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Gauteng Business 2018-19 edition

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A unique guide to business and investment in the Gauteng Province of South Africa. The 2018/19 edition of Gauteng Business is the 10th issue of this highly successful publication that has established itself as the premier business and investment guide for the Gauteng Province. In addition to the regular articles providing insight into each of the key economic sectors of the province, there are special features on the concept of the Urban Development Zone which underpins the successful urban growth strategy that is being pursued in the province, and on the importance of airports in regional economic thinking. To complement the extensive local, national and international distribution of the print edition, the full content can also be viewed online at www.globalafricanetwork.com under e-books. Updated information on Gauteng is also available through our monthly e-newsletter, which you can subscribe to online, in addition to our complementary business-to-business titles that cover all nine provinces as well as our flagship South African Business title.

SPECIAL FEATURE Urban

SPECIAL FEATURE Urban Development Zone Property regeneration and growth through tax incentives. Indluplace Properties is investing in providing accommodation in central Johannesburg. In order to fight urban decay and to encourage investment in inner cities, a tax incentive was created that applied to major South African cities. This is called the Urban Development Zone tax incentive. The UDZs for Johannesburg and Cape Town were first allocated in 2004. The inner city of Johannesburg, comprising just less than 18km², is the largest UDZ in South Africa and it is expanding its footprint in response to significant successes that have been achieved. The Urban Development Zone tax allowances (Section 13quat) provide for an accelerated depreciation allowance on the costs of buildings erected, added to, extended or improved inside a UDZ. The South African Revenue Service (SARS) has extended the incentive to 31 March 2020. Municipalities can apply for extension to the existing UDZs via the National Treasury. There are five requirements to qualify for a UDZ tax deduction. These relate to the building, the nature of the UDZ, trade considerations, the specifics of ownership and to the dates of the applications. The fact that the incentive has been extended to 2020 gives investors a good chance to take advantage of favourable conditions in Johannesburg. The Johannesburg Social Housing Company (Joshco) has plans to provide affordable rental accommodation in 12 inner-city buildings that were recently identified for that purpose. But the main target for the UDZ is private investors. The City of Johannesburg wants to leverage the UDZ concept to create a series of linked zones or precincts, starting in the inner city and reaching out to other areas and regions on the city’s outskirts. The city wants to achieve nothing less than the “structural transformation of the inner city’s economic and physical landscape”. The City of Johannesburg has identified the following nodes for development: • Carlton Precinct: Johannesburg’s tallest building attracts tourists; undergoing revamp; Sky Rink TV and film studio being developed; conference centre planned. • Park Station: intermodal node catering for cars, buses, rail commuters and taxis; Gautrain link to OR Tambo International Airport; wide variety of users. • Central park: JDA has worked on greening and GAUTENG BUSINESS 2018/19 14

SPECIAL FEATURE community engagement and wants the park to be a symbol of the successful city. • Doornfontein/Ellis Park railroad corridor: planned retail hub and student village. • Fordsburg: interior design focus; more offices and accommodation can be built. • Newtown: cultural precinct with the potential to cater to students and university departments with specialised offices and spaces. • Hillbrow, Berea, Parktown, Bellvue, Yeoville: creation of new public open space; opportunities for office and hotel developments. • Transit precincts are planned for Fordsburg, Newtown, Joubert Park, Doornfontein and Ellispark. The Gautrain station at Park Station will become a “Contemporary African Precinct”, with the city working with Prasa and Transnet. A range of new sites for UDZ investment includes: • The Zurich Building, Newtown Development • Maboneng Precinct • Braamfontein University Residential Precinct • Main Street Precinct • ABSA Campus • Bank City • Turbine Square • Ghandi Square. The City of Johannesburg and the South African Property Owners Association (SAPOA) have developed a database for properties that fall within the UDZ. The owner of the plot, valuation and zoning information is available for every stand. Building information is available for some parts of the UDZ. Transforming the CBD Plans for the regeneration of Johannesburg’s inner city have a long history. Some have been notable successes but progress has been sporadic and initial efforts were mostly concentrated on quite small parts of the city. The Newtown urban renewal project included a focus on the arts at Mary Fitzgerald Square; the building of the Nelson Mandela Bridge in 2003 improved linkages and gave the city a cool symbol; the Johannesburg Development Agency installed 156 public art works, cleaned up squares and installed street furniture. More recently, the Maboneng Precinct on the eastern edge of the CBD has become a busy mixed-use zone with a focus on the arts, design and entertainment. Now there is a drive to transform the central business district (CBD) in a concerted and coordinated way. The city’s new mayor, Herman Mashaba, said of Johannesburg in his “100 Days” address that, “It can become a model for a modern, post-apartheid South African city. It has the ability to produce a vibrant socio-economic mix of high-rise, low-cost and affordable housing for our people.” Making inner cities more liveable is a global trend. Flight from the cities in the second half of the 20th century saw factories relocate to industrial parks (or other countries) and offices and people move to suburbs. The move back to cities is spurred partly by the relative cheapness of property in CBDs, legislation encouraging inner-city investment and even a perception that suburbs are boring. Not only does a denser environment mean that service sector businesses such as laundries and restaurants have more passing trade, but the provision of bulk services becomes much more cost effective for utility companies and municipalities. A dense urban environment also has the potential to overturn one of the worst aspects of apartheid – the fact that most South Africans were forced to live a long way from their place of work, causing them to spend a lot of money on transport, a situation that still exists today. The Gauteng Growth and Development Agency is one of several organisations other than the City of Johannesburg which has been encouraging development in the inner city. An important nudge for developers has been the tax incen- 15 GAUTENG BUSINESS 2018/19

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