New mega players in North Coast property boom

One of the largest privately-owned stretches of coastal property in South Africa – covering some 5 089 hectare (ha) between Sheffield Beach and Blythedale on the KwaZulu-Natal (KZN) North Coast – is being earmarked for massive residential, resort and commercial property development to the tune of some R76 billion.

The ambitious plan is being spearheaded by two well-known but publicity-shy KZN magnates – Murray Collins and Patrick Sokhela. Collins is noted as a property heavyweight, having built the Collins Group into a multi-billion rand company together with his brother Kenneth Collins. Sokhela, a sugar baron and soccer boss, owns Ushukela Milling and Durban-based AmaZulu Football Club, as well as the Royal Shaka Property Group.

Sokhela secured the massive tract of land on the North Coast in 2004 following a landmark R335 million BEE deal with sugar giant Illovo, which included the purchase of the Gledhow sugar mill. The Collins and Sokhela families joined forces and have brought in Durban-based Grindrod Bank as an equity partner to unlock the commercial property value of the prime coastal land. The mega project will be developed over the next 20 to 25 years.

Murray Collins, who heads Collins Residential, revealed initial details of the “bigger” masterplan during a media briefing at Umhlanga’s Oyster Box Hotel last week. The briefing was on the group’s first two estate developments on the North Coast – the R2.5 billion Zululami Luxury Coastal Estate and a new R10 billion equestrian themed estate dubbed Seaton.

Collins says these developments, near Sheffield Beach and Christmas Bay, will kick off the group’s bigger development plans on the North Coast with Sokhela’s Royal Shaka Property Group. The 140 ha Zululami and 411 ha Seaton developments are on separate land, but strategically adjoined.

Tradehold subsidiary

Collins Residential is a relatively new property play for the Collins brothers, who sold the Collins Group and its R7.8 billion industrial property portfolio to JSE-listed Tradehold last year as part of a cash and shares deal. Collins Group is now a subsidiary of Tradehold, which is chaired by billionaire Christo Wiese.

The group has shifted its focus onto residential developments, conservation and tourism ventures as well as private equity investments. It partnered with Sokhela more than a decade ago, and believes now is the right time to bring “this remarkable coastal strip” to market.

“We believe more than R76 billion in property and tourism investment can be unlocked from the development of this expansive land holding, which boasts some 16km of coastline.”

Nhlangano Sokhela, a director at Royal Shaka Property Group, said developing the land, much of which is still under sugarcane, was always part of the plan, adding that part of the land holding was under a land claim which has since been settled (April 2017).

“We understood that this was going to be a long-term investment and that good timing is essential,” he added. The area has seen significant growth and property development in the last decade and this is “an opportune time to leverage off the momentum”.

JSE-listed Tongaat Hulett’s launch of the Zimbali Coastal Resort development in 1996 and the Gateway/Umhlanga Ridge node in the early 2000s are seen as major property projects that sparked the development boom north of Durban. Through its conversion of sugarcane land, Tongaat Hulett has master-planned developments such as Umhlanga Ridge Town Centre, surrounding Gateway, and the new Sibaya Coastal Precinct.

Major ‘semigration’ trend

Collins said the greater North Coast corridor – from Umhlanga to Ballito and beyond – has seen unprecedented growth. The development boom, together with the opening of King Shaka International in 2010, has resulted in a major ‘semigration’ trend, where many business people and investors particularly from Gauteng are buying homes on the North Coast and travelling to Joburg for work, added Collins.

Neil de Beer, Pam Golding Properties area manager for Ballito, says some 60% to 70% of its buyers in upmarket Zimbali are from Gauteng, highlighting the growing semigration trend.

Collins says the Zululami and Seaton developments will see the creation of over 34 000 residential units. Other strategic opportunities include beach resorts, retail developments, theme parks, and commercial and mixed-use property developments over time.

“To realise a project of this magnitude, it is imperative to launch key catalytic development products into the market to ensure the longevity of the masterplan,” he said.

Phase 1 of Zululami was launched in 2016, and is already 80% sold. Phase 2 will be launched in December.

Polo fields

Seaton is set to become one of SA’s most ground-breaking equestrian estates with about 3 776 homes, an equine district, a lifestyle village, and a private school and college node. Part of the plan includes an Olympic-size indoor show-jumping arena, polo fields and a horse training venue.

Collins Residential’s first development was the R700 million Emberton Estate in Hillcrest with 500 units. It is currently investing R850 million in new residential developments at Kindlewood and R950 million in its new 260-unit Mount Edgecombe Retirement Village, both north of Durban.

Its main competitors in terms of major new large scale residential developments on the North Coast include the Zimbali Lakes development by Kuwait-based IFA Hotels and Resorts; the R15bn Blydedale Coastal Resort by Elan Property Group; and, developments by JSE-listed Balwin Properties.

Recognised as SA’s largest residential sectional-title developer, Balwin recently made its first foray into KZN with its 1320-unit Ballito Hills development. Balwin is also in talks with Tongaat Hulett on potential sites for further developments on the North Coast.

Another major new entrant to the burgeoning KZN residential market is Evergreen Lifestyles, the retirement property division of Cape-based Amdec Group. Amdec and IFA have signed a R3 billion joint venture to build a 700-unit retirement village within Zimbali Lakes. Amdec, which last year sold a 50% stake in Evergreen to PSG for R657 million, has also secured a site within Tongaat Hulett’s Umhlanga Ridgeside development for a new 640-unit Evergreen retirement village.