The current value of an old, refurbished building in Johannesburg’s city centre has risen in value from R1-million to over R6-million in just five years. This shows the potential for investors and development companies to help boost the development of the city.
After last week’s fire at the Bank of Lisbon building, old buildings have become the focus of discussion. The building which was occupied by government departments‚ had a fire in which three firefighters lost their lives. A similar disaster has to be prevented from happening in the near future. Officials are looking at how this can be done.
Most of the buildings in the Joburg CBD became dilapidated about 13 years ago. In 2015‚ the mayor at the time, Parks Tau allocated a total of R5-billion towards Project Kopanang in an effort to redevelop 21 buildings‚ mostly tenanted by government departments. The Bank of Lisbon building was bought in 2005 for almost a tenth of its original selling price‚ as shown by Lightsone Data.
The head of commercial property at Lightstone‚ Linda Tshabalala said that after the municipal valuations by the City of Johannesburg earlier this year‚ the value of the building was set at about R13-million. While‚ the insurance replacement value was estimated at over R28-million.
“After a health and safety inspection‚ it was found that the building was only 21% compliant‚” said Tshabalala. “This could possibly have a severe effect on any potential insurance payout after the fire‚ adding to the wave of devastation.”
Various government departments have recently been ordered to evacuate the Johannesburg CBD so as to allow for ways to determine whether buildings should be demolished or restored
“Ironically‚ construction and development companies may benefit‚ as the opportunity to redevelop and re-energise the city centre presents itself‚” he added.
The Joburg CBD is an Urban Development Zone and is attractive to investors because of the tax incentives it provides. “Lightstone transfer data shows that when older buildings are bought and revamped‚ even on a minor scale‚ they could easily be sold for two or three times their purchase amount after a refurbishment‚” said the company.
For instance‚ the property at 305 Fox Street in Jeppestown was bought for R1-million in 2013. After the municipal value roll in 2017‚ it was valued at about R2.76-million. Then after it was refurbished in the same year‚ it is now listed for R6‚2-million.
The building has now become a house to a coffee shop‚ restaurants and apartments. These are proving to be a solid investment that also provides social upliftment to the area.
“This is a prime example of how refurbishment is a very lucrative investment in the long run‚” said Tshabalala.
Inner-city buildings could be the potential solution to the need for low-cost housing in the city. “The current housing problem in South Africa attests to the urgent need to restore buildings and repurpose them as low-cost housing and other useful amenities‚” Tshabalala said.
Article sourced form Times Live