The Eastern Cape Development Corporation (ECDC) is on a drive to raise R900 million in private investment and R468 million in public funding by the end of the 2027/2028 financial year to modernise its property portfolio which has an asset value of R1.2 billion.
The corporation is engaging the private sector to invest in its strategic property assets in return for long-term leases of up to sixty years and it 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.
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 concentrated in Mthatha (industrial, commercial, residential), Butterworth (industrial, commercial, residential), Buffalo City (industrial and commercial) and Komani, formerly Queenstown (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,” says the ECDC’s executive for properties and infrastructure management services, Craig Thompson.
“There is an opportunity for the private sector to invest in greenfields developments in our large vacant plots for residential, commercial, or industrial purposes, depending on the location and zoning of the land. 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 rental from the refurbished properties.”
“The ECDC welcomes proposals from potential investors that are financially sound and beneficial to both parties. ECDC is already doing its part and have initiated a R468 million property refurbishment programme for our existing properties which is being implemented and earmarked for completion by the end of 2026. The R468 million is comprised of a R184 million recapitalisation allocation from the provincial government and R284 million will be raised through the ECDC’s property disposal programme of non-core assets and from private sector partnerships for large-scale commercial investment.”
Thompson says 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 must ensure that these public assets generate economic value and that they respond to the economic challenges facing the province.”
“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.”
Thompson says the ECDC is on track to complete its property disposal programme of non-core properties by the end of March of 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 2023, the programme had already raised R63.57 million from the disposal of 139 non-core properties at public auctions.
“The ECDC has clustered properties in Butterworth, Mthatha, Komani and Buffalo City around 13 projects 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 underway, and there should be a continuous stream of tenders for construction between now and March 2024.”
The corporation describes non-core properties as vacant land below 2 000 square metres, 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 to 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 to qualify for bidding on a following auction. Auctions are online and onsite to reach as wide an audience as possible,” he concludes.
