18 Sep Next phase of Sandton development begins
INDEPENDENT MEDIA Central Square is being developed by Lushaka Investments, global construction group Mota-Engil Africa and Mercantile Bank.
Johannesburg – Construction on the second phase of Central Square, a multibillion-rand, mixed-use development in Sandton, has commenced. It involves the construction of 168 apartments in a 12-storey block adjacent to the World Trade Centre Building and is scheduled for completion by the middle of 2017.
It will be followed by a third phase.
Central Square is being developed through a tripartite alliance between local property developer Lushaka Investments, global construction group Mota-Engil Africa and Mercantile Bank, which has granted a R600 million loan, the biggest single lending transaction in its 50-year history, to Lushaka Investments for the development of the project.
Sergio Aquino, the chief executive of Lushaka Investments, said 50 percent of the apartments in the second phase had already been sold.
The price of apartments ranges from R2.9 million for an 89 square metre one-bedroom apartment to an estimated R40m to R45m for a single 1 200m2 rooftop penthouse with a private lift and its own enclosed parking area.
Aquino said the purchaser of this penthouse would be able to configure and adapt the product to their specific and unique requirements.
He said all the apartments were fully kitted out and were larger than the normal apartments you would find in Sandton.
“Our competitors are generally more than 20 percent more expensive in rate per metre so we are very competitive in terms of price and value,” he said.
Aquino said the ground floor piazza area would cater for coffee shops, restaurants and convenience stores.
“So we will be one of the very few mixed-use developments in Sandton that have got all the facilities built in… so you don’t have to leave Central Square to go to a restaurant.
“In terms of restaurants and coffee shops, we are trying to attract the best brands and operators, not franchises. We want to offer something different and unique,” he said.
Aquino said they saw a strong demand for residential property in Sandton, adding that half of the apartment sales to date in the second phase had been to investors who planned to rent them out because the residential rental market in Sandton was strong.
The balance of the sales were to homeowners who were downsizing from their existing homes and foreigners who were looking for a base in Sandton, which is recognised as the financial centre of South Africa, he said.
“We expect these trends to continue going forward and anticipate the rental market in Sandton to remain strong.
“There is an additional 700 000m2 of commercial space coming up into Sandton in the next three to five years.
“Obviously there is a big shortage of accommodation. We put the number at between 3 000 to 4 000 units in this market. If you just take a percentage of those 4 000 units, you would have around 1 000 to 1 500 people that are in this market that you are targeting in terms of sales,” he said.
Aquino added that commercial space generally led the construction cycle with residential following, and anticipated growing and accelerating demand for residential accommodation in Sandton.
“Sandton is still way behind the rest of the world in terms of the ratio of commercial space to residential. If you go to New York, London and Paris you generally have a lot more residential space in the middle of the commercial space that helps to support the work, live, play mentality.
“We, as developers, and other developers we are competing with have seen this gap in the market.”
Aquino said people living in this kind of node had the benefit of not needing to get into their car because they could use the Central Square shuttle to the Gautrain Station and back and to various point in Sandton.
He said the third phase of Central Square would be about the same size as the second phase but possibly also provide some office space, with construction probably commencing in 2017.
Aquino said the third phase would probably cost about R750m to R800m, which meant the total value created by Lushaka Investments in this phase would be in the order of R1.6bn to R1.7bn – and more than R3bn in value created by the three phases of Central Square.
The first phase World Trade Centre building in Central Square was sold to listed property fund SA Corporate in 2013.
Lushaka Investments has been involved in the property market for about 40 years as a builder but in the past about 10 years has moved into doing its own developments.