Chinese development group Zendai Developments’ plans to build a new R84-billion smart city in Modderfontein, east of Johannesburg, have not gone as planned.
BusinessTech visited the proposed construction site of Modderfontein New City. Development is progressing, but it is far from what was envisioned.
The project dates back to 2014, when Chinese development group Zendai Developments announced its intention to build an $8 billion city.
In 2015, Zendai South Africa Chief Operating Officer Do Wendui said market demand would drive the project.
“Twenty years ago, no one would have imagined that Sandton would be full of high-rise buildings like it is today,” he says.
It was promoted as the New York of Africa with nine functional zones including the CBD, entertainment centre, residential and educational districts.
It would also include churches, libraries, hospitals and medical facilities, sports and international conference centres, schools and affordable housing.
The focus was on technology to enable “smart cities” with modern communication infrastructure.
Zendai Developments has partnered with PCCW Global, a division of Hong Kong-based telecommunications company HKT, to provide technology services.
It will provide Zendai with system development, solution integration, application development and management.
It will also offer communications and information technology, cloud computing, and e-commerce solutions.
The new smart city was to be built over 15 years on 1,600 hectares of land in Modelfontein.
Once completed in 2030, it will be home to approximately 30,000 households and create up to 200,000 permanent jobs in the local community.
“This will be the future capital of the whole of Africa,” Zendai’s Wendui said when announcing the project.
Things go awry for the R84 billion smart city
On paper, the R84-billion Modderfontein New City sounded like a great idea to create a new commercial hub for Johannesburg.
The smart city development will make the most of the land available after AECI closed its explosives factory in 1994.
Prior to the Modelfontein New Town project, Heartland, AECI’s real estate subsidiary, began developing small plots of land in the Modelfontein area.
However, its distance from Johannesburg and Sandton made it unattractive to many businesses and families.
This changed when Gautrain was launched. The route from OR Tambo International to Johannesburg and Sandton passes through Modderfontein.
Zendai saw great potential and decided to purchase the 1,600 hectares of land for R1.06 billion.
Things didn’t go as planned. Zendai and its chairman, Dai Zhikang, did not have enough money to fund infrastructure development.
Zendai and Zhikang approached real estate developers and investors to invest in the project, but there was not enough interest.
Another unrelated development had a major impact on the Modderfontein New Town Development Plan.
In January 2015, Mr. Dai announced the sale of his stake in Shanghai Zendai Property to the state-owned China Orient Asset Management Company (COAMC).
COAMC therefore became the controlling shareholder of the Zendai and Modderfontein New City projects.
COAMC could not afford to continue with such an expensive project and decided to sell the land.
By 2016, it had sold 17% of its shares to Chinese real estate company Fuxing. The remaining 83% was sold to M&T Development.
In 2017, South Africa’s Competition Tribunal approved the sale to M&T Developments for a reported value of R1.8 billion.
Today’s Modderfontein
BusinessTech visited the proposed construction site for Modderfontein New City, which did not reflect Zendai Developments’ plans.
But it was clear that the new owners, M&T Development, were pumping millions of dollars into the area with new development.
Many infrastructure improvements were made, including new roads, shopping centres, schools and office parks.
Another distinguishing feature is the large number of housing developments, ranging from secure housing developments to affordable housing.
Driving around this area, I felt that it was an up-and-coming area with a high quality of life.
The new road further demonstrated that this is just the beginning and that more development is planned for the area.
A new office park and shopping center showed that developers have big plans for the area.
M&T Development does most of the commercial and residential development, which shows the company’s confidence in the Modelfontein area.
So, while it is consistent with unrealistic plans to build an African Manhattan, development is proceeding and attracting businesses and families.
Zandai’s Modderfontein New City Plan (artist impressions)
Today’s situation in Modderfontein
