The Passenger Rail Agency of South Africa (Prasa) has set its sights on beefing up its property portfolio with various development co-investments to boost the struggling entity’s book.
The state-owned rail company issued an update on the projects its property division, Prasa Corporate Real Estate Solutions (CRES) and special purpose investment vehicle, Intersite Asset Investments, are part of on Monday. Most of these developments form part of the entity’s Corporate Plan for 2022-2025, aimed at turning the state-owned enterprise (SOE) around.
A social housing project, student housing development and an office building conversion into residential units are just some of the projects the entity offered updates on.
The aim, according to the entity, is to drive stronger non-fare revenues.
According to Prasa’s 2021/22 annual report, fare revenue – which includes revenue made from ticket sales to train and bus commuters, for passengers and long-distance journeys – came in at R343 382 million in 2022.
Fare revenue in 2022 was reportedly almost half of the revenue received from operating lease rental income, which was reported at R608 821 million in the same year, up from R527 941 million in 2021.
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This picture looks dramatically different from almost a decade ago when fare revenues generated most of the entity’s revenues – outside of government subsidies – raking in over R2.1 billion in 2014.
“As we rebuild passenger rail services and bring people back to rail, unlocking value in our property portfolio is an important part of our strategy to secure long-term financial sustainability and support our primary mandate of providing a safe, reliable, affordable commuter rail service,” Prasa group CEO Hishaam Emeran said.
The projects at various stages of completion are scheduled to be available for use before the end of the current year, with one commencing construction in October.
The first phase of the Goodwood Social Housing project in the Western Cape is reportedly 70% complete. Prasa has noted that more than 1 000 residents will have the opportunity to live in the low-cost housing development near the Goodwood Station by the end of October.
The housing project, built on Prasa-owned land and being developed by DCI Community Housing Services, is expected to have 1 055 social housing units on the site. Funders on this R575 million project include the Social Housing Regulatory Authority (SHRA), the Infrastructure Fund and the City of Cape Town.
The Goodwood development will also see the construction of a 5 000m2 retail facility on the Goodwood stations deck. Prasa has said the project’s second phase is expected to be completed in 2024.
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On the other hand, Prasa’s Cape Town Station will be home to a 3 200-bed student accommodation for National Student Financial Aid Scheme-eligible students in Prasa’s first co-investment with the Eris Property Group.
This project is said to be 88% complete, with the first intake of students expected to take place at the start of the new academic year in February 2024.
The R1.4 billion co-investment Cape Town Station development will also see the redevelopment of the 7 000m2 retail precinct, which the railway agency hopes will support better foot traffic to the area and improve commuter experience.
“This mixed-use property development of the Cape Town station is one of the examples in which we are repositioning our stations as places where people can live, work and play whilst creating transit hubs to enhance the passenger and customer experience,” Intersite CEO and acting Prasa CRES CEO Annette Lindeque said.
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“We expect to conclude similar investment agreements soon to bring in private property developers while unlocking value for Prasa, thereby fulfilling our secondary mandate,” Lindeque added.
In Gauteng, the SOE revealed that construction on the residential building The Rynx is expected to start next month.
The development will see the conversion of Prasa’s Tippet office building at Park Station in Braamfontein into an 189-key residential building. Intersite has partnered with Urbane Living on this one.
Listen as Jimmy Moyaha speaks to Prasa spokesperson Andiswa Makanda about the rail agency’s comeback:
You can also listen to this podcast on iono.fm here.