Mall boom in Soweto
With research showing that much of Soweto's disposable income is spent outside the area, developers and retailers are ploughing investments into vibrant shopping malls catering for residents' every want.
SOWETO is experiencing a boom in shopping malls. A number of new upmarket shopping complexes are sprouting in the sprawling township and existing ones are getting a revamp, part of the township's "economic metamorphosis".
All this is in a bid to turn the township, established as a dormitory township mostly for the city's black migrant workers in the early 20th century, into a vibrant, self-contained shopping, entertainment and residential hub.
Until quite recently, Soweto had only one major shopping complex, the Dobsonville Shopping Centre, which housed major department stores and retail chains. In 2005, the Protea Gardens Mall opened to much hype, followed by the Baramall Shopping Centre in early 2006.
To put the cherry on the commercial cake, two massive malls have since taken off in the township. Work on the Jabulani Shopping complex is progressing and the Maponya Mall is taking shape. Both malls are expected to open later in 2006.
Underpinning all these developments is the steady growth of Soweto residents' spending power.
A study commissioned by the City of Johannesburg's economic development unit in 2003 found that the combined annual buying power of Soweto residents was more than R10,5-billion, R4,3-billion of which is disposable income. However, the research found that R3,4-billion of this disposable income was spent outside the township.
This lead to the call for new mall developments in the hope that residents would be encouraged to spend their money in the area.
Soweto's investment potential
Investors have recently come to identify Soweto as potentially profitable for mall developments, says the economic development unit's Tshiwo Yenana.
"Previously, townships like Soweto were disregarded for the purpose of investment. Both the state institutions and investors did not see the potential of large scale retail shopping here."
With the advent of democracy, it became illegal to prevent developments in these areas. The Financial Services Charter also placed certain targets for funding projects in previously disadvantaged areas and Soweto became an ideal place to invest for those wishing to meet their agreed targets.
"Soweto residents had to travel to places like Southgate, the CBD, Sandton, and so on to shop for both basic and other needs; they can now do that locally. They find convenience as well as save on travelling costs," says Yenana.
Not to be left out of the sudden retail prosperity, the Dobsonville Shopping Centre is undergoing extensions of 6 000m² to its gross lettable area. The expansion project to the shopping centre is expected to add value and lower the risk profile of the centre, says Kobus Ferreira from Sanlam Properties, managers of the centre.
"The extensions are client driven. There are quite a lot of individual and national retail tenants at the centre who expressed their willingness to expand their businesses within the centre."
The centre's extensions will take up a sizeable chunk of an R80-million allocation from owners Vukile Property, to extend the Dobsonville centre and the Phoenix Plaza in Kwa-Zulu/Natal, according to Ferreira.
Work began in February 2006 and will be completed in October, says Welcome Mashinini of Gensec Property Services, the company undertaking the redevelopment. "The extensions will see six or seven mostly retail shops being added," he says. Presently, the mall's vacancy rate is zero percent.
In 2005, the R106-million Protea Gardens Mall in Protea opened its doors to the public. Situated at the corner of Old Potch Road and Alekhine Street, the mall celebrated its first anniversary in April this year. It accommodates 77 stores and boasts some of the country's leading clothing, furniture and fast-food shops.
Yet another multi-million shopping mall, the Baramall Shopping Mall, recently opened in Diepkloof, Soweto. The mall is situated on the Old Potch Road diagonally opposite the Chris Hani Baragwanath Hospital next to South Africa's biggest taxi rank used by about a quarter of a million people daily.
The 9 583m² centre is currently fully let with 47 national, franchise and independent stores. Anchor tenants in the mall include Shoprite, OK Furnishers, Jet Stores, Diskom and Dunns. Financial institutions include Absa, African Bank, FNB and Standard Bank with franchise stores like Steers/Debonairs, Chicken Licken and Fishaways making up the complement.
The R55-million mall is 55 percent owned by Nedbank and the Masingita Group, with the remaining 45 percent being held by developer Landmark Real Estate.
