of Cape Town’s world class beaches.”
“The development of this property will certainly have a ripple effect that will boost Cape Town’s local economy, creating jobs and contributing significantly to the metro’s GDP,” says Alderman James Vos, the City’s Mayoral Committee Member for Economic Growth.
“The best economic and social value will be derived from the release of these properties for a range of uses, from industrial to community and private-sector led residential development, depending on the zoning. In this way, the City is supporting our economic recovery as smart real estate transactions create jobs through construction and generate revenue for municipal service delivery.”
Landmark auction
“The City’s Economic Growth Directorate invites you to be part of this landmark auction. Let’s turn dreams into reality, transforming this prime property into a beacon of progress for Cape Town. Mark your calendars for 27 March, as we unveil opportunities that go beyond bricks and mortar, fostering economic growth, job creation and prosperity,”
High Street Auctions MD James Dall says this is a once-in-a-lifetime opportunity for developers to benefit from a 99-year leasehold in a metropole attracting significant economic investment.
“The City of Cape Town is mitigating load-shedding at a rapid rate, creating employment opportunities and drawing foreign investment to the tune of billions of rands. It’s an investor-friendly destination and global business is taking note.”
“Our event on 27 March will be a hybrid live and online auction, with bids in ZAR accepted from around the world. Details are available at www.highstreetauctions.com, on the High Street app, or from Shawn van Jaarsveld at +27 79 949 6325.”
The City has previously said that it anticipates private investment of R1 billion going into the site.
