May 11, 2006
By Anish Abraham
REGENERATION of Jozi's inner city is speeding forward. Marking a milestone, investors, public officials and city administrators celebrated R1,1-billion worth of completed building improvements in downtown Johannesburg.
To toast the success of the Urban Development Zone (UDZ) tax incentive scheme, the City's economic development unit hosted a cocktail function at the Metropolitan Centre in Braamfontein on the evening of 10 May.
"We are here celebrating something that is not only good for Joburg, but for the whole country," said Linda Vilakazi-Tselane, the acting director in the unit.
A driving force behind Joburg's UDZ programme is Lebo Ramoreboli, a project consultant for area regeneration. Using multimedia slides, she gave the guests a brief overview of the tax incentive scheme.
"This is an exciting initiative designed to support the revitalisation of inner city areas," she said, giving examples of other cities that had benefited from such tax incentives, mainly the Soho and Harlem districts in New York City.
"They were no-go areas. Soho was a derelict area mainly with warehousing facilities. Similarly, Joburg was a no-go area several years ago, but now the banks and investors are coming on board."
Under the incentive, tax-paying investors within the designated area are allowed to deduct from taxable income their entire investment in refurbishing their property over a period of five years, at the rate of 20 percent. For new property developments, the deduction amounts to 20 percent in the first year and 5 percent a year for the next 16 years.
Sectional title owners
Initially the incentive did not apply to sectional title owners or to property developers who wanted to make use of the scheme to renovate buildings before selling them on. However, as a result of numerous requests during a three-day UDZ exposition in August 2005, legislation has been amended so owners of sectional title buildings and those that partially renovate buildings also stand to benefit.
To benefit, construction, extensions, improvements or additions have to be carried out on a floor area of at least 1 000 square metres.
"To date the City of Johannesburg has received more than 60 applications for locations certificates, and 20 have been issued so far. Most investment has been in the CBD, Newtown and Braamfontein," Ramoreboli said.
So far 18 investors have completed upgrades to their buildings, to the value of R1,1-billion, while the others are in various stages of work.
Before introducing the next speaker, Vilakazi-Tselane thanked all members of the business community for their support of the City's urban renewal plans. She called on more young professionals, women and blacks to enter into the property market.
One such person is Mzamo Vilakazi, the chief executive officer of Atterbury Property Holdings, which was responsible for the Mapungubwe luxury flats in the inner city's financial district.
"Firstly I would like to thank the City for enabling us to lobby for sectional title property owners to also benefit from the UDZ tax incentive," he said.
The building consists of 116 refurbished flats, almost all of which were sold after being on the open market for about three weeks. Vilakazi said he thought it was a fallacy to believe that the CBD would always be derelict and, as came off a low base, he saw it as a great investment opportunity.
"There is a need to re-interpret how people relate to buildings and urban living space. Joburg is at a point of cultural re-awakening," he said, before playing a video clip of the flats his company refurbished, titled Golden era in Joburg.
Vilakazi concluded his talk by stating that the UDZ tax incentive would go a long way towards changing the profile of inner city property investors and residents, turning the city into the melting pot it was supposed to be.
Vision
"It is such a good feeling to be in the same room with people like you, who share the same vision as us," said Ruby Mathang, the member of the mayoral committee for development planning and urban management.
He praised the efforts of the economic development unit regarding the UDZ exposition, saying it had generated significant investor and media interest in the tax incentive. Reminding guests that inner city regeneration was a mayoral priority, he said the City would continue to promote its UDZ aggressively, ensuring continued investment in the inner city and enabling Joburg to reach its goal of being a world-class African city by 2030.
"I hope that this will set a trend across the country so that there is reinvestment in our city centres. Reaching the R1-billion mark is a clear vote of confidence in the Johannesburg inner city," he said.
Contrary to perceptions, the inner city is the largest employer in Johannesburg, providing about 200 000 jobs – more than the combined workforce of the City's other nodes.
Yakoob Makda, the director of Region 8, which includes the inner city, was extremely pleased. "These are the fruits of our hard work over all the years," he said.
Investors who had already finished upgrading their buildings and had benefited from the UDZ tax incentive were presented with a framed photograph of the Nelson Mandela Bridge, a prominent symbol of Joburg's inner city revival.
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