In the past 11 years, since the Melrose Arch precinct in Johannesburg first hit the map, a series of additions has helped it become a bustling hub.
Now Amdec, the main shareholder and property development company of the premium mixed-use development, plans to more than double the precinct's size to 600,000m² from its existing 250,000m², and add more high-end shops, apartments and offices. It has about 325,000m² of land suitable for the development.
Melrose Arch is worth about R8.5-billion and will be valued at about R20-billion on the project's completion in about eight years, on current projections, according to Amdec.
Most of the expansion will involve the office component . But a flagship residential offering at Melrose Arch will be One on Whiteley, a R450-million, 50,000m² development aiming to attract people who want luxury living, but not in busier, congested nodes such as Sandton. One on Whiteley, which is being built, will have 119 luxury one- and two-bedroom apartments.
While Melrose Arch' s restaurants and offices have mostly performed strongly, retail at this upmarket development has not fared as well.
Nevertheless, its investors and managers argue that the retail mix will improve as the precinct expands over the next few years.
Amdec CEO James Wilson said this week that retail was always intended to be a smaller portion of the overall precinct.
"We wanted it to be high-end, high street, aspirational, destination shopping which works alongside the large office segment and strong restaurants. This is why we are bringing the likes of Rolls-Royce, McLaren and Rolex," he said.
The precinct also wants to attract families to its restaurants and is opening British chef Jamie Oliver's first restaurant in South Africa, Jamie's Italian, next month.
Melrose's 38,000m² of retail space will increase to about 60,000m².
"We believe that Melrose Arch can become the primary destination for living standards measure 10 customers in Gauteng," said Amdec joint MD Guy Gordon. "It can become like the V&A Waterfront of Gauteng."
Cape Town's V&A Waterfront is the most valuable commercial property asset in South Africa, worth about R14-billion.
In a vote of confidence in Melrose Arch, global hotel group Marriott International announced this week that it would manage a new hotel and a set of executive apartments in the precinct. These would be built by Amdec and would be the first Marriott-branded and tailored hotels in South Africa. Marriott already operates the African Pride Hotel and Protea Fire & Ice Hotel in the precinct.
HTI Consulting CEO Wayne Troughton, a commentator on hotel trends, said the hotels would be welcome additions . "Melrose Arch works in that it largely serves people who live in it or near it, or work in or near it. Yes, there is a tourist element with tourists wanting to dine there and using hotels there, but Melrose Arch understands its local customer very well," he said.
"It makes sense that Amdec would choose to bring in two new hotels, given how well the African Pride and Protea Fire & Ice have done over the past few years."
There were fears, when Melrose Arch was built in 2005, that it would be a white elephant, especially as it had been in the planning stage for years, and about 80,000m² had been built when the Sentinel Mining Industry Retirement Fund sold it, for R1.27-billion, to Cape-based property entrepreneur Stuart Chait, UK-based Tony Criss and Cyprus-based Allan Collier. This was the largest private property deal in South Africa at the time.
Over the following six years, more than R2-billion was spent on building offices, shops and restaurant space.
Chait and his partners sold their 50% interest in Melrose Arch in 2011 to their 50% joint-venture partner, Amdec, in a deal worth about R2.25-billion.
Wilson said that while Melrose Arch had done well and been profitable, it might be a bit early to judge its overall performance since it was not finished yet.
"Melrose Arch was designed to be developed over quite a long period.
"We knew back in 2011 that we would bring in two new hotels and a further 42,000m² of retail space. More residential units and office space are also coming on line soon."
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