Religious roots: The Waterfall City development is still owned by the Waterfall Islamic Institute and is leased under a 99-year lease agreement consistent with Islamic law. Photo: Franz Rabe/naturalphoto.co.za
Waterfall City is one of the largest property developments in South Africa, housing thousands of people and various real estate projects. But few people know about the rich history that lies beneath the surface of this city. Its innovative leasing system is a first for the South African real estate market.
In 1850, Waterval was established as a farm of 3 400 hectares. Peter McDonald, a land surveyor, named this farm Waterval after the small waterfall found there. Johann FB Rissik, the surveyor general at the time, signed off Peter’s land survey plan and the farm was registered in 1888. As was done back then, Paul Kruger, the president of the South African Republic, signed the original title deed in 1889.
When looking back at the history of Johannesburg, we know that gold was first discovered in 1884 and some was found near the Jukskei River that ran through Waterval farm, so people assumed gold was everywhere. It was in 1886 that the main gold reef was found at Randjeslaagte, today’s central Johannesburg.
Where Waterval farm was is now Midrand, situated between Pretoria and Johannesburg, and on it is the expansive, multibillion-rand Waterfall City development.
The first owner of this land was a Miss Pimond. She sold the farm to the Gibson brothers, who arrived in South Africa from Britain circa 1871. They were the first title-deed owners of this farm. Their main line of work was operating a Red Star Line stagecoach business.
The Gibson brothers had ox wagons and bred cattle on the farm for their transport business. They created a pit stop between Johannesburg and Pretoria and aptly named it Halfway House — the same name used today.
In his research paper Land as Waqf & Mia’s Farm: A Decolonial Case Study, Aasif Bulbulia tells us that in 1934, Moosa Ismail Mia purchased the farm from the deceased estate of John Alexander Gibson for £16 000. Mia was born in India in 1876 and moved to the Transvaal in 1904. He registered the development under Witwatersrand Estates Limited, a company established to navigate the Union of South Africa’s land ownership restrictions. Many will be familiar with this farm’s nickname — “Mia’s farm”.
Mia and his four sons, Mohamed, Ahmed, Mahmood and Yusuf, built a school (the Waterval Islamic Institute), hostels, homes for the Mia family members, and a small mosque on this farm.
The institute was established in 1940 and was one of the first formal Muslim educational institutions in the Transvaal. It produced prominent scholars, ran its own printing press known as “The Shed,” and is well known for its strong role in institutionalising Islam in South Africa. (Bulbulia, A., 2021. Land as Waqf & Mia’s Farm: A Decolonial Case Study. Honours thesis. University of Johannesburg.)
The Mia family used this land as a working farm. They bred cattle and sheep, and they grew crops such as maize. It was only in 1985 that they considered developing this excellently located, valuable piece of land.
Mr Bulbulia expands on how Waterfall Estate was transformed from the Waterval Farm into what it has become today. He credits the project as the brainchild of Werner van Rhyn whose vision for the estate brought about the mixed-use Waterfall City. He approached the Mia family and a partnership was born. The Mia Family and real estate investment trust Attacq got to work.
Planning for the Waterfall City precinct began in 1996. Other property companies such as Balwin Properties have subsequently added value to the area. (Bulbulia, 2021.)
This city-within-a-city, along with its beautifully maintained roads and manicured gardens, has attracted huge investment over the past few years. It is home to multiple residential, retail and commercial developments, including hospitals, hotels, corporate headquarters such as PwC, and one of the largest shopping centres in South Africa — the Mall of Africa.
Many schools are setting up in the area. These include Curro Castle, Reddam, Reddam House Waterfall Early Learning School, Curro Waterfall Primary School, Reddam House Preparatory School, Curro Waterfall High School, Reddam House College and Stadio School of Education.
This development is still owned by Waterfall Islamic Institute (WIC), founded by the Mia family. The WIC is a 22% shareholder in Atterbury Investment Holdings.
Today, the farm has reduced in size to 2 200 hectares after the government expropriated some of it. Parts of the farm were divided into smaller sections to accommodate the development of Eskom’s Megawatt Park, the Buccleuch Interchange and the Allandale Interchange.
