SHANGHAI Zendai Property Limited’s plan to develop a suburb northeast of Johannesburg into the “New York of Africa” is “extremely ambitious,” according to AECI Ltd., the chemicals company that sold the land last year.
Shanghai Zendai bought the 1,600-hectare (3,954-acre) plot for 1.06 billion rand ($91 million) from AECI last year and announced plans to build a financial centre and 35,000 houses to rival Johannesburg’s current business hub of Sandton.
“The problem is a lot of it is agricultural land,” Mark Dytor, chief executive officer of the South African chemicals and explosives manufacturer, said by phone Tuesday.
“You have to open it up, you have to put in roads, sewage lines, water et cetera. Of course, you have to do that and fund it yourself.”
The area will become a hub for Chinese firms investing in sub-Saharan Africa, Shanghai Zendai Chairman Dai Zhikang said in November 2013. Modderfontein used to house an explosives factory that opened in 1896 to support the mining industry that’s the source of a third of all gold the world has yet produced.
The company will spend 80 billion rand ($6.87 billion) on the development over the next 15 years, he said.
“In reality, they will use the low-hanging fruit that is available for office parks and residential housing,” Dytor said. “To build another Sandton in Modderfontein right now is extremely ambitious,” he said, referring to Africa’s biggest financial district in northern Johannesburg.
AECI declared a special dividend after the land sale. The payout of 3.75 rand a share is in addition to an ordinary dividend of 2.25 rand a share for 2014, itself a 7% increase from 2013, AECI said in a statement on Tuesday.
Profit attributable to ordinary shareholders climbed 16% to 1.1 billion rand in 2014 from a year earlier. AECI’s sales from its chemicals and international operations mitigated a drop in income because of last year’s five-month platinum strike, Dytor said.
“That’s the diversification of the group,” he said. “We’ve purposely decided not to be in any one geography or any one mineral.”