In a first for the auction industry in South Africa, the City of Cape Town will auction a 10-year renewable lease for the Virgin Active property in Green Point this week.

The auction, scheduled for Thursday, 29 June, will include another 31 properties, ranging from vacant properties to residential and business properties as well as properties zoned for community use. 

Jessica Spira, the managing director of Virgin Active South Africa, confirmed to Daily Maverick that the company intends to bid for the 10-year lease on the 17,884m² property. The site currently houses one of Virgin Active’s most popular gyms, including outdoor tennis courts, a volleyball court and a 25m indoor pool.

Spira was upbeat regarding the auction outcome — Virgin Active was already leasing the parking lot with 200 parking bays directly from the city and has expansion plans in mind for this gym.

“We’ve just launched a padel offering, so we are likely to remove some tennis courts and put in padel courts,” she says. Padel is a mix of tennis and squash, currently taking South Africa by storm.

Spira says expansion plans could include a family pool as the gym seeks to attract more families with younger children. The auction will be for the monthly amount paid as part of a 10-year lease, renewable for another 10 years.

Virgin Active has 132 clubs across southern Africa, including two in Namibia and one in Botswana, and all the clubs are leased. 

“If we build a new gym, we have a high capex ourselves when it comes to the equipment and the cost of laying out a new gym, so we prefer to use a landlord,” Spira says.

If Virgin Active’s bid is not successful, the company may try to negotiate a sublease with the successful bidder. If that is not possible, the company will have a three-month notice period to vacate the property. 

“We don’t expect it to come to that. However, if it does, we have numerous other gyms in and around Cape Town that members can use and we will use the three-month period to absorb members into other gyms. In the long run, we would probably look for another site to set up another club to service this particular area — Mouille Point, Sea Point and Green Point,” she says.

James Vos, the city’s mayoral committee member for economic growth, says the auction is part of an approach to “release” city-owned properties and get the best economic and social value out of assets that are not required for municipal purposes.

The properties are located in various areas, including Durbanville, Gardens, Newlands, Goodwood, Mitchells Plain, Khayelitsha, Grassy Park and Muizenburg. The auction, hosted by High Street Auctions, will take place at noon on Thursday, 29 June and bidders can either attend in person or virtually via the High Street app.  It is a public auction, but only registered buyers can attend the live event.

The Virgin Active site is listed as Lot 33, and once bidding opens, all registered bidders are free to place bids on their chosen properties. Bidding takes place on the specific property page that includes the description and information about the property and bids will be recorded in real time. DM