Because of the Islamic faith of the Mia family, this specific piece of land cannot be sold or transferred. It’s known in Islamic law as a waqf. A waqf, or Islamic endowment, is an asset dedicated by Allah to assist the poor and needy. This includes buildings or land donated for charitable purposes, with no intention of reclaiming the assets.
With the above being said, this land can be leased. The profits from the leases must be used for public good, such as for charities and community initiatives.
All properties in the Waterfall City precinct are under leasehold ownership. Balwin Properties’ Munyaka development, valued at more than R10 billion with a planned 5 020 apartments, will also follow the unique lease ownership structure.
This structure consists of 99-year leasehold agreements. As a buyer of an apartment, you will enter into a long-term 99-year lease with the Islamic Trust, the landowner.
The lease agreements are registered at the deeds office, and they are renewable after the 99-year period with an infinite number of extensions.
Lessees are allowed to finance their lease agreements through banks. Interestingly, bank financing for these leases was a groundbreaking deal upon the inception of the Waterfall City project.
You can sell your property at any time during the 99-year lease, and the new owner will receive a new 99-year lease.
Furthermore, the lease cannot be cancelled.
Here’s what is interesting about the Munyaka development. When you sell your apartment, you would pay an agent commission (which they have capped at 5%). You will also be liable to pay 3% plus VAT of the total sales price to the Islamic Trust.
If your 99-year lease period expires, you can renew your lease agreement with the Islamic Trust and pay it 3% plus VAT and 0.5% to the residents association based on the current market value of your apartment.
In the event of death or divorce, the Islamic Trust does not require you to pay the 3.5% plus VAT. And if you inherit the apartment after someone’s death, you can continue ownership for the remainder of the 99-year lease without paying the 3.5% plus VAT.
This means that during any of the above, there will be no transfer duties applicable at any stage — unless the law changes. Transfer fees can be exorbitant, so this is appealing to investors.
Perhaps the player at a disadvantage in this situation is the South African Revenue Service. Because no transfer fees have ever been (or will ever be) paid, will they not miss out on substantial transfer duty revenues for many years to come?
More importantly, getting banks to fund these projects with leases and having title deeds issued could change the game for unlocking the potential of homelands and areas under traditional ownership in South Africa. Banks treat these lease agreements as bondable assets, and that is great.
This also has the potential to be a viable model for land owned by state-owned enterprises such as Prasa. This entity is mandated to capture the value of land to subsidise transport operations. Instead of selling the land and losing out on future gains, why not implement a lease structure similar to Waterfall City’s?
The same goes for sporting facilities such as stadiums. There could be an opportunity to develop surrounding land, thus ensuring long-term revenue for the sport and sporting facilities that are costly to maintain every month.
One final thought when it comes to Islamic landlords and a waqf. Islamic landlords must adhere to the conditions of the religious endowment. Violating these conditions includes businesses that sell pork, alcohol, gambling or prostitution.
Islamic landlords tell me in my capacity as the principal commercial property broker at Ask Ash that they will not lease their properties to churches, casinos, pubs, bottle stores and gambling institutions, so I am familiar with Islamic law.
At first, the idea of a smart city built on waqf land sounded contradictory. What about restaurants that sell alcohol operating on Waterfall City land? And what if a tenant owns an online sports betting business and works from home in Waterfall City? Does this city built on waqf land challenge Islamic law?
My original thought was that the direct rental income from the restaurant becomes a conflict of interest for the landlord’s primary business. If the Islamic landlord benefits directly, that is a breach of the waqf.
I now understand that in the case of Waterfall City, the Islamic owner is not benefiting directly from the lease agreement between the lessee and their subtenants. The terms and conditions of the waqf are not breached as a result of the 99-year lease structure that has been put in place. In this manner the owner does not become party to, and thus accountable for, participating and benefiting from prohibited activity.
Ask Ash is a new column that examines South Africa’s property, architecture and living spaces. Continue the conversation with her on email ([email protected]) and X (@askashbroker).
Editor’s note: The original version of this article did not cite Aasif Bulbulia’s research, particularly his contribution to understanding the significance of the Waterval Islamic Institute. We have learned from the incident and will tighten our editorial processes. We apologise to Bulbulia.