In spite of business uncertainty before the May elections, South Africa remains regarded as an opportunity for development investment.
Pointing in this direction is the opening of Amdec Group’s R1.5 billion The Yacht Club, comprising 170 residential apartments, 6,000m² of office space and Africa’s first AC Hotel by Marriot.
The East Block (right) consists of 50 apartments above two levels of office space; the West Block (left) of 120 apartments, and the 188-room AC hotel by Marriott. Picture: The Amdec Group
“There's a lot of pessimism in South Africa,” said Amdec chief executive James Wilson at the official unveiling of the Yacht Club on 16 April. “Personally it frustrates me because I think it’s a magnificent country. Why do people keep talking it down?”
Pointing to the pessimism is the latest PwC’s annual CEO survey released at the beginning of this year showing only 18% (compared to 22% in 2018) of South African chief executives are ‘very confident’ about their own companies’ prospects for revenue growth over the next 12 months
“The economic environment is absolutely stagnant,” says FNB property economist John Loos. South Africa’s GDP growth slowed from 1.3% in 2017 to an estimated 0.7% in 2018; the National Treasury forecasts South African economy’s growth to 1.5% in 2019.
But investors like Amdec and Arne Sorenson, president and chief executive of Marriott International don’t agree.
At the unveiling of the AC Hotel. Sorenson said South Africa could flourish with regards to tourism. “As more and more and more people discover the sites, the history, the food, the architecture, the natural beauty, the weather of this place, I think with the right tourism policy we should see arrivals into Cape Town and South Africa continue to grow in the years ahead.”
Attendees of The AC Hotel by Marriott unveiling at the Gin Bar. Picture: Abbie Wolf
The AC Hotel extends Amdec Group’s partnership with Marriott, as it began with the Melrose Arch in Johannesburg and will continue with the Harbour Arch in Cape Town. Wilson said at the unveiling that four more developments with Marriott are in the pipeline. However, this is Africa’s first AC Hotel, which targets millennials seeking hotels with style and functional design, while providing authentic experiences.
Amdec Group acquired the vacant site in 2015. Picture: The Amdec Group
Mixed-use key for Amdec
Every type of property demand is under pressure. But, mixed-use living might outperform other sectors because of lifestyle factors, says Loos.
After launching the Yacht Club in September of 2015, the apartments sold out in 14 months. Initially listing at R48 000 per m², they jumped to an impressive R75 000 per m² last year. The commercial space finished construction in April 2019. The offices are on the market for a 3-year minimum lease at R275 per m².
Western Cape provincial minister of economic opportunities, Beverley Schäfer, sees mixed-use developments, where one can live, work and play, key to future growth: “As we build our province's reputation as a global finance and tech hub, the availability of this kind of space acts as a drawcard for businesses and investors alike,” she said.
The Yacht Club development is close to the Cape Town International Convention Centre (CTICC), the V&A Waterfront and its award-winning Silo District.
Picture: The Amdec Group
Amdec Group has an even larger mixed-use development in the form of the R15 billion Harbour Arch is currently under construction in the Cape Town CBD and the completed R16,5 billion Melrose Arch in Johannesburg.
The remainder of their R70 billion South African property investment consists of inclusionary housing for disadvantaged communities and successful retirement brand, Evergreen.
“We’re not just a construction company or a property development company; we want to build communities,” said Wilson.