Soweto no longer just a dormitory for Johannesburg

SOWETO — once considered little more than a “dormitory” township complex — is changing dramatically with commercial property developments mushrooming everywhere.

Most of the new development so far has been retail in nature, but moves are afoot to introduce more offices and industrial properties to Soweto.

While this development progress is positive for both the commercial and residential property markets, some small business owners are having profits squeezed because they cannot compete with large retail concerns. The latest proposed development is a fully fledged business district and retail centre in the up-market suburb of Diepkloof.

The City of Jo’burg Property Company, the property arm of the City of Johannesburg, said last week it would be facilitating the investment of R100m worth of property development in Diepkloof to create a business district and retail centre.

The emerging Diepkloof business district is on 10ha of council-owned land at the intersection of Immink Drive and Eben Cuyler Road.

The development includes a 20000m² shopping centre, a 60-unit townhouse complex and Soweto Hospice’s new premises .

Meanwhile, several shopping malls have been developed or are being built in Soweto, including Maponya Mall, Jabulani Mall, Protea Gardens shopping centre and the Baramall Shopping Mall.

One of the biggest planned developments is the R1bn Orlando eKhaya development project. The project, situated on the eastern entrance of Soweto near the Chris Hani Baragwanath Hospital, was launched in February and will see more than 100000m² of retail, residential, offices and recreational developments created.

Property economist Francois Viruly, of Viruly Consulting, says that in the past Soweto “has largely been a dormitory town”.

“What happened in the past was households who started moving into the middle-income groups were tempted to move out of Soweto and to start acquiring properties in the rest of the metropolitan area.” But he says this scenario could well change in the years to come.

“My estimate is that we are quadrupling the amount of retail space in Soweto at present. I think that will be the catalyst to create a very different environment in the Soweto area.

I could well see in the years to come that from an affordability perspective people may want to stay longer in Soweto than in the past.”

Keith Brebnor, CEO of the Johannesburg Chamber of Commerce and Industry, says that there is no question that the face of Soweto is changing.

Brebnor says the chamber organised a recent tour to Soweto to show members and other businessmen the various commercial and retail developments going up in the area. About 150 business people were taken on the tour.

“They feel there are huge opportunities to expand their businesses in Soweto to take advantage of the burgeoning middle-class market that is growing there,” says Brebnor. “There is going to be more retail, more residential developments.”

But he says a lot of the chamber’s members run successful businesses in Soweto and they are being squeezed by competitive pricing, convenience, security and parking offered by all the shopping malls being developed.

“People who would have normally proceeded on their way home past the small spaza shop are now changing their habits and shopping at new shopping centres and chain stores.”

Brebnor says these small business operators have appealed to the chamber to help them.

“They realise you can’t stop progress. However, they are hoping that they could buy any BEE (black economic empowerment) equity or shares available in these new developments instead of them going to some remote shareholder in Cape Town.

“They realise it is strangling their businesses to death and they are prepared to buy into the developments as some form of compensation.”

Zanele Mthembu, who owns Sediba Management Consultants, which acts as a consultancy to several small businesses in the Soweto area, says the development of the malls is “affecting a lot of people. Traditional shopkeepers in Soweto have had their businesses adversely affected by the mushrooming of malls everywhere,” she says.

“The malls have created jobs but the shopkeepers feel they have not been consulted in terms of how the malls will affect their businesses and their profits are being eroded,” says Mthembu.

Article By: Nick Wilson - www.businessday.co.za