The Eastern Cape Development Corporation (ECDC) has announced plans to raise R900-million in private investment and R468-million in public funding by the end of the 2027/28 financial year to modernise its property portfolio.

The corporation is engaging the private sector to invest in its R1.2-billion property portfolio in return for long-term leases of up to 60 years.

The ECDC is actively engaging the private sector through tenders and targeted meetings, while soliciting expressions of interest or realistic proposals.

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 the Eastern Cape towns of Mthatha, Butterworth, Buffalo City and Komani, formerly Queenstown.

The ECDC’s portfolio mostly comprises commercial and industrial properties, as well as large tracts of vacant land.

“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 greenfield developments in our large vacant plots for residential, commercial or industrial purposes, depending on the location and zoning of the land,” the ECDC explains.

It adds that there is also 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 a generous long-term lease of up to 60 years. In return, the ECDC will benefit from nominal rentals from the refurbished properties.

“Interested investors are invited to present proposals which are financially sound and beneficial to both parties to the ECDC.

“However, we are already doing our part, and have initiated a R468-million property refurbishment programme of our existing properties which is being implemented and earmarked for completion by the end of 2026,” says ECDC properties and infrastructure management services executive Craig Thompson.

The R468-million is comprised of a R184-million grant from the provincial government, R262-million that will be raised through the ECDC’s property disposal programme of noncore assets and about R24-million that will be raised through current private investment.

Thompson says 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.”

For example, there is an opportunity to invest in the corporation’s Wild Coast Hotels such as Oceanview Hotel in Coffee Bay, Mazzepa Bay, Kob-Inn Hotel and Wavecrest Hotel.

Wavecrest Hotel already has an investor operating the hotel on a long-term lease.

Other hotels also have operators in place, however, these are still open for private investors to come in and improve the hotels.

There are further opportunities to invest in commercial properties in Mthatha and in open vacant land in Mthatha, Butterworth and Mdantsane in Buffalo City to develop the large tracts of land.

DISPOSALS & UPGRADES

Thompson says the ECDC is on track to complete its disposal programme of noncore properties by the end of March 2026. The programme aims to raise R262-million, with the proceeds of the disposals ploughed back into the refurbishment programme.

By the end of September, the programme had already raised R63.5-million from the disposal of 139 noncore properties at public auctions.

“The ECDC has clustered properties in Butterworth, Mthatha, Komani and Buffalo City around 13 project clusters. 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,” Thompson says.

The corporation has 303 vacant stands below 2 000 m² and 89 two- to four-bedroom standalone houses. The houses and vacant plots range in price from R200 000 to R2-million.

“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,” Thompson states.

He says residential housing is not deemed a core focus for the corporation, compared with industrial and commercial property which stimulate the economy through jobs, skills development and investment attraction which is the primary mandate of the ECDC.

The corporation is keeping its 513 flat units and townhouse complexes as they form part of its refurbishment programme, although it may consider selling them in future.

It notes that, for these units, it is exploring institutional tenant markets, such as government departments, that may need accommodation for staff or universities requiring accommodation for students.