Atterbury auctions former City Lodge Newtown after closure in South Africa

Atterbury Property has sold a shuttered hotel in Johannesburg, a move that reflects how developers are rethinking the future of inner-city real estate as demand shifts away from traditional hospitality. 

The former City Lodge Hotel in Newtown, once marketed as a base for exploring the city’s cultural district, was auctioned for close to $3.5 million, according to market estimates.

The deal points to growing investor interest in repurposing older hotel assets that no longer meet demand. 

Interest in the 148-room property came largely from residential developers, not hotel operators.

That shift highlights changing patterns in Johannesburg’s central business district, where accommodation demand has softened while housing needs continue to rise. 

The sale also comes as City Lodge Hotels adjusts its portfolio, focusing on stronger-performing locations in the city’s northern suburbs and key commercial hubs. 

Atterbury, which developed the hotel in 2015, chose to sell as the lease neared its May 2026 expiry.

City Lodge opted not to renew after a review of its operations.

Developers eye residential conversion 

“This is a blank canvas for redevelopment,” said Jayson-Lee Collins of Broll Auctions and Sales, noting interest in student housing, apartments and mixed-use projects. 

The hotel closed on March 31 after failing to draw enough business and leisure travellers.

That was despite its location near well-known sites such as Museum Africa and Market Theatre. 

Louis van der Watt, CEO of Atterbury Property, said most bids came from developers focused on housing.

He pointed to lower conversion costs, as rooms already have plumbing, power and bathrooms in place.

Shift in inner-city demand 

Across South Africa, older hotels and office buildings are increasingly being converted into housing, particularly for students and young professionals seeking affordable options close to city centers.

At the same time, City Lodge is investing in properties where demand is stronger.

The group operates 58 hotels with more than 7,300 rooms and continues to upgrade and expand, including a project at Waterfall City.

A changing role for Newtown 

The sale underlines a broader shift in Newtown and similar districts.

Once promoted as tourism hubs, these areas are now drawing attention as potential residential communities, where location and price matter more than hotel proximity to attractions.