LEREKO Property Company, the empowerment firm that acquired a 25% interest in the massive land holdings of pulp and paper producer Sappi, is looking to partner with developers to take advantage of the development potential of the Sappi sites.
The group says there is billions of rands worth of property development potential on the land sites owned by Sappi.
Lereko Property Company, a special purpose vehicle created to participate in the Sappi land empowerment transaction announced last year, has a 25% undivided ownership share in Sappi’s South African plantation land, situated mainly in KwaZulu-Natal and Mpumalanga.
Sappi owns about 360000ha of land and only 65% is planted with trees. This means about 130000ha remains as unplanted land because it is unsuitable.
Lereko Property Company has secured an exclusive right to participate in all commercial property development initiatives on Sappi land. It is a subsidiary of Lereko Investments, which is the empowerment vehicle of former North West premier Popo Molefe, former environmental affairs minister Valli Moosa and Lulu Gwagwa. Gwagwa, who is chief operating officer of Lereko Investments, says the R224m empowerment transaction was concluded in mid-2006.
She says Lereko Property Company has identified various property developers for potential partnerships. The group has also asked the various parties to indicate what land they would be interested in developing and what they envisage being developed.
Gwagwa says Lereko decided it could not do these developments on its own. “We are looking for partners.”
Potential development projects could include golf estates, hotels, tourism facilities, residential estates and retail and commercial developments.
“We’ve been to Mpumalanga with a number of developers, and the Drakensberg, Richards Bay and the Midlands areas ... a number of people are giving us proposals.”
Gwagwa says one Sappi area has been identified for development on KwaZulu-Natal’s south coast. “We’ve advanced far in negotiations with a particular developer.” She says some Sappi land on the south coast has been identified as suitable for residential development, along with supporting retail and social services. The developer has identified the potential for 500 residential units.
“We are looking for developers who are innovative and interested in property development but have strong environmental management flair and who also have a good understanding and grasp of inclusive housing development within the context of government policy.”
Government is proposing that property developers set aside 20% of developments for low-cost housing. Lereko wants to develop its projects in the same spirit.
