The scheme, originally set to expire in March 2009, has been extended by five years to enable the private sector to play an increasingly significant role in assisting with the development of South Africa's inner cities. The announcement formed part of the Minister's recent 2008 Budget Speech in Parliament.
Many cities - and most notably Durban - around the country have registered a growing number of applications by investors and developers during the latter part of the incentive scheme's operating period.
Commenting, eThekwini Municipality's city manager, Dr Michael Sutcliffe, said: "The UDZ tax incentive was a welcome, if unexpected, innovation by National Government. It has taken a few years for the municipalities to understand the potential impact of the scheme and to optimise take-up by private investors. Most cities are now seeing accelerating numbers of applications. There are also indications that the larger property owners, financiers and investors are more aware of the scheme and are beginning to plan large-scale property developments and refurbishments that will take advantage of the depreciation allowance".
"The extension to the UDZ tax-break scheme expiry date will now allow developers who have committed to enterprises in Durban, and cities around the country, to complete their projects and still qualify for the tax incentives. The move is being regarded in a most positive light by stakeholders around South Africa, all of whom appreciate the additional time allowed. This will have the effect of ensuring a marked increase in overall inner city development, which would have been impossible, but for the Government's decision regarding the UDZ incentive scheme," Dr Sutcliffe said.
Investment valued at more than R1 billion has been committed to Durban's inner-city UDZ, assisting in the arrest of urban decay and contributing positively to the restoration of the city's business and residential status.
The eThekwini Municipality already regards the investment turn-around in Durban as being indicative of the overall success of the UDZ incentive scheme in the city and has welcomed the extension as a means of maximising investment and development in previously neglected areas, the result of the displacement of capital from the inner city to other urban areas and the suburbs.
Head of eThekwini Municipality's Strategic Projects Unit (SPU), Julie-May Ellingson, said: "The UDZ incentive scheme has proved most successful and beneficial to Durban. The city has received more than 350 enquiries from prospective investors since the inception of the scheme and forthcoming developments qualifying for the depreciation allowance will bring the total value to some R1,2 billion.
This figure is likely to be significantly exceeded now that the scheme has been extended by Government for a further five years. I believe this to be a tremendous boost for our city and one which will greatly assist in rejuvenating both the business and residential elements which make-up the CBD and its immediate surrounds."
The scheme extension means that projects regarded as being under threat of the scheme's cut-off, will now qualify, while others in the pipe-line are set to proceed, giving further impetus to the city's regeneration.
Two projects - a residential development in Baker Street and a refurbished building in Hospital Road, now operating as a lodge - have been completed and an additional three projects registered since a February workshop in Durban called to discuss concerns about the scheme's time-frame, which led to the five-year extension.
The new projects include a General Motors Dealership on the corner of Prince Alfred Street and Old Fort Road, Himalaya House at 273 Yusuf Dadoo Street, and Albaraka Bank at Kingsmead Office Park.
Durban, in particular, appears to have emerged as a hub of investment activity, driven by the city's dedicated approach to CBD regeneration, its sport and tourism events-led strategy, moves to improving inner-city transport systems and the development of related infrastructure.
Successful developments under the scheme include the new Standard Bank regional offices at Kingsmead Office Park, the recently launched ABSA building in Gardiner Street, the JBS building, housing a Mr Price shop, and the Olwandle Guest House in Stalwart Simelane Street, amongst others.
Source: eThekwini.gov.za
Presentation for Seminar
