Lease auction for a high-rise development in Cape Town

Duration of lease is set for 60 years, with a 20-year and 19-year renewal options, totalling 99 years.

Image: Supplied/Hammer & Gavel

The City of Cape Town is expecting a state of-the-art integrated high-rise development by the successful bidder who lands a 99-year-lease for a 25 000m² bulk Tower Block development nestled in the Foreshore precinct, adjacent to the Cape Town International Convention Centre (CTICC).

The municipality’s incentivised timeline also underscores its commitment to driving progress and development in the heart of Cape Town.

Lease auction method

So says Greg Dart, director of High Street Auctions which has partnered with the City of Cape Town to auction extended commercial leases on strategic city property that places the development onus on private investors, while the municipality ultimately retains ownership of the land, and eventually all the site improvements.

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“The Foreshore Tower Block development rights offering within the CTICC precinct stands as an unquestionably bold move, given the prime site and investment scales. But the lease auction method is now a tried and tested formula proven to generate significant revenue streams for the city that goes directly towards improving infrastructure and service delivery to the residents, without surrendering ownership of the core asset that’s effectively being held in trust for future generations of Capetonians.

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“As before, in the auction on 27 March, registered bidders will enter bids reflecting the monthly rental [exclusive of VAT] they are willing to commit to under a Triple Net Lease agreement, which encompasses all costs of repairs, maintenance, and insurance.

Timeline

“The initial lease duration is set at 60 years, with a 20-year renewal option followed by an additional 19- year optional extension. Cumulatively, the total lease option is 99 years,” says Dart.

High Street Auctions associate director Shawn van Jaarsveld says several favourable conditions have been drafted into the city’s pro forma lease agreement to incentivise developers ahead of the auction.

“The timeline, at its most basic, starts with competitive bidding at the auction, which will eventually lead to one winner – the person or entity that makes the highest bid. That bid then goes to the city for processing and ratification. The highest bidder, upon acceptance by the city, proceeds to sign the lease agreement.

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“One of the most significant conditions revolves around the Deferred Rental Period and Rental Commencement Date. In this instance, the lessee has conditional options to defer all or a fraction of the monthly rental during the deferred rental period, which is envisaged to coincide with the construction phase.”

The site is on the Foreshore, within the CTICC precinct, in walking distance to the V&A Waterfront and just minutes from Table Mountain and many of Cape Town’s world class beaches.

“Our event on the 27th will be a hybrid live and online auction, with bids in rands accepted from around the world,” says High Street Auctions managing director James Dall.

Details are available at www.highstreetauctions.com; or the High Street app.

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