More township malls on the cards

More township malls on the cards

Major developers are increasingly targeting sprawling townships which are seen as the development nodes of the future for both the residential and retail sectors. Many of these developments are concentrated around transport hubs like taxi ranks which by their very nature attract tens of thousands of commuters daily.

Country manager of International Housing Solutions (IHS), Rob Wesselo, says on the residential side 97% of the market is in under developed areas. Massive urbanisation has also contributed to increased demand for affordable housing. Two of IHS’s largest developments are in Soweto south west of Johannesburg.

On the retail side the Pan African Shopping Centre in Alexandra north of Johannesburg is but one example of a successful mall which is in the process of expanding due to increased demand from retailers and shoppers.

Entrepreneur and owner of the centre Tebogo Mogashoa of Tebfin Property, says major tenants seem less nervous about investing in areas like Alex with a sometimes dubious reputation as being unsafe. Mogashoa says Tebfin Property has similar projects in the pipeline in places like Eden Park and Daveyton on the East Rand. “We see ourselves as an upcoming developer in this space… focusing on retail development in under-serviced areas with the specific focus on emerging markets,” Mogashoa says.

He attributes the success in Alex to the buy-in from the community and local players like the taxi associations who are shareholders in the project. The centre’s focus is the bustling taxi rank which attracts people from near and far. “The development responds to the needs of the communities.”

Several reports have been written saying the mushrooming of malls is threatening small business – a sector seen as key in the creation of jobs. Mogashoa disagrees, saying small business and informal traders were consulted extensively prior to the launch of the development and came to realise how they could trade successfully alongside the more formal sector.

Mark Stevens, the MD of Fortress, says his company is focusing on the market that has large volumes of feet moving through it, whether it be the Johannesburg CBD, Diepsloot or the bustling Louis Botha Avenue close to the city, or anywhere close to a taxi rank. “It might be the township where there’s a taxi rank, but it might be a commuter point where we know there’s a train or a bus.”

Fortress’s market is the lower LSM which is commuter orientated. “This is the market we’re chasing wherever that market may be,” Stevens said.

He added that their market now had more disposable income and had high aspirations. “They want better quality and brands. A lot of the tenants that we deal with, you can see from their trading how they are doing, I’m talking your Shoprites, the Capitecs, Pep (and) Cashbuild (JSE:CSB)”.

And, according to Stevens, the future looks rosy: “Going forward we see a lot of growth in that market, the rentals are off a low base… as opposed to some of the shopping centres in Johannesburg with very, very high rentals.” He says while their trading densities might be larger, getting good growth out of them going forward will be difficult.


Denny Crane

Denny Crane
It's not me ... yet. Denny Crane from the TV series Boston Legal. Click on picture if you're not sure who he is!