Property

What South Africa’s new R84 billion smart city looks like today

Daily Investor • 6 January 2025

Daily Investor travelled to the site of the abandoned R84 billion Modderfontein New City in Gauteng and was surprised by the development in the region.

Modderfontein was never a particularly popular area, mostly because of African Explosives and Chemical Industries’s (AECI’s) dynamite factory.

The factory caused significant odour pollution in the area, which made it an undesirable place to live and an unpopular neighbourhood for businesses.

However, in 1994, AECI closed the factory as part of its strategy to phase out nitroglycerin production.

After the factory closed, Heartland, AECI’s real estate subsidiary, began to develop small pieces of land in the Modderfontein area.

However, it was far away from Johannesburg’s business district and did not hold much appeal for businesses or households.

This changed when the Gautrain was launched. The route from OR Tambo International to Johannesburg and Sandton goes straight through Modderfontein.

Interest in turning Modderfontein into an economic hub rose, drawing developers’ attention, including Shanghai Zendai Property.

Zendai, a private Chinese real estate firm, proposed the development of the ‘Modderfontein New City’ in 2013.

In 2013, Zendai bought 1,600 hectares of land in Modderfontein, comprising several parcels of land and buildings from AECI South Africa, for R1.06 billion.

The company had grandiose plans to build a complex with residential, commercial, light industries and retail facilities.

Former Zendai chairman Dai Zhikang said the project would transform the property into the ‘New York of Africa’. “It will become the future capital for Africa,” he said.

His master plan included building 55,000 housing units, 1.5 million square metres of office space, a hospital and medical facilities, and schools.

The new city was also set to focus on technology, with PCCW Global providing technology and telecommunications services for the project.

Zendai South Africa chief operating officer Du Wendui said the development was a 10 to 15-year project.

“The project will be market-driven, and depending on what our clients or developers want, the sky is the limit,” he said.

“Twenty years ago, nobody would have imagined that Sandton would look like it does today with its multiple skyscrapers.”

Former Gauteng Premier David Makhura hailed the development as a game-changer for the province.

In 2015, he said the Modderfontein development would inject R 84 billion into the economy and create 150,000 jobs over the next 20 years.

The project is abandoned, but new plans are executed

The People’s Map reported that the project faced big financial challenges. Zendai and its chairman, Dai Zhikang, did not have enough money to fund the infrastructure.

They were looking for property developers and investors to step in, but this did not happen as there was insufficient appetite for the project.

In January 2015, Dai announced he was selling his shares in Shanghai Zendai Property to the state-owned China Orient Asset Management Company (COAMC).

Therefore, COAMC became the controlling shareholder of Zendai and the Modderfontein New City project.

COAMC had no stomach to continue with such an expensive project and decided to sell the land.

“By 2016, it had sold 17% of its shares to a Chinese real estate firm named Fuxing. It sold the remaining 83% of shares to M&T Development,” The People’s Map said.

In 2017, the Competition Tribunal of South Africa approved the sale to M&T Development for a reported R1.8 billion.

Daily Investor visited the area to see what happened over the last few years, and it was encouraging to see the extent of new developments in the region.

There were new roads, shopping centres, restaurants, filling stations, and residential developments in Modderfontein.

Although there was still a lot of open land, it was clear that millions were pumped into the area to create an economic hub.

Numerous office parks and industrial developments were offering affordable rentals for businesses.

Most of the residential and commercial developments were done by M&T Developments, which could be expected since they bought the land.

Although the developments do not match Zendai’s lofty ambitions to build the ‘New York of Africa’, it is still a rapidly growing area with strong potential.

The images below show what Zendai planned for the Modderfontein New City and what it looks like today.