Philippi Horticultural Area Land Price Questions
Thanks to Nazeer for forwarding this story to me.
One of the ongoing challenges with regard to the Philippi Horticultural Area is the 480ha piece of land currently apportioned to sand mining, which has been/is being/hopefully won’t be rezoned from rural to urban. This is one of many factors that is encouraging attempts to rezone other portions of the PHA - from the evidence of this there is clearly money to made out of this process.
The IOL Personal Finance section is running a story investigating the big players involved here. A section of the article is below and the full article can be found here
“SAND DUNES INCREASE IN VALUE BY 2 000% IN THREE YEARS
In 2007, 480 hectares of windswept sand dunes known as Schaapkraal were bought for about R36 million and then sold on, resulting in a tidy profit of about R224 million. About one-third of this profit effectively went to Cape Town businessman Wentzel Oaker, who remained in control of the investment until it was placed under provisional curatorship last month.
The Financial Services Board (FSB) wants to use the curatorship to recover the R224-million profit, which was made at the expense of members of six retirement funds, which invested R519 million in the Rockland Targeted Development Investment Fund.
Today, it is claimed the land is worth R890 million, and it has a fancy new name, Oakland City Development.
According to Oaker, who spotted this wonderful investment opportunity from which he has already profited so well, the increase of more than 2 000 percent in the value of the land can be ascribed to two factors: there are huge profits to be made from exploiting deposits of building sand (claimed to be worth R450 million) and the construction of a mini-city.
The only problem is that neither Wentzel, who, through his companies and the companies Rapicorp 122 and Rapicorp 123, owns 20 percent of the land, nor TDIF, which owns 80 percent of the land, have mining rights.
One of the Rapicorp companies is applying to exploit the sand on only three of the 21 erven that make up the Schaapkraal property.
Furthermore, Rapicorp 122 and Rapicorp 123 do not have approval to develop a multi-billion-rand mini-city.
So the land is what it was, apart from visions of the future.
According to Deeds Office records unearthed by the FSB’s inspectors, the land was bought by Rapicorp 122 and Rapicorp 123 for R36 million in 2007. According to Oaker, at the time the two Rapicorp companies were owned by the Rockland Group and two faceless trusts, the Shuster River Trust and the Merlow Trust, which sold their shares to the Rapicorp companies.
The Rapicorp companies then sold 80 percent of their shares at a “discounted” R260 million, netting a profit of about R224 million for the Rockland Group, the Shuster River Trust and the Merlow Trust. Oaker says the land was valued at R300 million at the time of the sale.
In papers in support of the Rockland provisional curatorship, the FSB and its inspectorate say that “in light of Oaker’s conflicted role and position, the amount for which the land was valued in December 2007 has a ring of suspicion” given:
* Oaker’s failure to explain the sudden rise in valuations;
* Oaker’s failure to follow standard business practice in transactions of this magnitude by obtaining a second, independent valuation of the land; and
* The increase of 2 125 percent in the value of the land, from R36 million in April/May 2007 to R890 million in December 2010.”
University of Cape Town