Newlands rugby stadium site up for sale could make way for mixed-use development

The historic Newlands rugby stadium in Cape Town is for sale. It comes after the Western Province Rugby Football Union decided to move to Cape Town Stadium as the new home base for Western Province and the Stormers.

The syndicate has come under financial pressure and tried to strike joint venture deals to unlock development on the ground within the grounds of Newlands Rugby Stadium, first with Investec Property a few years ago and then with another private group. However, both deals fell through.

Read: Struggling Cape Town soccer World Cup stadium switches to rugby

But the latest development is that SA Rugby is now involved and the decision has been made to sell the stadium via a transparent tender process.

Commercial real estate services company Galetti has been appointed to manage the sale process. In this latest episode of The property moduleGaletti’s managing partner, Wes Cowan, joins us to tell us more about the sale.

Highlights of his interview are below. You can also listen to the full podcast above or download it from ionoSpotify or Apple Podcasts.

Newlands Rugby Stadium is part of the large Newlands Sports Precinct, with Newlands Cricket Ground a stone’s throw away. Picture: provided

Strong points

“We started the [sale] procedure in February. We were actually appointed about a month before that… to launch a sealed bidding process on the property, which started on February 15th. At this time, we expect initial offers from potential bidders to arrive this week.

“So at the end of this week the first non-binding offers are due and [we are] hoping to complete the process by the end of May.

“There’s been a lot of interest, obviously with this landmark in the Western Cape… [from] your typical listed and private real estate entities, landlords and landlords, plus a few international developers and investors… So we’re expecting a number of offers… from a diverse group of investors.

How big is the property in terms of scale and what will a potential buyer get by buying something like this?

“The property is currently zoned for community use, which allows for a hospital, place of worship, place of education and then consent use of boarding house or conference rooms.

“So we anticipate that it will go through a process of rezoning and planning. The property is, as is, registered at 43,000 square meters.

“Current zoning allows for 60% coverage and a floor factor of two. Obviously, it was a stadium. The current height is approximately six stories, so we expect this type of volume to be unlocked once it goes through the zoning process with the new owner.

Will we eventually see the stadium demolished for residential or mixed-use development? What do you think could work there?

“Some developers have come up with the idea of ​​using some of the existing infrastructure, and others are going to basically destroy it.”

“Regarding the use and the area… In the [nearby] Newlands Cricket Ground, they have just developed around 15,000 square meters of retail space which has been taken up very well by the market.

“Given its location, with the iconic view of Table Mountain, it is [a] really wanted desktop node.”

Read: Rosebank is SA’s most expensive desktop node, report says

“Then the [broader] the Claremont and Newlands office node itself is trading very well, picking up some of the highest rentals in the country – and even through Covid has seen very few vacancies. So from a general office perspective, it’s trading well.

“I envision a mixed-use type of development, similar to a Harbor Arch or Melrose Arch, where there’s the kind of live-setup-work-play residential property in the area. ”

“I think the region is looking for a new kind of funky retail setup, similar to Melrose Arch in Johannesburg. So yes, I think the three sectors [office, residential and retail] could do very well in this space.

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Are you confident that everything will be finalized by the end of May?

“Yes, we expected most offers to arrive by the end of this week, and these initial offers are actually non-binding. Thereafter, we will shortlist [and] select a few bidders and place them in the final round. This then gives them the chance to really dive into the property, do some extra homework, and spend the time and money they need to be sure to submit a binding final offer by May 31.

“There will then be an adjudication, a selection process, and we hope to notify the successful bidder during the month of June.”

What is the value of this property and what do you hope to achieve in terms of the sale price?

“There is no reserve price. It’s definitely not there. I think what we’re trying to do is achieve the fair value of the property.

“You’ve talked about the history of the asset and the proposed developments and the owners that there have been in the past. I think what we’re looking to do is just create a seamless process by which ownership achieves its value; that’s why we’ve given potential bidders the time we’ve given, and the information up front to really do their homework and see what they can achieve once the property is fully developed. and reaches its best and best use.”

“What that price will be is anyone’s guess at the moment. I have my suspicions, but I won’t divulge them at this time.

“There is a municipal assessment. It goes towards the calculation of tariffs and is not really to be taken into consideration [in relation to] the transaction of the property. I think it’s more about determining the realizable volume and use of the property and where its value would then be, and reverse engineering to determine a base land value.

Read: Growthpoint: the office market will never be the same because of Covid-19

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