City says plot auctions benefit poor

The City of Windhoek has confirmed eight cancellations following the auctioning of plots at Academia, while adding that the profits made would be used to develop poorer areas. City’s head of property management Elly Shipiki said yesterday that most of the cancellations were due to contracts not being concluded on the day of the auction. At least one of the eight - a married investor - had failed to acquire a partner’s consent certificate. Shipiki said auctioning has the benefit of allowing the council to use its share of the profits to cross-subsidise underdeveloped areas. City spokesperson Joshua Amukugo said: “The City of Windhoek [gave] required information to all the prospective purchasers who took part in this process, and the bidders were exposed to adequate information on what is involved in an auction process in order for them to make well-informed decisions.” He added the City was still processing these cancellations, after which it would decide whether to re-auction this land, or advertise it for private sale. Shipiki acknowledged that auctions could typically add up to 300% to the upset price of a piece of land, compared to more competitive ways like tendering or selling over the counter. The auction of the 143 plots took place on October 16, with erf sizes ranging from 494 square metres to 845 square metres. The upset prices were initially set at between N$420 000 and N$612 000. By the time the public sale had concluded, the cheapest erf had sold for N$850 000, while the highest went for just under N$1.4 million. “Although the upset price was set and 50% restriction of the pre-approval (was set) with an intention to prevent bidders from bidding excessively, the City of Windhoek does not have control of how people should bid or pay for an erf,” Amukugo said. “That choice was entirely in the hands of the bidders,” he said. He confirmed expectations that, due to the high prices promised by some of the successful bidders of the day, some had begun to forfeit on these. Auctioning Commenting on a directive by the Ministry of Regional, Local Government and Housing issued in 2013, which called on the City and other municipalities to stop auctioning off land, Amukugo yesterday said existing agreements with private partners had kept it from honouring this command. Academia Extension One is one of a number of public-private partnerships (PPPs) which the City has entered into, which sees it sharing the financing, design, construction, operation and maintenance of public infrastructure and services with private partners. “Before this directive, the City of Windhoek had already entered into the PPPs with some entities, a situation that left auctioning of land as the only viable sale method in order for the parties involved to recover the cost incurred in developing the land,” Amukugo said. In the case of Academia Extension One, the City had partnered with Betula Nigra Investment, trading as Acacia Investments. Amukugo noted that in most cases, these PPPs consisted of a profit-sharing agreement, where the parties share the profits on a 50/50 basis after expenses had been covered. Involved in the Acacia plots were the City of Windhoek as land owner, Old Mutual, Bank Windhoek and Acacia Investments. WINDHOEK DENVER ISAACS BLAMELESS: City of Windhoek spokesperson Josua Amukugo and Head of Property Management Elly Shipiki, pictured at yesterday’s press conference in Windhoek. PHOTO: DENVER ISAACS