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Monday Jan 16, 2012

Developers ask for extension of urban development tax scheme

The government has been urged to extend the urban development zone (UDZ) tax incentive by another five years to March 2019.

An extension would help boost prospects for urban regeneration, says Colin Young, director of Nine Cubed Group, which proposed and brokered the R1.6 billion landmark co- development office project planned by First Rand Group and Old Mutual for the Portside site in Cape Town's central business district.

Young says the incentive was introduced to promote office and residential development projects in carefully selected UDZ areas of major cities.

"It aims to encourage investors and property developers to fast-track their development schemes," he says. "There are real benefits for corporates that want to invest in inner cities, notably to own and occupy their own buildings. Currently, though, any businesses considering investments, for instance, to consolidate space, need to move quickly if they are to benefit. Construction needs to be completed before the UDZ tax incentive expires at the end of March 2014."

Young says the reality, though, is that many projects have been delayed in the wake of the global economic meltdown and the negative impact this has had on bank lending requirements.

"Growth is also expected to be muted for some time and this is likely to curb developments which in any event involve time-consuming processes. Extending the incentive by another five years to March 2019, by which time the economy should have picked up, could allow more projects to be kickstarted during this extended period and for benefits to flow to cities.

"Another reality is that regeneration of urban zones already endowed with sound service infrastructure will allow city funds to be better deployed in improving facilities in underserviced areas."

Young says the UDZ tax allowance underpinned the financial benefits highlighted in the Nine Cubed Capital Portside development proposal.

Portside will be Cape Town's tallest building. It will be the provincial headquarters for the three divisions of the First Rand Group - First National Bank ( FNB), Rand Merchant Bank and Wesbank. Co-owner Old Mutual will offer an additional 25 000m² in the lower office portion of the tower to house corporate office tenants. The development is seen as a major boost for economic activity in the city.

Weekend Argus (Saturday Edition)

    
 

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