R7bn for ‘Africa’s Riviera’

21 September 2006

A British- and Dubai-led consortium has beaten strong competition from a number of international bidders to buy Cape Town’s landmark Victoria & Alfred (V&A) Waterfront for US$1-billion (more than R7-billion) in South Africa’s biggest single property deal yet.

The consortium comprises UK-based London and Regional Properties, Dubai government investment arm Istithmar, and a black empowerment grouping headed by DIH, the holding company of local private equity firm Decorum.

According to Business Day, the winning bidders aim to turn the V&A Waterfront into “Africa’s Riviera”, with the sale likely to act as a catalyst for further foreign investment in the country.

According to Business Report, the consortium plans to make additional investment in new development at the Waterfront that could equal the $1-billion it will spend on acquiring the property.

The Waterfront, a world-class mixed-use development near the heart of Cape Town’s central business district, attracts up to 22-million visitors a year. Set against a backdrop of sea and mountain views, its mixes shopping and entertainment venues with offices, luxury hotels and exclusive apartments in a residential marina.

The preferred bidder in the sale by Transnet and its pension funds was announced by Transnet chairman Fred Phaswana in Cape Town on Wednesday.

The sale is part of Transnet CEO Maria Ramos’s turnaround strategy for the state transport company, involving the disposal of non-core assets to release cash for the company’s planned R64-billion investment in key port, rail and pipeline infrastructure in South Africa.

Mahmoud Saleh, secretary-general of Istithmar owner Dubai World – which is owned by Dubai’s ruling al-Maktoum family – told Business day that the consortium aimed to develop the Waterfront into an “African Riviera”.

James Wilson, chief executive of one of Dubai World’s hotel and resort chains and representative of London and Regional, told Business Report that plans for the undeveloped 45% of the 603 000 square metre property included sea-facing hotels – including international brands such as the Ritz-Carlton and the Four Seasons – as well as new retail stores such as Gucci and Dolce & Gabbana.

Wilson “expected additional investment in developing the land to equal the investment in the already developed 55 percent, but did not give a figure,” Business Report said.

According to Business Day, more than 60 South African and international companies took part in the bidding for the property, among them Canadian property investment fund Cadillac Fairview, Old Mutual SA, a consortium of RMB, and Liberty International.

Property economist Francois Viruly of Viruly Consulting, echoing the sentiments of a number of other analysts, told Business Day that the deal “set the platform for further investment and development by foreigners in South Africa.

“It also shows that we can compete against other investment opportunities that investors are being offered across the world,” Viruly said.

SouthAfrica.info reporter

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