14 Feb 2013
Although the economic outlook for 2013 is not exactly rosy, and while pundits may paint it in varying colours, go to any shopping mall and you are guaranteed to find people shopping up a storm.
Of course, then there is talk of hard times and recession, retail sales say otherwise and property developers continue to feed the shopping beast with new malls popping up in almost every new corner.
According to the South African Council of Shopping Centres (SACSC) new, large shopping centre developments will be focused in South Africa’s metropolitan areas with the highest population growth figures including Johannesburg, Cape Town, eThekwini and Tshwane impacting the needs for housing, job creation, schools and general infrastructure.
In October 2012, the Billion Group, a leading property development company, broke ground on its new centre, Forest Hill Mall set within the Forest Hill City precinct, located on a major interchange, spanning 1km along the N14 highway and 300 metres along the R55 in Monavoni, Centurion, south west of Pretoria.
The mall marks the first phase of three phases in the development of this mixed-use precinct which will feature A-Grade office properties (22 000 square metres), two hotels (groups not yet secured), motor show rooms (8 000 square metres) and 1 500 apartments, according to Sisa Ngebulana, Billion Group executive chairman and founder.
The group which currently has its head office in Montecasino Fourways will relocate its head office to Forest Hill City.
The mall has a gross lettable area of 72 000 square metres making it the largest mall offering the best of South African and international fashion, food and entertainment brands in the area.
On completion, the retail will measure a whopping 110 000 square metres and the precinct will have 298 000 square metres of mixed-use development.
Ngebulana says they have received over 80 percent commitments from leading international and South African brands, including Checkers Hyper, House and Home, Woolworths, Truworths, Edgars, Ster Kinekor, Foschini Group, Pick n Pay, Pepkor and Mr Price Group brands. Banks, food and entertainment franchises are also well represented and the mall will boast and ice rink.
It’s not only retailers who are seeing potential in this underserviced (in terms of retail) node, Nedbank has shown its support for the development of the mall providing a R1.4 billion loan, he says.
Ngebulana explains that the mall is strategically located and highly visible from the main highway interchanges set on a hill.
It will service the current 112 500 households in the primary catchment area, which is set to grow to almost 160 000 households by 2014.
The current area retail undersupply is 250 000 square metres and the mall is a first phase of a larger retail development which will expand to a planned 110 000 square metres of retail.
“Forest Hill Mall’s architectural design matches our development philosophy of enhancing the overall lifestyle experience of the prospective end-user.
“At the same time we were cognisant of our responsibility to the community and environment within which the mall is located,” says Ngebulana.
Forest Hill Mall will have a 4 split-level parking consisting of 2 400 bays at 600 bays per level and additional parking will bring the total number of bays to 4 320.
“Forest Hill epitomises urban living – where people eat, live and play in a safe and convenient environment,” says Ngebulana.
Its current development pipeline has a total value of R7.164 billion and total GLA of 370 000 square metres.
The company successfully took its portfolio of property assets to market with the Johannesburg Stock Exchange listing of Rebosis Property Fund in May 2011, the largest property sector Initial Public Offering to date.
The listed property fund has been tipped as one stock to watch out for in 2013 as the listed sector’s prospects look attractive to investors.
According to Keillen Ndlovu, head of listed property funds at STANLIB, buying into this fund is cheap relative to the market and the properties in this portfolio are quite defensive, which is why they like Rebosis.
Read the article here.
What is more, the fund’s retail consists of dominant regional shopping centres and some lower income centres (this is where the population is and this is where the growth is), according to Ndlovu.
Investing in the City of Tshwane
According to the City of Tshwane's Executive Mayor, Councillor Kgosientso Ramokgopa, this represents the biggest investment by a Black-owned property group since democracy.
Opening is set for April 2014 when South Africa gears itself for the polls at same time, celebrating 20 years of democracy.
“The plan to open in April 2014, a time that represents two decades of democracy underscores the importance of this development,” he says.
Ramokgopa says the Billion Group has an impeccable track record and property mogul Ngebulana a beckon of hope and inspiration for young people in South Africa.
He points to three things that make this development a landmark in the city and says they want to make the city investor friendly and continually work at speeding the development approval process which should not be longer than 34 days.
Firstly, he explains that the city is committed that economic development has geographic traction noting that in the past two to three years, a lot of new developments have been in the east of the city.
“This development in the west sets a trend for future developments.”
Secondly, he says the mall will present retail opportunities for households in the new 47 000 low-income homes set to be complete in the next 24 months.
“I am also proud to say I will be a regular shopper at the mall as I live less than 2km away from the new shopping centre,” he says.
The location of the mall close to residential areas ensures that people do not have to travel far to access retail facilities and this will help the city to reduce carbon footprint.
Thirdly, he says Forest Hill City is a massive catalyst for sustainable job creation – which is a huge drive for the city and will help enhance economic growth.
According to Ngebulana, during construction, 2 300 jobs will be created directly and indirectly and 2 400 jobs will be created once the mall opens in 2014.
In his State of the City Address in March 2012, Ramokgopa mentioned one of the seven pillars anchoring service delivery as that of accelerating economic growth, job creation and social development.
An enabling climate for investment is critical for economic growth and social development within the city.
For that reason, the City of Tshwane has embarked on a number of initiatives to cultivate and sustain a favourable environment for this, he said at the time.
In one interview with Property24.com, Ramokgopa said the city aims to market and position itself as the preferred investment destination in Gauteng.
Click here to read the article.
He pointed the introduction of the Policy Strategic Investment Attraction Retention and After Care aimed at fast tracking investor business and development approval with the city within 34 days, a process which usually takes 34 months.
To qualify for approval under this policy, investors should be doing business within the city’s eight sectors namely manufacturing, green economy, retail, agriculture, tourism and business outsourcing among others.
Retail property market
Amanda Stops, chief executive officer SACSC, says South Africans expect to see more shopping centres built in 2013 as retailers roll out new stores to unlock markets, despite a sluggish economy.
Some of the malls to be completed this year and in 2014 include Jozini Mall in KwaZulu-Natal, Seshego Mall on the outskirts of Polokwane in Limpopo, Moruleng Mall in the North West, Mayfield Square in Daveyton Gauteng, Tugela Ferry Shopping Centre in KwaZulu-Natal, Dihlabeng Mall in Bethlehem Free State and Kinako Mall in Port Elizabeth.
“For the next two years, new shopping centres bigger than 30 000 square metres include several greenfield developments of large regional shopping centres on the fringes of our metropolitan areas and residential growth in their immediate vicinity will drive the sustainability of these centres.”
South Africa’s retail sector is the third most important contributor to the country’s GDP, she says.
Established shopping centres will remain under pressure to stay competitive in the prevailing economic environment and the key to future growth in South Africa is stability and strong GDP growth where new job opportunities can be created, points out Stops.
Stops explains that shopping centre development plans underway for 2013 to 2014 will create some 600 000 square metres more retail space in shopping centres over 30 000 square metres alone.
Total retail space in shopping centres above 30 000 square metres increased from 1.8 million square metres in 1993 to over 7.8 million square metres in 2012 – a growth rate of 7.8 percent a year.
Most of these larger shopping centres - around 72 percent - are located in five metropolitan areas and the rest are mainly in cities, with only 3 percent in rural areas.
“Prudent shopping centre development needs sufficient population and income in a local trade area and the market must be sustainable with adequate supporting households and enough disposable income.”
With this in mind, the demand for retail space will keep on increasing in Gauteng and Western Cape, while this growth will be much lower in other provinces, she adds. – Denise Mhlanga
Denise MhlangaProperty journalist at property24.com
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