R2.2bn Telkom Towers redevelopment set to unlock Pretoria government asset

The Department of Public Works and Infrastructure is preparing to issue a Request for Information (RFI) for the redevelopment of the Telkom Towers precinct in Pretoria, as government moves to turn the dormant property into a productive, income-generating asset.

Public Works and Infrastructure Minister Dean Macpherson said the redevelopment is currently estimated to cost between R1.8 billion and R2.2 billion and will involve the refurbishment of all nine buildings in the precinct.

Once completed, the project is expected to provide about 106,000 square metres of gross leasable area, which could be used to accommodate government departments and generate revenue through new or existing clients.

Macpherson said the redevelopment would also allow government departments currently occupying expensive private-sector buildings to move into quality state-owned infrastructure.

“The redevelopment is expected to contribute to the creation of more than 5,300 direct construction jobs,” Macpherson said.

He said the jobs would support families and communities while stimulating economic activity.

The RFI will seek input from the market on technical approaches to refurbishing and upgrading Telkom Towers to meet regulatory requirements and government accommodation standards.

It will also assess potential public-private partnership (PPP) models, including contract structures, project packaging, lifecycle approaches, commercial viability and bankability.

Macpherson said the department had finalised a Memorandum of Understanding with the Infrastructure Finance and Implementation Support Agency (IFISA), paving the way for the RFI to be issued.

The department intends to pursue a rehabilitate-operate-transfer model, which would ultimately see the precinct fully occupied by government departments in the City of Tshwane.

Macpherson said government had already spent approximately R1.4 billion acquiring, renovating and maintaining the complex, while a further R776 million in financial losses had been directly attributed to the historical mismanagement of the property.

He said the continued dormancy of Telkom Towers had left the complex vulnerable to vandalism, theft and occupation by criminal elements, while government continued to incur significant security costs.

The redevelopment forms part of a broader reform programme aimed at improving how government manages and utilises state-owned assets.

Macpherson said the department was also considering the redevelopment of Public Works House (PWH) and the Central Government Offices (CGO) building.

Public Works House is estimated to require R2.2 billion for refurbishment and could unlock 63,768 square metres of gross leasable area while creating about 5,700 construction jobs.

The CGO building is expected to require R560 million for refurbishment, potentially unlocking 41,739 square metres of gross leasable area and creating approximately 1,600 construction jobs.

Together with Telkom Towers, the three projects could create more than 12,700 construction jobs and unlock approximately 212,000 square metres of gross leasable space.

Macpherson said the projects would form part of efforts to rejuvenate Pretoria’s inner city and return government departments to state-owned buildings.

“This will ensure that we cut down on costly private sector leases and return that money to departments to be used for service delivery,” he said.

The minister said the department was also working to reduce its R6 billion leasing portfolio while reviewing its R150 billion asset register and opening state properties to investment.

“Our work with the private sector, revenue generation and reduction of our R6 billion leasing portfolio is central to this work,” Macpherson said.

He described the Telkom Towers project as an important step in demonstrating that the department’s reform programme was beginning to take effect.