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Real Estate

Modderfontein New City

Modderfontein, Gauteng Province, South Africa
Written by Ricardo Reboredo.
Updated on 24 July 2021.
The Modderfontein New City is a defunct real estate megaproject in South Africa. Proposed in 2013 by Shanghai Zendai Property Limited, a private Chinese real estate firm, the New City was launched with enormous fanfare due to its promise to create the ‘New York of Africa’. However, a lack of investor interest, pushback from the municipal government, and problems with investments in China all contributed to the eventual aborting of the project. It highlights the precarity of megaprojects in the Global South, especially those without official state backing and initiatives to smooth out regulatory environments.

Basic Information

Name: Modderfontein New City
Chinese Name: 南非沐德坊新城
Location: Modderfontein, Gauteng Province, South Africa
Type of Project: Real estate
Project Developer(s): Shanghai Zendai Property Limited (2013–15); China Orient Asset Management Company (COAMC) (2015–17); M&T (2017–)
Main Contractor(s): n/a
Known Financier(s): n/a
Cost: 5–6 billion USD
Project Status: Suspended

Project Outline

In 2013, Zendai, a private Chinese real estate and financial services firm, purchased 1,600 hectares of land near Johannesburg and announced plans for a new mixed-use mega-development that would cater to upscale commercial and residential usage. Taking inspiration from the latest wave of Chinese suburban developments as well as visions of ‘modernity’ exemplified by Dubai and Shenzhen, the original concept for Modderfontein called for the construction of a ‘new urban district’ that would become a hub for both Chinese and South African firms.

The town of Modderfontein, where the New City would be built, was founded in 1894. The town was home to the African Explosives and Chemical Industries (AECI) dynamite factory, which produced nitro-glycerine until the 1990s. Most of the surrounding area was left relatively undeveloped to form a buffer zone to shield the city from potential explosions.

Once the factory closed in 1994, Heartland, AECI’s real estate subsidiary, began developing small parcels of land in a piecemeal fashion. However, given Modderfontein’s peripheral location (18 kilometres from the old central business district), it was not until the construction in 2012 of the Gautrain, Johannesburg’s light-rail system, that land values began to rise. Modderfontein’s location between O.R. Tambo International Airport and Sandton, Johannesburg’s new CBD, meant the site went from peripheral to central within a few years. According to my interviews with project stakeholders in 2018, the possibility of turning the site into an economic hub enticed developers and shifted the development time frame from the medium term (five to 10 years) to the near term (one to two years).

Figure 1: Modderfontein’s location. Sources: Miles Irving, UCL; Reboredo and Brill (2019).

At the same time, Zendai was looking for investment opportunities abroad. Founded in 1992 by Dai Zhikang, the company emerged as a player in the Chinese real estate market with the development of projects such as Thumb Plaza and the Himalayas Centre in Shanghai. Modderfontein was to be the company’s flagship project and its second venture outside China. In 2013, roughly 1,600 hectares of AECI’s surplus land in Modderfontein, as well as Heartland itself, was sold to Zendai.

Figure 2: Area sold to Zendai by AECI. Source: AECI, 2013.

Zendai’s original masterplan was designed by a team of London-based consultants and included 55,000 housing units, almost 1.5 million square metres of office space in a new CBD, hospital and medical facilities, and schools, among other amenities. Seven sections would be developed in all: residential units, an industrial node, a finance and trade centre, a conference centre, sport and recreation facilities, education and training centres, and an African cultural theme park. Moreover, the site would host 10 shopping centres and hotels.

Figure 3: Modderfontein Masterplan. Source: Zendai, 2015.

Initial plans called for the mega-development to be finished within 10–15 years. Some 3,000 residential units would be built in the first three years to finance the remainder of the project. According to Zendai’s now non-operational website, the plans promised ‘integrated planning, rational layout, systematic construction, optimized allocation of various commercial and living functions and an integrated development environment [that is] aimed at making Modderfontein a multifunctional city’. Following the sale, Zendai and its designers released a series of artist’s renditions, which became representative of the project, even as it took different forms between 2012 and 2015.

Figure 4: Modderfontein rendition. Source: Polity.

