PRASA

The way, the why and the how we use transport is evolving and undergoing transformation around the world. And what about our railway stations? They continue to serve as the gateways to mass transit. But the story does not end here. Major train stations, across the globe, have become the new shopping ‘Meccas’ and mixed-use transit hubs. Therefore, there couldn’t be a more opportune time to reimagine the role of PRASA’s railway stations as more than just transport nodes, but also as channels that can positively impact on the well-being of the communities they serve.

PRASA

DRIVING SUSTAINABLE ECONOMIC GROWTH & DEVELOPING COMMUNITIES BY UNLOCKING COMMERCIAL VALUE IN ITS PROPERTY PORTFOLIO

PRASA’s extensive property portfolio, managed by its property division, PRASA Corporate Real Estate Solutions (CRES), comprises of over 500 railway stations, vast tracts of land, office and residential properties, with a combined market value in excess of R5 billion. This positions PRASA as one of South Africa’s largest inter-model transport landlords.

Thusly, in line with the global trends and its secondary mandate, PRASA CRES, in collaboration with its Special Purpose Investment vehicle, Intersite Asset Investments (wholly-owned group subsidiary), has been exploring innovative strategies to maximize the potential of PRASA’s commercial real estate.

This strategic pursuit aims to secure long-term financial growth for the organization, and in turn, reinvest into its primary mandate of facilitating the movement of people.

This focus on generating non-fare revenue is in line with international standards of subsidising the cost of running passenger rail.

Examples of such initiatives are seen undertaken by international rail operating companies like Hong Kong, Deutsche Bahn, Network Rail and Japan Railways; who generate a sizeable portion of their net income from nonfare revenue activities. These secondary mandates include the leasing of property and coinvestment on developments to ensure market related returns are generated from these assets.

Pursuant to the aforementioned strategy, PRASA’s rail stations and broader rail network play a pivotal role in this revenue enhancing approach. By fostering the growth of commercial and mixed-use developments, the agency’s aim is to not only attract private property developers but also stimulate economic activity within our stations. This approach is also designed to address socioeconomic challenges confronting the country.

Repositioning train stations as the new frontiers of mixed-use development

“Recognizing that our train stations are more than just transit hubs, but vital centres of connectivity and mobility for the communities we serve, we are repositioning our railway stations as the new frontiers for retail and mixed-use development. And we are confidently building future communities right at the heart of our stations. This strategy has seen PRASA attract billions in development opportunities by partnering with private developers in and around its precincts and stations,” says Hishaam Emeran, PRASA Group CEO.

The Cape Town Station development, agreed to between PRASA and ERIS Property Group, is the first ever co-investment for PRASA, and represents a major achievement for Intersite in securing long-term financial stability for the business. The project is in the process of revitalizing the iconic Cape Town Station in the Western Cape.

This station serves as the largest inner-city transport interchange in the City of Cape Town, combining long-distance train travel, urban commuter rail, long distance buses and taxis. This signifies taking a significant step forward by introducing mixed-use commercial offerings.

Through this mixed-use development project, the station has been meticulously designed to cater to the next wave of station redevelopment. It is transforming and revolutionizing the way people live and move around and reshaping PRASA’s railway spaces to build communities of the future.

This transformative project unlocks both the social and commercial value within the agency’s property portfolio, driving sustainable growth and fostering vibrant communities of the future.

“When Intersite invested 25% into this co-investment R1,2 billion project, we made a commitment to play a meaningful role in society, one that will yield dividends for generations to come. Come January 2024, about 3200 NSFAS-eligible students from diverse backgrounds will have access to state-of-theart facilities, comfortable living spaces, including access to Wi-Fi and modernized kitchenettes equipped with fridges and other basic necessities,” says Annette Lindeque, PRASA CRES/Intersite Acting CEO.

The construction of student accommodation at the station is about more than just bricks and mortar, and the physical structures. It's about fostering an environment where students can thrive academically and personally. With amenities such as a gym, study rooms, collaboration lounges, laundry facilities, and many more, this station has been redesigned with the student in mind, giving them a place where they will not only find privacy and convenience, but the resources they need to succeed in their academic pursuits. The aim is to create a supportive and inclusive atmosphere where students can connect and learn from each other.

The development of the 7200-meter square retail space will also ensure that the agency attracts more passengers and retailers to its stations. This revamped retail precinct will be home to a diversity of retail outlets, but importantly, enhance the commuters travel and shopping experience by end of November 2023. Intersite will see its return on investment once the development reaches trading stage.

Unlocking socioeconomic value by helping municipalities achieve their goals

Another key example of how PRASA is unlocking not just commercial value, but socio-economic value as well, is the Goodwood Social Housing Development project in the City of Cape Town. This R575 million project will see over 1 055 affordable social housing units built near the public transport hub, the Goodwood railway station on PRASA-owned land.

Once complete, the development will be boosted by a construction of a 5000 m² retail facility on the station deck. The second phase is expected to be complete in 2024.

