Menlyn Park Shopping Centre owner Parento, in association with developer Divercity Urban Property Group, has broken ground on the conversion of Menlyn Office Park into residential units in a project valued at R850m.
The offices, in Pretoria East, were bought from Old Mutual Property. Divercity, which specialises in affordable rental housing such as Jewel City and Barlow Park, was chosen as Pareto’s residential development partner after a competitive request-for-proposals process.
The project includes developing 460 apartments through office-to-residential conversions of the existing three- and four-storey buildings, alongside 740 new apartments to be delivered across four new buildings, planned at heights of up to 10 storeys.
The development is Pareto’s first residential project, expanding its portfolio beyond retail to support long-term, defensive capital growth while directing more residents into the Menlyn shopping centre.
This development signals our commitment to shaping the next chapter of the Menlyn precinct.
— Malose Kekana, Pareto CEO
Pareto is wholly owned by the Government Employees Pension Fund, which is managed by the Public Investment Corporation. The PIC invested in the multifamily residential sector through Divercity earlier this year.
“This development signals our commitment to shaping the next chapter of the Menlyn precinct. By introducing high-quality residential options next to one of South Africa’s premier malls, we are creating a vibrant, connected node that reflects how people increasingly want to live, work and spend their time," said Pareto CEO Malose Kekana.
Divercity CEO Carel Kleynhans said his company is “excited to partner with Pareto on this project. The Menlyn node has grown steadily, with rising demand for well-located, mixed-use residential opportunities driven by Menlyn Park Shopping Centre and Menlyn Maine.”
Multifamily rentals are recognised as a mature asset class globally, and there is a growing interest in the segment among institutional investors in South Africa thanks to increased transparency and robust market analyses.
Divercity is one of the founding members of the South African Multifamily Residential Rental Association, which consists of 13 members who collectively represent more than R40bn in property assets and a portfolio of more than 75,000 residential units across the country.
For the first quarter of this year, the association’s members reported 95.8% occupancy rates, bad debt of less than 1% and demand far outstripping supply.
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