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Tongaat Hulett is still primarily what it has always been: a major agribusiness involved in farming, milling and refining sugar cane throughout Southern Africa. But for the past 25 years its development division has also been converting surplus agricultural land into infrastructurally serviced real estate for residential, commercial, industrial, resort and mixed-use developments in KwaZulu-Natal.
With an all-inclusive approach to land conversion, it has set out to achieve the strategic objective of unlocking maximum value for all stakeholders invested in the 8 000 hectares of developable land under the company’s ownership.
When realised inclusively, agricultural land conversion generates impressive returns – not just infrastructure investment and public sector income, but also profound social benefits, including sustainable employment and local economic development.
Tongaat Hulett Developments sets the benchmarks and parameters from which development unfolds. In addition to a development framework, the company provides the platforms for future built environments. These include establishing and communicating the urban vision, implementing infrastructure and environmental best practice, and establishing security and urban management structures.
Infrastructure
Infrastructure installation is a prerequisite for maximising the value of land before selling it to developers. For smaller-scale projects, Tongaat Hulett’s public infrastructure spend is recovered through the sale of land, while the installation of medium-scale (metropolitan) and large-scale (regional) infrastructure often requires collaboration with governmental agencies.
Tongaat Hulett works in close collaboration with local and national government to support and drive the requisite infrastructure delivery on converted land, for the improvement of services delivery and urbanisation.
“It is an imperative to work closely with the authorities to address challenges associated with infrastructure capacity and delivery. This is in an effort to find sustainable, solid solutions,” says Mike Deighton, managing director of Tongaat Hulett Developments.
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Generally speaking, infrastructure that is revenue-generating for the service provider, such as electricity, water and sewerage, can be funded reasonably easily. A bigger challenge is road infrastructure, which is very costly and does not generate pay-for-use revenue for the government directly.
Developers have had a similar experience, but are learning to overcome these hurdles through closer collaboration with the government.
“From a developer’s perspective, it’s important to bring government departments along on the journey from the very beginning. Once they understand the vision for the project and are invested in it, the approval process becomes easier to facilitate,” says Rory Wilkinson, planning director for Tongaat Hulett Developments.
To date there has been considerable progress on several major infrastructural initiatives in KwaZulu-Natal. Construction of the GoDurban integrated rapid public transport network is well under way, while the upgrading of the N2 highway between King Shaka International Airport and Sibaya Coastal Precinct has been completed. Water supply has undergone extensive upgrades, with the construction of new aqueducts to serve Durban’s northern areas, a reservoir for the uMhlanga region and increased sewer treatment capacity, which is due for completion at the end of 2016.
The development process
Tongaat Hulett’s integrated approach to land conversion for value creation involves a multifaceted process which always begins with a thorough assessment of each piece of developable land to determine its broader context. The preparation of shovel-ready land – so that it is ready for sale to developers – ultimately requires the ongoing commitment and engagement of multiple stakeholders, which include local and provincial government authorities as well as surrounding communities.
Near to a major city such as Durban, land conversion that fully recognises the potential values and benefits provides immense opportunities for business and government to partner in serving the interests of the communities and bringing sustainable socio-economic upliftment to the region.
“We are constantly pushing ourselves to develop new strategies for our business to better serve communities through job creation, infrastructure development and investment, social integration, municipal rates collections, and so on,” says Peter Staude, CEO of Tongaat Hulett.
In the public interest
“With many of the strategic considerations in our business, there is an imperative responsibility to serve the public. This often requires us to come out of our silos and work together to find solutions to the socio-economic issues which so many people face,” says Peter.
A recent example: Tongaat Hulett’s 1000-hectare Sibaya Coastal Precinct is a mixed-use development between uMhlanga and uMdloti that will create about 270 000 temporary construction jobs, while its combined facilities will conservatively employ a further 30 000 people permanently on completion.
Having inculcated a philosophy of “Better Together” around transformation, the company has set the industry benchmark through its Socio-Economic Sustainability and Innovation Programme. This is a partnership with the government and surrounding communities that aims to empower people living in and around Tongaat Hulett’s developments by means of economic participation.
Tongaat Hulett has planted approximately 28 000 hectares of sugar cane in KwaZulu-Natal over the past four years, creating over 7 000 jobs. The company’s contribution to the local economy and its close collaboration with the government in agriculture has helped establish sound working relationships and paved the way for future projects, such the multi-billion rand integrated Cornubia settlement just west of uMhlanga.
Looking ahead
Through agricultural land conversion, Tongaat Hulett is creating value not only for business and investors but also its community stakeholders, whom it serves through sustainable employment opportunities and local economic development.
“We are committed to uplifting KZN socio-economically by facilitating growth and investment, providing housing and employment opportunities, contributing to the betterment of society and protecting and preserving our natural heritage,” says Rory.
Dedicated to the mutual success of both the development at large and individual developers, the company acts as an anchor to its property developers. Flexibility is crucial, and the company is able to craft and design its spaces according to the requirements of each developer, while remaining true to its vision for the built environment.
“By planning with our developers, providing market intelligence and data, and facilitating investment partners where required, we are able to offer a solution-driven platform and a strong support network,” says Rory.
The company continues to work together with a range of government agencies and the property industry to identify and develop further market segments where the region has a competitive advantage.
Attracting regional investment through opportunities offered via business process outsourcing is one such area. Tongaat Hulett has also identified a large untapped retirement market within the residential segment which is catching on to the idea that KwaZulu-Natal’s North Coast could well be the country’s most desirable place to retire.
The Developer Journal is available online and in print.
For more information contact jaime@estate-living.co.za | louise@estate-living.co.za