The project, initiated by PRASA’s investment vehicle, Intersite, is a joint partnership between PRASA, the City of Cape Town, the Social Housing Regulatory Authority (SHRA), DCI Community Housing Services, among others. This joint initiative weaves into the social fabric of Cape Town communities, creating new neighbourhoods and a new sense of belonging.

“This historic project demonstrates the significance of cross-sector collaboration and partnerships with municipalities in creating socio-economic and commercial value. It also underscores PRASA’s potential role in urban development by encouraging commercial and residential development near transit hubs,” says Lindeque. It’s a demonstration of the meaningful role our land-holding plays in helping municipalities achieve their goals of building affordable housing, all the while contributing to PRASA's non-fare revenue for long-term financial stability,” adds Emeran.

Densifying corridors to create vibrant transit hubs and access to mobility

The train stations of the future are not just about catching a train; they are about living, working, shopping, and convenience, all within a walking distance of the station. The Cape Town Station and Goodwood Station projects are just examples of how mixeduse development at the train stations can create dynamic transit hubs by combining transportation with residential, commercial, and recreational spaces, bringing life to the heart of our cities.

The densification of PRASA’s corridors, bringing people to the railway stations, will ensure that it increases rail patronage, while improving mobility and access to public transport. This will be achieved through the student accommodation project that sets to provide more than 3200 potential rail patronage and the Goodwood Station project set to provide a potential of more than 1000 rail patronage. Intersite is also in the process of finalising a further 20 developments for student and gap housing across the agency’s vast rail network.

These development projects demonstrate the potential to reshape the way the agency thinks about transportation hubs and to positively impact the communities it serves and improve mobility. The agency expects to conclude similar investment agreements soon to bring in private property developers to unlock the value for PRASA’s Real Estate, thereby fulfilling its secondary mandate.

Intersite is also co-investing with Urbane Living in a development in Braamfontein, Johannesburg. The Rynx will see the conversion of PRASA’s existing Tippet Building offices into 189 residential units at an estimated cost of R67 million over a period of 18 months.

UPDATE: PRASA’s Rebuilding Programme

A lot of work has gone into rebuilding the passenger rail infrastructure and restoring passenger rail services. To date, over 26 corridors have been recovered out of the 40 corridors, with R3.6 billion invested in recovering the rail infrastructure and over 6000 jobs created.

In this financial year, PRASA identified 16 lines for rehabilitation and refurbishments.

These are the corridors:

Gauteng:

Pretoria – Kaalfontein

Leralla – Germiston

Hercules – Koedoespoort

Germiston – Kwesine

Germiston – Johannesburg

New Canada – Residentia

Johannesburg – Randfontein

KZN:

Durban – Dalbridge – KwaMashu

Durban – Winkelspruit

Durban – Crossmoor

Durban – Pinetown

Western Cape:

Nyanga – Phillippi

Phillippi – Chris Hani

Eersterivier – Muldersvlei

Eersterivier – Strand

Recently, PRASA launched Pretoria to Kaalfontein, Germiston to Johannesburg, Durban to KwaMashu, and Eersterivier to Strand. Trains are running from Cape Town to Langa, to Nyanga on the Central Line.

These milestones have made the agency proud as it intends to restore 80% of the corridors by the end of this financial year.

Prasa's Ambitious R50bn CAPEX Programme

As pronounced by President Cyril Ramaphosa in his 30th October 2023 Economic Progress report to the nation, PRASA also plans to spend R50 billion over the Medium-Term Expenditure Framework (MTEF) period in restoring passenger rail services and modernizing the rail infrastructure, building on previous investments in infrastructure and locomotives, which on average will show an improvement of 22% per annum over its last year spend of 13.5 billion.

Projects under the agency’s ambitious capital programme for the next three years include:

1. Rolling stock modernization programme

2. Depot Modernization programme

3. Walling

4. Station Modernization programme

5. Perway Infrastructure

6. Electrical infrastructure

7. Signaling and telecommunications

8. Digitization of our systems

PRASA has recovered the passenger rail services, it has introduced the new Electric Motor Units (EMUs), otherwise known as Isitimela Sabantu. The trains that are being introduced, are high-tech, that come with CCTV cameras, automatic doors, airconditioning, high-tech safety measures, designed with the safety of commuters in mind. These trains are manufactured here in South Africa, in Springs, Gauteng, by Gibela.

The depot modernization programme will include the installation of intelligent fencing at the various rolling stock depots and staging yards, incorporating CCTV and integrated security systems to replace the existing fencing.

PRASA is revitalizing its signaling system, bringing in modern telecommunications in line with the European Train Control System ushering a new era in signaling safety. Work has started in KwaZulu-Natal and the Western Cape to re-signal the passenger rail network to ensure the safe passage of the trains and increasing the frequency of PRASA services.

These projects are all part of PRASA’s ambitious capital programme where it intends to invest in the economy.