THE Eastern Cape Development Corporation (ECDC) is rolling out a R546 million refurbishment programme of its R1,370 billion property portfolio which it says is ripe for public-private investment.
The rental investment property portfolio consists of 1,742 lettable units spread across the Eastern Cape. The portfolio includes commercial, industrial and residential property units as well as various parcels of vacant land in Mthatha, Butterworth, Komani and Buffalo City. Of the 1,742 lettable units, 460 are flat units from 66 blocks of flats, 526 industrial, 180 commercial, 132 retail, 6 leisure, and 160 standalone houses.
The leisure portfolio comprises of Wavecrest Hotel, Ocean View Hotel, Kob Inn Hotel, Mazeppa Bay Hotel and Coffee Bay Hotel for which the corporation is looking for a triple net lease tenant. The portfolio generally needs improvements to attract private sector investments to boost job creation, economic growth and development, according to the corporation.
The portfolio also includes 238 small enterprise units established largely by the former Transkei and Ciskei governments and inherited by the ECDC at their disestablishment. These properties require overhaul improvements to avail better facilities to SMMEs.
“We have begun a refurbishment process which is intended to improve the state of the portfolio and to transform it and improve performance. The Eastern Cape government committed R273 million of the planned R546 million programme spread over several financial years towards the property improvement programme. Funding amounting to R142.5 million of the total programme has been availed to the ECDC by government and allocated towards the refurbishment of the identified properties. The ECDC is raising the balance of R273 million through a capital raise programme involving the disposal of a portion of the residential portfolio, targeting non-core residential properties, primarily to existing tenants.
“The ECDC has to date raised R95 million from the disposal programme. These funds have been invested into the refurbishment of the commercial and industrial property stock. Over the next two years, ending in the 2026/27 financial year, the ECDC intends to raise a further R150 million from the disposal of residential vacant land parcels under 2,000 square metres and standalone houses as well as identified flats buildings and outlier non-core commercial/industrial, no longer serving our core mandate. The Corporation is also courting private investors who have commercially viable proposals and the financial muscle to invest in some of its properties in return for long-term leases. Investments are earmarked to be raised in the form of strategic private sector partnerships in which private operators invest in the improvement and remodelling of the properties for approved business activities and operate them on the basis of long-term triple-net leases,” says ECDC chief executive officer Ayanda Wakaba.
Wild Coast hotels
Projects underway involving private partners include the Mazeppa Bay Hotel which has been awarded to an operator. The operator is refurbishing the 90-bed hotel. Refurbishment work on the 44 rooms, 80-bed Ocean View Hotel in Coffee Bay is also underway through an ECDC R8 million refurbishment investment to make the hotel more attractive to visitors. Refurbishments began in June 2024 and are expected to be finalised in February 2025. A total of 30 jobs will be created during construction.
Industrial parks and factories
Government is also revitalising and improving industrial park infrastructure to stimulate economic activity. The 156-hectare Dimbaza Industrial Park has been fenced with R50 million funding from the Department of Trade, Industry and Competition (DTIC). The Department of Economic Development, Environmental Affairs and Tourism (DEDEAT) has invested R40 million in electrical bulk infrastructure upgrades and an additional R45 million for the resurfacing of internal roads at the Dimbaza Industrial Park.
The ECDC has recently awarded construction contracts worth R130 million towards refurbishing four factories in Dimbaza as part of the Corporation’s portfolio refurbishment programme.
Wakaba says construction has begun on two of the four factories identified for refurbishment in Dimbaza. Construction on the two factories began in March 2024 with completion expected at the end of May 2025. A total of 200 construction jobs are expected to be created by the two contractors, while 30% of the construction value is targeted for subcontracting to local SMMEs.
“The goal is to stimulate economic activity in Dimbaza by improving the state of the facilities while attracting investors to locate their operations at the park. One of the two factories under refurbishment houses the Non-Automotive Manufacturing (NAM) cluster at the park. The role of the cluster is to support non-automotive manufacturers to become more competitive. The NAM cluster provides shared facilities and equipment to member businesses to support their operations. A portion of the operational costs of the NAM cluster is supported by the provincial government.
“Interventions to overhaul the Dimbaza Industrial Park are crucial considering that the estate houses 94 factories. Of this number only 18 are leased, four are vacant, and 72 are derelict and need to be refurbished. Thus far, R233 million has been invested into the Dimbaza Industrial Park. The park currently employs 512 permanent staff. The investment pipeline in Dimbaza includes a potential biofuel refinery along with an animal feed investor currently conducting due diligence,” explains Wakaba.
Work underway
The ECDC refurbishment programme is aimed at the transformation of the entire ECDC property portfolio. For example, the ECDC has invested R53 million into the refurbishment of three blocks of flats, Kyalami (18 units), Msintsi (8 units) and Bashee (20 units) in Butterworth. Refurbishment on the blocks commenced in February 2024 with completion expected in April 2025. Bashee Court has already been completed. Plumbing, electrical works, window repairs and tiling among other upgrades are being attended to make the properties attractive to tenants. A total of 150 jobs are expected to be created during construction.
The refurbishment of the Mthatha ECDC Office Park began in February 2024 with completion expected in November 2024. The R5 million project includes putting up a facade and painting among other interventions. The refurbishment of the office park will also benefit tenants which include law firms and architects.
A R25 million construction contract has been awarded to revamp the Butterworth ECDC Office Park. Refurbishments will benefit both the ECDC and business tenants in the office block. Refurbishment on the office park began in February 2024 with completion expected in April 2025. The contract also includes the refurbishment of the Avalon Court property which houses commercial tenants in 22 units. A total of 80 jobs are expected to be created during construction.
The refurbishment programme also includes upgrading trading facilities for small businesses. For example, a R6,5 million construction contract is underway for the refurbishment of the 10-unit Zwelitsha Centre in King William’s Town. The centre houses several small traders. Refurbishment on the centre commenced in November 2023 and completion is set for December 2024. The idea is to provide the centre with a facelift and to make it attractive to tenants. A total of 25 jobs are targeted to be created during construction.
Contractors have also been appointed for the refurbishment of the iconic Mdantsane Mall outside East London and the Development House in Mthatha.