The South African Government’s response to the project was mixed. Gauteng Province strongly approved of the project, and pointed to a Stellenbosch University study that predicted the New City would generate upwards of 100 million USD for the local government. The same study estimated the initial creation of 22,000 jobs, of which 65% would be for semi-skilled or unskilled workers. According to my interviewees, the provincial government therefore viewed the project as a jobs and investment windfall for Johannesburg and met with Dai Zhikang to discuss the New City’s integration into provincial planning documents. Provincial interest was so high that in 2015 the Premier of Gauteng, David Makhura, said Modderfontein would ‘inject R84 billion [5–6 billion USD] into the economy of the Gauteng City Region and is expected to create 150,000 jobs over the next twenty years’.

Despite this interest from the province, the city government of Johannesburg was sceptical about the New City from the start. This proved to be significant as, in South Africa, planning approvals are made by municipal authorities, who are not beholden to the provincial government. The city government did not believe the Modderfontein New City would fit in with its planning strategy, which largely focuses on low-income housing and infill development. As such, they declined to grant the project special status and instead required Zendai to follow rigorous planning protocols.

Further complicating matters for Zendai, in South African urban megaprojects, infrastructure is generally funded by the developers, who then receive a rebate from the municipality. Zendai did not have the capital to install the necessary infrastructure and Dai Zhikang had little luck finding interested investors. While he personally sought out both South African and Chinese firms, these did not believe the Johannesburg market was right for the type of development being proposed. As one interviewee noted, ‘Dai ran out of money’ when he ‘couldn’t find investors’. Additionally, underperforming assets in China meant Zendai was now losing money on all fronts.

In January 2015, Dai announced he was selling his shares in Shanghai Zendai Property to the state-owned China Orient Asset Management Company (COAMC), which then became the controlling shareholder of Zendai and therefore of the Modderfontein project. COAMC and new CEO Du Wenhui understood the project could not go further as constituted and sought to scale it down. By the middle of 2015, COAMC decided to sell off the land. By 2016, it had managed to sell 17% of its shares to a Chinese real estate firm named Fuxing and eventually closed on a deal for the remaining 83% of shares with M&T Development, a South African company, for 1.6 billion ZAR (112 million USD). M&T has begun developing the land, building a gated community of the type seen throughout Johannesburg.

Figure 5: The M&T development site, September 2017. Photo by the author.

Project Impacts

Local Community: During the project development process, three masterplan workshops with local stakeholders were held. These were overseen by Atkins, Zendai’s London-based consultants, and went over the project proposals in great detail. The workshops lasted two days each and were attended by upwards of 40 participants.

Environment: The project was to be built on a large site, the centre of which is the Modderfontein reserve, a natural park that is home to a variety of native species. However, given the site’s historical usage, questions about soil and water contamination persist. The Modderfontein masterplan delineated several environmental measures to be taken on construction, but it is unlikely M&T has considered any of these with their project as their development rubric follows the standard for Johannesburg’s gated communities.

The project was divisive from the start. As Dai Zhikang first went to the provincial government for planning permission, the municipal government of Johannesburg was not informed of the project until they read about it in the media. This coloured their view of the development throughout. Ultimately, however, the project’s failure did not attract much attention and it quietly disappeared from the headlines. Dai was arrested in China in 2019 on charges of illegal fundraising from the public and was tried by a Shanghai court in March 2021.

In-Depth Sources

Ballard, Richard and Philip Harrison. 2020. ‘Transnational Urbanism Interrupted: A Chinese Developer’s Attempts to Secure Approval to Build the “New York of Africa” at Modderfontein, Johannesburg.’ Environment and Planning A: Economy and Space 52(2): 383–402.

Brill, Frances and Ricardo Reboredo. 2019. ‘Failed Fantasies in a South African Context: The Case of Modderfontein, Johannesburg.’ Urban Forum 30(2): 171–89.

Reboredo, Ricardo. 2020. A ‘Bandung’ view of the world: The political economy of Sino-South African megaprojects. PhD dissertation, Trinity College, Dublin.

Reboredo, Ricardo and Frances Brill. 2019. ‘Between Global and Local: Urban Inter-Referencing and the Transformation of a Sino-South African Megaproject.’ China Perspectives 2019(4): 9–16.

Updated on 24 July 2021.

Ricardo Reboredo is an Assistant Professor of International Relations in the Department of International Relations and European Studies, Metropolitan University Prague (MUP). He received his PhD in Geography from Trinity College Dublin (2020). His research focuses on China’s politico-economic internationalisation and the varied ways in which this is articulated throughout the Global South.