Central Paarl on track
2005-03-10
THE central Paarl urban renewal project has been a contentious issue for a long time now, but it looks like the latest initiatives have set the process in motion once again.
The total upgrading of the CBD is still in its planning stage, but the first phase will be underway shortly.
The current stakeholders, consisting of 11 property owners and the Council, are now looking for local Black Economic Empowerment (BEE) investors.
The new company will be an ordinary public company structure with basically three sources of funding or shareholding: current owners (40%), BEE (40%), and financial institutions (20%).
BEE investors must have money or access to money to join, and preference will be given to local people. There is government funding as well as bank funding available for approved BEE participants.
Property developer Johan Pauw said it was important that potential investors understood that the opportunity was an investment in property and therefore carries a higher risk than, for example, investing money in a bank account.
"High risk investments, however, also generally offer a higher return than say, money left in a bank account."
The first phase (the top section of Lady Grey Street between Main and Verster Street) is to cost in the region of R184 million and a target of 40% of this has been made available to BEE investors, with local residents being given first preference.
The initial return will be in the region of 12% and the annual escalation will be between 8% and 9%.
"Investors should note that the vacancy factor has not been taken into account in these figures and this could have an effect on the rate of return," said Pauw.
The plan is to have approximately 70% of tenants composed of national companies with the rest being small operators like boutiques and other niche shops.
Entertainment will also play a major role and a food court is planned with appealing restaurants and line shops.
The ambience of the place will be that of a secure but open shopping experience although shoppers will be able to walk under cover throughout the centre.
Parts of Lady Grey and New Streets will also be turned into pedestrian areas.
Parking will be upgraded and ample secure parking will be available, especially in the Patriot Square area where a new food anchor and 7000 mē of additional shops will be constructed.
"Potential investors should know that the area still has to be rezoned and public participation will form a major part of the final approvals and could therefore have an effect on the current planning and financial forecasts of the CBD revamp," said Pauw.
He says rezoning could take some six months and after that a construction period of some 18 months would follow.
"The development will be implemented through a company and understandably it would not be practical and cost effective to accommodate hundreds of small, individual investors. For this reason investors are encouraged to form groups of people having the same investment profile to invest as a group in the CBD company.
"This is an historic opportunity for previously disadvantaged people of Paarl and Drakenstein to become involved in the social and economic revival of their area and to benefit financially.
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