Chinese developer determines Modderfontein’s future

This is one of the largest bulk urban property transactions ever undertaken in the country and the announcement was made on November 5.

According to Shanghai Zendai, the Chinese development firm, its aim is to build the biggest business hub of the country. AECI is an explosives and specialty chemicals company based in Modderfontein and has owned the land since 1896.

Until recently, Heartland Properties (a subsidiary of AECI) managed the AECI properties and land. A total of 1 600ha of land was sold to Shanghai Zendai at a cost of just over R1-billion. Before the sale, numerous other solutions were considered, which included listing Heartland separately and unbundling the land.

The Modderfontein Reserve was excluded from the land transaction and will remain the property of AECI, which promised it will remain a green, open space for nature. A further 1 300ha of land were retained for future disposal, as well as for AEL Mining Service operations.

Once all the conditions are fulfilled, which includes the transfer of land to the value of R513-million by the first deadline of July 31, 2014, AECI will receive the full payment of R1 061-million in cash. The remaining land will be transferred over a two year period.

Chairman of Shanghai Zendai, Mr Dai Zhikang, said Sandton is not enough for the future. “This is a new future for Africa. That is the priority function,” said Mr Zhikang.

“The plan is to develop five million square metres (of the trade and finance centre),” said Mr Zhikang. He said it would be about three to five times bigger than Sandton.

An exhibition and a conference centre will be built as the new developers deem it feasible due to the proximity of OR Tambo International Airport and the Gautrain stations. A cultural centre for tourists will promote African heritage and schools from the pre-school level through to the university level will be implemented. In addition to this, a skills centre will train workers in specific skills. Open spaces will play host to sports facilities, which will cater for rugby and football.

“The majority of the land will be developed for families, in the hope of developing the area into an international community,” said Mr Zhikang.

A recent, high-level economic impact study was performed by the Bureau of Economic Research at the University of Stellenbosch. The study indicated that implementing Modderfontein’s previously approved spatial development framework will cost about R77-billion.

Over a 15-year project lifecycle, there is the capacity to build 33 000 houses and create 22 000 jobs. These jobs will comprise 65 percent of semi-skilled and unskilled workers. R1-billion will be generated in local government rates and taxes, while direct and indirect benefits for the national economy will be about R14-billion. The development will support the local construction industry, as well as emerging entrepreneurs and SMMEs.

Shanghai Zendai is listed on the Hong Kong Stock Exchange and has developed numerous homes, hotels and offices in 12 Chinese cities. Among its flagship projects are two five star hotels in Shanghai; the Himalaya Complex and the Radisson BLU. The Himalaya Complex has a shopping mall, offices and a centre for fine art and performing arts.

AECI chief executive, Mr Mark Dytor, said the sale is aligned with the group’s stated strategy regarding its legacy land holdings and is fairly valued. “AECI’s property assets reflect the history of industry in South Africa. When the original explosives factory was opened to support the burgeoning gold mines in Johannesburg, Modderfontein was a two-day ox wagon ride away from the rapidly growing city. Over the past 118 years, the process of manufacturing explosives has evolved and the requirement for maintaining vast tracts of open land around the manufacturing facilities has declined accordingly,” he said.

He added that all zoned serviced land was sold in the ordinary course of business. “We were going to have to continually invest in bulk infrastructure to make more land available,” he said.

Heartland employees engaged in development activities will be transferred to Shanghai Zendai in accordance with the Labour Relations Act.

Shanghai Zendai’s strategy is to diversify its business internationally. In 2011, the company’s first overseas project was launched near Auckland in New Zealand. The decision to invest in South Africa involved three years of extensive research and analysis. The Peoples Republic of China’s policy framework regarding South Africa, and the emergence of BRICS as a global economic force, helped pave the way.

Shanghai Zendai plans to develop the land in three ways.

The first option involves independent development. The second is via joint ventures and/or partnerships. The last solution would be to sell the land to other developers. A local management team will work with local contractors and local employees to deliver the vision.

The buildings will be designed around South African aesthetics, with the implementation of eco friendly technology. Shanghai Zendai assures residents that environmental, heritage and recreational spaces will also be protected.

Community members’ reaction

The announcement by AECI and Shanghai Zendai resulted in numerous comments received from local residents.

“Either the land is developed or left for squatters and rubbish townhouse development. It makes no difference that it was sold to a Chinese developer. So what if it is Chinese? We cannot have too many of one nationality in one place. Prefer Nigerians or Somalis? You have a choice – skip and go to Sandton,” said a reader.

Natasha Lotter said, “Job creation is fantastic news! But, Edenvale has already been overrun by the Chinese and Modderfontein could not handle the traffic before Greenstone centre and estates were built, now (this) . It is madness! Will the existing roads be able to handle the additional traffic created by the new development? I hope they will pay to extend the Gautrain to Modderfontein/Edenvale area to ease the traffic.”

A concerned Modderfontein resident contacted the NEWS to question if the Modderfontein Reserve would be affected.

Ms Wilma Hechter said on the NEWS’ Facebook page that there is no more space in their country (China) and that was the reason for investing in the ACEI land. “They will take our country, kill our wildlife and move on to the next (country),” she said.

A person with the pseudonym, Pleb, commented, “Oh heck – how revolting,” on Looklocal Bedfordview and Edenvale.