A few kilometres from the Baramall, on the Old Potch Road, a massive shopping mall is being built on land owned by Soweto businessman, Richard Maponya. The R500-million Maponya Mall, considered Soweto's first upmarket "mega" shopping mall, will cover 6 000m² - the size of eight football fields - and construction has already started. The first phase of construction will see 5 000m² of the site being built.
The project is a partnership between Maponya Motors Property Holdings and one of South Africa's largest private property developers, Zenprop Property Holdings.
The mall will have house fashion, restaurant, entertainment, furniture stores and banks. A "fully-fledged" cinema complex, a first for Soweto, is expected to be one of the main attractions of the mall and big stores like Pick 'n Pay, Edgars, Woolworths and Ster Kinekor have committed to taking space in the mall once its complete in October this year.
Speaking at a function to introduce Maponya to potential retailers, Johannesburg's Executive Mayor Amos Masondo said such projects as the Maponya Mall are encouraging economic growth and development in Soweto.
"It will encourage people to see Soweto as a place that you can go back to not just a place where you come from."
In another development Soweto, Jabulani will boast a R350-million shopping mall by the end of October 2006. Located at the corner of Koma and Bolani roads, the centre will boast the country's top retail shops like Foschini Group, Edgars, Truworths, Ackermans, Pep Stores, Shoprite Checkers and Dunns. Like the other malls, all major banks will be represented.
The 45 000m² centre, being developed by Greenwold Property Developments, will include offices to assert the area as a central business district in Soweto. The market potential for the Jabulani Mall is estimated at more than R600m a year.
To top it all, a R1-billion City of Johannesburg project, Orlando Ekhaya, is set to change the face of Soweto with the development of 300 hectares of vacant land into a shopping and entertainment mecca.
The development precinct, following an agreement between the Johannesburg Property Company and the Soweto Power Station consortium, made up of Old Mutual Asset Managers, Standard Bank, Linsela Holdings and other BEE groups, will see the redevelopment of Soweto's famous landmarks - the power station and the cooling towers - into a 24 000m² retail and entertainment centre.
Leasing for the retail development will be managed by Dijalo Property Services and old Mutual Properties. They say a number of offers to lease from established national retailers have already been received. The consortium hopes to start the redevelopment in the second half of 2006.
"This place will become filled with exciting opportunities including entertainment stages, exclusive retail, jazz bars, exclusive and authentically Sowetan restaurants and bungee jumping. Orlando Ekhaya will be the place that everyone wants to come and see. It will be the place where everyone wants to live and work," said Masondo during the launch of the project in February this year.
Existing Soweto business, be it retail or otherwise, can become tenants within the township malls and are encouraged to take up the opportunities as opposed to seeing the malls as competition to their business, says Yenana.
The City has also played a large part in the economic metamorphosis of Soweto, providing an enabling environment for business to thrive. It has "actively" invested in development and infrastructure projects that will make Soweto "a normal place where economic activities can thrive."
"The City has done this through development of roads, part of the mayoral project to tar all roads in Soweto, and the Strategic public Transport Network (SPTN) project which links Soweto to the major employment nodes in the rest of the city. The city has also upgraded the major electricity and water networks in the township and through the Johannesburg Property Company, it is making prime land available for development like the Orlando Ekhaya mixed use development," says Yenana.
The City is currently finalising the major taxi rank upgrade in Kliptown together with the informal trading facilities in both nodes. The economic development unit is also busy marketing Soweto not only as a tourist hot spot, but as an investment destination, according to Yenana.
As support mechanism to the retail and other economic developments in the township, the City has begun "constructing" a Soweto Empowerment Zone, "a facility that will nurture and formalise the currently informal economic activities of Sowetans", says Yenana.
"The facility will accommodate different economic sectors while supporting the participants in getting accreditation, accessing procurement opportunities as well as growing their businesses."
Adds Yenana: "There are other city-wide initiatives like the BEE database, of which some Sowetans will be part and that initiative is to make it easy for various BEE companies to get exposure in new or existing markets. There also other skills-based initiatives that are done in partnership with academic institutions."
Article by: Ndaba Dlamini - www.joburg.org.za