Monday, March 23, 2009

Birth of a private city in Johannesburg

20 Mar 2009 - Inet Bridge

A private, self-contained city that could be as big as Johannesburg’s central business district (CBD) is scheduled to be built around Lanseria airport, to the northwest of the city.

The developers of Cradle City, Amari Holdings, have been given mixed-use building rights for 8mm² of “bulk” — industry jargon for space that is habitable and income-producing.

To put that space in perspective, the 122-year-old Johannesburg CBD has about 7m m

Cradle City is projected to be 20 times bigger than Melrose Arch will be when that iconic development is completed, and six times bigger than Waterfall City, next to Midrand.

If Cradle City is fully developed as planned, it will have:

3,2mm² of housing — about 30000 homes;

2,4mm² of offices — the equivalent of 30 Carlton Centre office towers;

769000m² of retail — five times as big as the Sandton City complex; and

1,1m m² of warehouses and light industrial buildings.

It’s also intended to offer hotels and leisure activities, and a 100ha green belt with parks and sports activities.

Site work is expected to start in May.

Is it all pie in the Lanseria sky? Urban researcher Dirk Prinsloo makes no bones about Cradle City being a long-term project. “It could take 25 years,” he says. “It will need at least 40000-50000 households in the vicinity to justify its size.”

The critics’ first mistake would be to see Cradle City as the end of a line of CBDs dwindling in size.

It is on Johannesburg’s far northwest urban edge, beyond which it will be difficult to get new development rights. But think beyond Johannesburg to former Gauteng premier Mbhazima Shilowa’s dream of a “global city region”: Lanseria airport is at a central point between Tshwane (Pretoria), Johannesburg and Mogale City (Krugersdorp). It straddles all three.

“It’s near the centre of the global city’s major development area,” says Johannesburg planning tsar and former Wits professor Philip Harrison. “Initially we were reluctant to approve such a large development, when looking at it purely as an extension of Johannesburg. But its centrality in the global city might, in time, justify such size.”

A second reason to think Cradle City is not an unrealistic concept is that the global consortium that owns Amari consists of people with proven entrepreneurial flair and deep pockets.

Chairman Preston Haskell (44) is a US developer and majority owner of Colliers, the international franchised property services giant. Haskell’s Amari cofounder is South African Mike Nunn (48), pioneer of the global tanzanite industry, and former CEO of London’s AIM-listed Tanzanite One. Then there’s Andrey Barinski (43), the founder in 1992 of Russia’s Forum Properties and a developer of large projects in Moscow.

Unlike many SA developers who cling to the short-term profit-taking they learnt during the boom-and-bust years before 1994, Haskell and his partners have patient capital and take a longer view — up to 40 years to completion.

But they got in early, buying farmland two years ago — at a price they won’t disclose — that is now selling with office rights at R1150/m² of bulk. They aim to release parcels of land to developers over that period, to create a city on 912ha with 15 times the density of the 2200ha Waterfall City. It will be architecturally and environmentally controlled — and will emphasise green building.

Amari is already planning a second African development around an airport, on 380ha in Lubumbashi, Democratic Republic of Congo.

The most intriguing justification for Cradle City’s scale is Lanseria. This privately owned airport has ambitious growth plans. Though Prinsloo refers to other airports that have development around them, Lanseria has been establishing a unique role in the global city. Travellers who are tired of the torture at OR Tambo airport find the quick and casual atmosphere at Lanseria a great relief. It’s rather like the 1950s: queues are brief, the planes a short walk across the tarmac and you can stand on the roof of the terminal and see your family waving from the plane window.

The airport is gearing up for strong growth, with 2000 scheduled flights next year and 1m departing passengers. That would mean 500 passengers packing each scheduled flight — but about 80% of departing passengers use unscheduled corporate and private flights.

With Kulula losing its exclusivity on scheduled flights soon, the airport is aiming at 7m passengers by 2017 and 3500 scheduled flights, with about 97% of passengers on private flights.

Prinsloo says the key bonus for Cradle City will be the growth of freight traffic to and from Lanseria. “This will drive the growth in demand for warehousing, distribution, hotels and related services,” he says. It’s the reason Amari’s first phase is a light industrial business park that will also have two hotels and a 30% office and retail component.

Cradle City sales director Sherry Seward says end-users have already signed up for 25% of the park. An institution is negotiating to buy a portion of the park to add to its investment portfolio, and she expects to announce a deal for a hotel any day. “Sales are moving more or less as we expect them.”

Another alleged plus for Cradle City is more controversial. It will be a self contained city when it’s complete, theoretically able to close itself off if crime continues to ravage Gauteng — flying its requirements in through the airport, and in demand among households seeking the ultimate in security. Leaving aside crime, a privately run “city” could be a major attraction.

Harrison has concerns about this. “I’m not in favour of such a self-contained environment,” he says. “I would like to see it more integrated into the rest of the global city.”

But until the local authorities can control crime and manage the public environment, the city is likely to continue fragmenting into secure precincts. Cradle City will probably be the biggest of them all.

Source: Financial Mail