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Amazon to develop R4bn office at disputed facility in Cape Town

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 21 Apr 2021

The Cape Town-based R4.5 billion River Club Development will be the new home of US retail giant Amazon, after the City of Cape Town recently approved the 15-hectare parcel of land for development by the Liesbeek Leisure Properties Trust.

The Observatory-based River Club, which is owned and operated by the Liesbeek Leisure Properties Trust, is working on a major residential and commercial property development expected to create 5 239 jobs in the construction phase alone.

In a statement, the City of Cape Town says international conglomerate Amazon will be the anchor tenant, opening a base of operations on the African continent, and together with other commercial tenants will unlock economic opportunities for SA.

Amazon, which already has an office in Cape Town, is reportedly looking to establish a larger corporation in the vicinity, which is expected to conjugate its cloud computing and customer service businesses as the Jeff Bezos-founded company’s African client base continues to grow.

The development design, according to the City of Cape Town, intends to create a 150 000sqm mixed-use space, creating up to 19 000 indirect and induced jobs.

“The planned mixed-use development will be a significant boost to the economy and the people of Cape Town in the aftermath of the national COVID-19 lockdown,” says City of Cape Town executive mayor Dan Plato.

“We are acutely aware of the need to balance investment and job creation, along with heritage and planning considerations. It is clear that this development offers many economic, social and environmental benefits for the area. We are committed to driving investment to revitalise the economy, which is slowly recovering following the impact of COVID-19.”

Almost 60 000sqm will be used as office space, with further mixed-use space for retailers, a 200-room hotel, gym, restaurants and conference facilities.

The city’s concept approval of the re-development of River Club comes after the planned precinct received much opposition from environmentalists, the Khoi and the San groups, who had raised concerns that the new development would lead to the land losing its historical significance.

In a complaint lodged with the Planning Appeals Advisory Panel, the groups submitted a petition with 400 signatures, saying the construction on the floodplain between the Black and Liesbeek Rivers would result in increased risk of flooding and environmental exploitation.

However, the City of Cape Town argues that one of the overarching goals of its Municipal Spatial Development Framework is sustainable development that balances ecological conservation and urban development.

“The city has carefully and thoroughly considered all of the submissions and concerns during the appeal process. This imminent development strikes that balance, with a combination of well-located residential and commercial opportunities, the rehabilitation of the degraded riverine corridor, improved links with surrounding ecological resources such as the Raapenberg Wetland and the establishment of a high-quality green space that will be accessible to the public,” notes the city’s statement.

Deepening South African roots

Amazon has been in SA since its on-demand cloud computing subsidiary Amazon Web Services (AWS) first established its presence in Cape Town in 2004.

Its local roots saw the cloud giant build pioneering networking technologies, including its next-generation software for customer support, and the technology behind its compute service Amazon Elastic Compute Cloud, in SA.

The group set up an AWS office in Johannesburg in 2015.

The company brought AWS Direct Connect to SA in 2017, offering direct links to the AWS cloud, and started building its own infrastructure in 2018, installing locations in Johannesburg and Cape Town, along with an edge location in Nairobi, Kenya.

Deepening its roots in SA, AWS last year announced the opening of the AWS Africa data centre region in Cape Town.

The new infrastructure opened up opportunities for innovation and entrepreneurship, which allowed developers, start-ups, government and private sector organisations such as Absa, Investec, Old Mutual, Pick n Pay, University of Pretoria and Standard Bank to use AWS to deliver innovative services to their clients.

Shortly after the data centre region, Amazon said it would begin recruiting in SA to fill 3 000 new virtual job vacancies in customer service in 2020. The roles range from customer service associates, to technical experts who work virtually while supporting Amazon customers in North America and Europe.

With the new recruits, Amazon said it would have a total permanent workforce of 7 000 in SA by the end of 2020.

“The new jobs reflect our continued commitment to South Africa’s economic development, and I am proud to have South Africa be a growing part of our ability to deliver a great experience to Amazon customers around the world and provide employees with the opportunity to work safely from home,” said Andrew Raichlin, director of Amazon customer service in SA, at the time.

Earlier this month, AWS South Africa opened applications for small IT businesses to apply for its Equity Equivalent Investment Programme.

The initiative was launched in 2019 as part of its broad-based black economic empowerment programme, which seeks to support black-owned local small IT businesses, by providing an 18- to 24-month enablement and acceleration programme for businesses with a turnover under R50 million.