Durban is undergoing quite a revival
Places and spaces rise and fall. And when it comes to the rise of certain provinces in South Africa, well-run metros are one of the biggest attractions for investment.
From what I can see, eThekwini metro is taking a feather out of the City of Cape Town’s cap, because it is now moving and shaking.
Durban has one of the busiest ports in the country, and its conference centre is blowing up with bookings when it comes to the corporate side of things.
With its sandy beaches, great year-round climate and warm ocean, I think Durban should be one of our top destinations in the country for business and leisure.
But Durbs is often in the news for all the wrong things: crime, the 2021 riots and accompanying destruction to severe floods and polluted water that causes high E. coli counts and the closure of beaches. If the perception of Durban, along with infrastructure, crime prevention and service delivery, can be improved, this location can boom.
Albeit busy, the Durban port is seriously congested and needs attention. That was on the cards but will have to wait until the high court decides next year whether the losing bidder, APM Terminals, or International Container Terminal Services, which won the bid, will proceed with investing millions in upgrades and new equipment at the port. And it will take time to turn Transnet, the state-owned logistics company, around.
But a notable deal that was recently closed concerns the much-needed rejuvenation of the iconic beachfront property Joe Cool’s at 137 Marine Parade. eThekwini has appointed a company to redevelop the site on a 45-year lease agreement. For non-Durbanites, Joe Cool’s was the coolest place to be in its heyday.
eThekwini is on a mission to release the potential of state-owned real estate. Its proactive land release strategy, along with a detailed RFP (request for proposals) for the beachfront redevelopment opened the door to industry professionals in November 2022.
The tender was granted to Imvusa Trading 595 CC, which will begin construction early next year after the necessary approvals have been achieved. The municipality has said the beachfront redevelopment will create 80 jobs during the construction period.
eThekwini’s mayor, Cyril Xaba, has emphasised that they will guarantee the retention of all current jobs, and new positions will also be established because the new site will be 68% bigger than the existing one. The redevelopment will bring in new tenants, including a Mugg & Bean restaurant, while retaining the existing tenants such as Wimpy, Steers, Fishaways and Milky Lane.
The municipality also has plans to redevelop the old Funworld site. Its formal announcement of these plans will be published soon.
Investment flows where confidence goes and Southern Sun will also make some major moves. The group was awarded a 50-year lease and it will invest R1 billion in the rejuvenation of the Elangeni and Maharani hotels. The current lease was set to end in December 2025. This was an essential move by the municipality, especially when jobs are concerned — the two hotels employ about 500 people and these jobs are now safe.
I spoke to Thapelo E Mmusinyane, the head of real estate for the eThekwini municipality. He says when they released these hotel properties to the market for tender, the number of responses received was the highest ever. This shows the keen confidence from investors who want to get stuck in and revive these iconic assets in Durban.
He also mentioned that eThekwini has put into action initiatives to attract investment and foster growth. One is the economic development incentive policy, which seeks to facilitate and create a supportive environment for new investments while maintaining existing ones.
This initiative provides property rates relief to eligible businesses and developments that contribute to local economic growth, job creation and infrastructure development. As a result of this policy intervention, the municipality has secured R217 billion in ongoing investment developments, with additional projects planned that are expected to generate about 300 000 jobs.
eThekwini is the only municipality in the country offering a property rates reduction incentive to property developers and owners. I am certain that property players will welcome the incentive with open arms, especially because rates have been soaring higher than inflation over the past 10 years.
“Some of these projects are key drivers in promoting new developments, particularly in strategic growth areas like the north — where Oceans Umhlanga, Sibaya Coastal Precinct, Brickworks and Whetstone Business Park are located — and the west, where some of the industrial developments like Cato Ridge dry port, Keystone Park, Giba Business Estate and the Westown mixed use development are located,” Mmusinyane said.
eThekwini signed a memorandum of understanding with the national department of public works to release surplus properties and land that it does not need to drive development. The Passenger Rail Agency of South Africa has already released stations in the municipality jurisdiction.
This makes so much sense for the sustainability of a municipality. Why sell the goose that lays the golden egg? In this case, the goose is prime real estate assets, and the egg is income from the property.
In September this year, eThekwini released 34 out of 149 properties for tender. The target for this financial year is 50 — all with the goal of retaining asset ownership, partnering with a developer to make them modern and functional, and turning Durban into a key tourism node.
Some of the other famous leased landmark properties advertised for redevelopment in September were Kings Park Stadium and the Durban Country Club, which will be hosting the Investec South Africa Open Championships in 2025.
“The awarded properties have a capital investment pipeline of R4 billion with R1.4 billion of that earmarked for the beachfront alone and which will create a total of 1 500 jobs during construction and 5 500 jobs post construction,” Mmusinyane said.
The beachfront’s Golden Mile plays a crucial role when it comes to tourism assets. The municipality is working to restore this city’s shine by protecting and enhancing this area. It would be wonderful to see the strip transformed back to its former glory and I think the Durban metro is on a mission to do exactly that.
I was pleasantly surprised when I saw the stern approach that the municipality took when it forced the legendary Hilton Hotel to reopen. The Hilton Durban shut down during the Covid-19 pandemic when the lockdowns devastated the hospitality sector. The International Convention Centre was also hit, which affected the Hilton Durban.
This led to eThekwini almost expropriating the Hilton Hotel. The municipality has a condition in the title deed that if the hotel stops operating as a five-star hotel, the municipality has the option to buy it back. Upon evoking this condition, the hotel owner reopened the hotel to avoid losing it.
It’s unfortunate that more municipalities don’t have leases with clauses like these in place. Such agreements would significantly help ensure the smooth operation of hotels — especially those occupying prime real estate such as the mothballed Hyatt Hotel in Rosebank.
eThekwini has 565 070 properties in its portfolio, valued at R704 billion, according to Statistics South Africa.
Durban has a lot of vacant land, some of which is protected for environmental purposes.
About 68% of the municipality’s land is classified as “rural.” The communal land under the Ingonyama Trust is included in this. The remaining 32% comprises residential, commercial and industrial areas.
Mmusinyane mentioned that eThekwini has decided not to sell its municipal-owned properties unless it will be used for gap housing.
The municipality has ambitious plans to achieve R1 billion in net property income annually. It owns 9% of the property in its jurisdiction. If eThekwini continues with its current strategy — bringing properties to market when lease agreements expire — they will maintain market-related rentals and enhance their revenue stream, thus ensuring financial sustainability for the municipality. Viva, Durban.
Ask Ash is a column that examines South Africa’s property, architecture and living spaces. Continue the conversation with her on email (ash@askash.co.za) and X (@askashbroker)