Added to the scepticism was strong criticism that the developers should invest in the inner Johannesburg CBD to arrest urban decay.
As Graham Wilson of Osmond Lange Architects and Planners recalls: “We believed intrinsically in the city centre but also believed a decentralisation of nodes was good.” Wilson at the time was involved in the master planning of Melrose Arch when the Mineworkers Pension Fund owned the precinct.
And the focus for the pension fund management was to expand the precinct to include new amenities and vital easy-access points for traffic. Then JHI Properties came to the party with a triangle of land bordered by Corlett Drive, which solved the access problem.
Developers got the rights to demolish residential properties and to proceed with its plans, but the government had one condition: the development must dedicate up to 15 000 square metres of the planned 191 500 square metres to residential units.
The pension fund was reluctant to take the risk and asked Wilson to sell up. “We said to them: ‘Guys, you have the makings of a proper mixed-use development, rather than just an office park. People want to live closer to office parks and want to have flats here.'”
“They said this thing has got to be future proof; be active not only in ten, 20 and 40 years but make it into a worthwhile investment.” Twenty years later, Melrose Arch is among Johannesburg’s prime real estate developments, vying with nearby Sandton and Rosebank. The trendy precinct is targeted at the well-heeled, with a string of luxury retailer tenants, top-end residential apartments and office space.
The ownership structure has evolved, with property development company Amdec Group the main shareholder from 2005, and Liberty Group netting 25% in 2014.
The precinct’s 225 000 square metres, valued at about R8 billion, will grow to 600 000 square metres in the next eight years, increasing its value to R14 billion.
Already, Amdec has broken ground on a luxury apartment development on Whiteley Road, dubbed One on Whiteley, which boasts 119 one- and two-bedroom luxury apartments. Amdec and Pam Golding Properties, which will market the apartments, are hoping for the development to be completed in 2017.
Apartments are priced from R2.7 million for a one-bedroom, through to R6 million for two bedrooms. Melrose Arch’s present apartment rentals range from R22 000 a month for a one bedroom to R45 000 for a two bedroom apartment.
Managing director of Amdec Guy Gordon says Melrose Arch has 190 residential units in three apartment buildings and One on Whiteley is expected to grow the precinct’s units close to 300.
Amdec, which owns undeveloped bulk in Melrose Arch, plans to deliver a further 700 apartment units over the coming years.
Melrose Arch is showing strong property fundamentals, says Pam Golding’s chief executive, Andrew Golding. “Rental yields in Melrose Arch have been consistent at 9.5% to 14%, which are some of the best in the country,” he says.