By Larry Claasen
THE Passenger Rail Agency of South Africa (PRASA) is looking to its commercial property operations to be a significant driver for its revenue growth.
The rail operator generated R707-million in rentals from its property portfolio for the year to end March 2025, and planned to grow it to R2-billion by 2035, said PRASA group CEO Hishaam Emeran at the Rail Africa conference in Sandton.
Though it’s still early days, the strategy of increasing revenue from its property operations is paying off. “We’ve exceeded our target. Last year, we gave the team a target of R670-million, which they had to generate.”
PRASA property rentals growth trajectory
Over the past 15 years, PRASA’s property division recorded significant growth in the rental space from R258-million in 2012/13 to R568-million in 2021/22 and R616-million in 2022/23.
Its property investment portfolio value grew from R924-million in 2012 to over R4-billion in 2021, with the highest growth of over R2-billion recorded in the Metrorail station environment, followed by the development leases at over R1-billion.
It’s continuing this growth momentum as in the financial period to end 2024, the group finalised 24 of its property 26 development leases.
Emeran said the group was looking to operations, outside of its rail portfolio, to drive revenue because it fully understood that the national government was dealing with its own financing issues and would find it difficult to assist PRASA in future.
PRASA property rentals secondary mandate importance
“We are all facing funding challenges. Therefore, the secondary mandate [like revenue from its property portfolio] becomes more critical.”
Though the national government has committed itself to supporting the turnaround of state-owned enterprises like PRASA, it is increasingly asking them to partner with the private sector to source their own funding.
An example of the group turning to the private sector to help commercialise its property portfolio is the redevelopment of Cape Town station, where it partnered with developers through a long-term lease.
The Units on Cape Station redevelopment, in partnership with Eris Property Group, saw the creation of 7 000m² of retail development and 3 300 beds for student accommodation at a cost of over R1,2-billion.
PRASA property rentals retail development anchors
The retail component is anchored by Spar, Clicks and Adidas. The food precinct is made up of amongst others, McDonalds, KFC, Debonairs, Pedros, Hungry Lion and Chicken Licken.
The student accommodation has amenities like laundry facilities, study and computer labs, games labs, TV rooms, Co-Lab lounges, a cinema, indoor gym, action soccer/netball/basketball courts, a braai area, on-site café and landscaped courtyards.
PRASA property rentals pilot development model
Aadil Moosa, property manager of the Cape Station Precinct at Eris Property Group said the development could be an example for the rollout of similar developments across the country.
“With the public transport aspect – and massive tertiary education institutions just minutes away – Cape Station is a perfect pilot project for the city and the rest of South Africa. At Eris, we are excited to have a massive pipeline of development projects being rolled in the next 5 to 10 years within the student accommodation sector.”
Emeran said that in partnering up with PRASA, property developers had advantages that could see them get a better return.
“Show me another development… where you can develop to this level of bulk without requiring one parking bay. Why? Because we’re both at a station. Mass transport.”
PRASA property rentals expansion pipeline
Aside from Cape Town Station, it’s also looking to redevelop other major stations like Park Station in Johannesburg.
In Goodwood, it completed a social housing project in partnership with the Department of Social Housing. Around the country, there are developments.”
PRASA property rentals cross-sector synergy
The synergy of having rail linked to commercial property developments also pays off in other ways. PRASA, for example, made R22-million (a 55% increase) from advertising in 2024.
