How much does it cost to buy a building designed by Sir David Adjaye, the lead designer of the National Museum of African American History and Culture in Washington and one of the world’s most celebrated architects?

R32 million.

At least that’s the highest offer made for Hallmark House, the mixed-use building situated in the Maboneng Precinct. It went under the hammer in a massive liquidation sale of close to 20 buildings in the area.

Not only was it the last building to go on auction in the sitting that lasted for an hour and a half on Monday, it also attracted the highest bid.

The building was a project between Propertuity and Adjaye of Adjaye Associates. It consists of a mix of 13 residential units, a penthouse, 46 hotel rooms, a bar and restaurant area, a conference centre and a gym to name just some of its features.

Propertuity, led by former chief executive Jonathan Liebmann, kick-started the renewal of Johannesburg’s inner city in 2009 with one building and now a decade later the downtown district, loved by Johannesburg’s hipster and tourists, boasts a property portfolio of over R1 billion.

After facing financial, operational and management challenges coupled with an over-ambitious property portfolio Propertuity was put into liquidation in October 2018. But the lights are not out yet for Maboneng as investors say, in the end, Propertuity held a small portion of the buildings in the area and there are new owners in town.

Read: Almost 20 buildings up for auction in massive Maboneng liquidation sale

On April 15 the company’s trademark buildings such as Arts on Main, residential container development Drivelines Studios and the Main Street Life building which houses The Bioscope indie cinema were all up for grabs to the highest bidder.

The open auction raised a total of R109.5 million. Offers for the 18 buildings ranged from R400 000 to R32 million.

“Some of the properties went well,” says Roy Lazarus, director of Park Village Auctions. He notes Hallmark House as one of them but says others didn’t go according to expectation and were “disappointing”.

Provisional bids for some of Maboneng’s buildings

Building Bid 1. Urban Fox R400 000 2. Fox Street Studios R500 000 3. Betty Fox R500 000 4. Rivers of Steel R1.3 million 5. Living Moad R2.2 million 6. 305 Fox Street R2.3 million 7. Rocket Factory R3 million 8. Revolution House R3.1 million 9. Main Street Life R4.5 million 10. Evolution House R4.7 million 11. Artisan Lofts R5 million 12. Aerial Empire R6 million 13. Craftsmen’s Ship R7.5 million 14. Remeds View R7.5 million 15. Arts on Main R8 million 16. Drivelines Studios R9 million 17. Market Up R12 million 18. Hallmark House R32 million

Source: Moneyweb and auction notes

Lazarus feels the auction was an indication of a depressed market.

“When you have good buildings and tenants, and there is a chance that you can do something, you foresee opportunities and people are prepared to pay. [However] people take into account what is happening in the country such as elections, where we are with Moody’s, and people are not confident to invest in this country.”

Urban Fox, a building with two commercial units and an exclusive-use area, attracted no interest from the room of close to 200 potential bidders. This saw the auctioneer’s starting price fall from R4 million to R3 million to “I don’t mind folks – I will withdraw it. I have a plane to catch. Any offer you like.” The final and only offer was R400 000, which is subject to confirmation.

‘No building will be sold for R500 000’

All offers made on the properties are subject to confirmation, meaning that should the price be deemed too low, the owners can refuse the offer.

At the same time, bidders with the highest offers have first right of refusal against counter-offers that come after the auction date. All they have to do is meet the offer in order to retain the buildings.

Lazarus says they are approached with counter-offers after public auction “80% of the time” so “no buildings will be sold for R500 000”.

The commercial properties were at the upper end of the bid spectrum, with buildings such as Arts on Main and Market Up receiving offers of R8 million and R12 million respectively.

At the other end were some of the residential buildings, particularly those that are not fully occupied.

“Students do not have a lot of money at the moment considering the turmoil at universities,” says Lazarus, adding that they want free education, let alone afford a place to stay.

Drivelines Studios, the seven-storey container apartment building with the highest rate of occupation, was valued at more than R19 million and received a bid of R9 million. Lazarus says this was the most successful property because the bulk of the units are occupied, with rentals much lower than the market norm. This is because the building costs were lower thanks to the use of shipping containers.

One developer who was looking to buy “several” buildings on the day says Maboneng is a good development area with a lot of promise. “Things are starting to stabilise, [and] especially after the elections there will be a lot of growth in this country.”