Cost-Benefit Analysis and Leasing Model for Municipal Investment Properties, George
A cost-benefit analysis and leasing model showing the George Local Municipality a projected return of approximately 1 584 % — nearly 16 times the initial investment — over a 30-year lease of municipal land.
2024 · George Local Municipality · Development economics and municipal land strategy · 9 months duration
Key contributors: Annette Engelbrecht
The George Local Municipality appointed Cadre Connect (Pty) Ltd to conduct a cost-benefit analysis and propose a leasing model for its investment properties. George owns the largest number of properties in its area and sought a mechanism allowing developers to build on underutilised municipal land without the municipality carrying the capital outlay.
Cadre assessed four strategically positioned sites suited to mixed-use development, testing market demand for residential, retail and office uses. The recommended instrument is a Ground Lease with Reversionary Rights: the developer constructs and owns the buildings during the lease, and ownership reverts to the municipality at expiry or if agreed conditions are not met.
The hypothetical model sets a 30-year lease with the municipality receiving 15 % of the developer's annual revenue from year two, with revenue escalating at 6 % per year. The projected return for the municipality is approximately 1 584 % over the lease term. The report closes with actionable recommendations for initiating the leasing process.
Key figures: 1 584 % projected 30-year return | 15 % share of developer revenue | 4 sites assessed