Thibault Investments is set to redevelop One Thibault in Cape Town, turning it into the tallest residential building in the Mother City when it opens in just more than a year’s time.
Landlords are converting office buildings into residential buildings across SA as they look to fill stubborn vacancies and to meet demand for housing for groups with varied affordability.
Comprising 180 fully-serviced studios and apartments, the housing units in One Thibault are being financed via private group Flyt’s section 12J property investment fund, presenting a significant tax rebate and a guaranteed rental return for investors.
At 126m, One Thibault will be the tallest residential building in Cape Town and the second-tallest building overall in the city, shorter only than the FNB Portside office building.
The building was formerly known as the LG Building and originally known as the BP Centre. It is a modernist skyscraper, located on the European-style Thibault Square at the end of St George's Mall in Cape Town.
Thibault Investments was formed by Steven Herring, a property developer who is also the CEO of listed fund Heriot Reit.
“One Thibault is an iconic building, which we understand. Some years ago we bought a building located behind it, from Absa. There we developed 215 flats, studios, ones and two bedroom flats. Now we want to use our expertise to create the most iconic residential building in Cape Town,” Herring said in an interview with Business Day on Monday.
Thibault Investments will convert half of the building into residential units with the rest being offices and retail space.
“The building will have two entrances, one residential and one commercial. The first 14 floors will be commercial and the next 15 floors will be residential,” Herring said.
Six of the residential floors will have sectional title units for sale and the other nine will be for rent.
Hospitality management company Wink Aparthotels will provide on-site administration for all the units giving investors “a well-managed, hands-off investment with access to a host of other benefits over and above a guaranteed rental income of 6% for the first year”, according to Herring.
Section 12J is an investment tax incentive designed to encourage investment into a range of private companies that meet defined criteria. The incentive gives taxpayers the ability to write off 100% of their investment against their taxable income.
The scheme’s sunset clause becomes official at the end of June 2021, marking the end of the incentive.
Since 2008, section 12J has been part of SA’s Income Tax Act and provides investors with an immediate tax deduction equal to 100% of the amount they have invested.
In turn, about R10.34bn has found its way via the section 12J initiative into smaller businesses, creating between 9,000 and 10,500 jobs, according to research by the Section 12J Association of SA
Herring said One Thibault was well-suited to conversion.
“The floor plates lend themselves to conversion, which is a big plus when converting offices to residential. It makes the conversion much cheaper,” he said.
He said the majority of people who had started to buy units were SA professionals aged between 35 and 65 years old.
“This is a unique, iconic building with amazing views. I believe it represents a long-term investment case for Cape Town and SA,” he said.
In conjunction with Vivid Architects the building will be redesigned to ascend diagonally into the city skyline, carving out fresh perspectives of the harbour to the east and Table Mountain to the west.
One Thibault will also include a swimming pool, co-working space, 350 parking bays and storage units.
Rentals will start from R6,000 a month for a studio apartment climbing up to R12,000 a month for the high-end two bedroom units.
The development is expected to break ground in 6-12 weeks from now and the building is expected to open in the at the beginning of the second half of 2022.
Herring said Heriot would consider buying One Thibault in the future.
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