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Township Investments

Alexandra, home to 500 000 residents, recently unveiled its first mall, The Pan Africa Shopping Centre. When he opened the centre, President Jacob Zuma declared, ‘Slowly, but surely, we are changing the face of the townships.’

In Cape Town, the Thembokwezi Lifestyle Estate in Khayelitsha, a township with a population estimated at 700 000, is on the cards. The estate, funded by Old Mutual, will be the first of its kind in the township. Plans for 564 homes on the five-hectare site have temporarily been put on hold, but construction of a new shopping mall will begin later this year. At the same time, construction will begin on the Nonquebela Link Mall on the site of an older open-air mall in Khayelitsha.

This is cause for celebration, right? Or disbelief? We can certainly celebrate the fact that investment is flowing into both these enormous population centres, but it’s also more than a little surprising. Up until recently, a sizeable chunk of income has been travelling away from home communities to outside shopping areas. Johannesburg’s Department of Economic Development estimated that in 2003, R3,4-billion of Soweto’s R4,3-billion disposable income was spent outside Soweto.

Today, 10 000 Alexandra commuters pass through the area around the Pan African Shopping Centre. A Pick n Pay branch is located alongside the taxi ranks, saving residents the time and expense that travelling to distant supermarkets incurred in the past.

The Pan Africa Shopping Centre is a public-private partnership that is part of the Alexandra Renewal Project (ARP), in turn part of the Government’s Urban Renewal Project, launched by former president Thabo Mbeki in 2001. While the City of Johannesburg concentrated on providing housing and infrastructure, the ARP has attracted investment for the building of a school, a library, a business-support centre, parks and a clinic, all of which have provided a healthy dose of employment on the numerous construction sites.
In a wave of publicity not usually associated with the opening of a mall, but helped along by Nelson Mandela, who performed the opening ceremony, Soweto unveiled its own mall in 2007. The Maponya Mall boasts 175 shops, 11 restaurants, a cinema and plentiful office space. When the Thembokwezi Lifestyle Estate concept was launched in Khayelitsha in 2007, the ceremony was attended by Mbeki and the city’s mayor at the time, Helen Zille.

Clearly politicians of all stripes want to be associated with high-profile investments in South Africa’s townships, but so too does the business world. Although Jali Bakoro, the developer behind Nonquebela Link Mall, recently declared ‘Khayelitsha is not regarded as attractive to investors’, what was an investment trickle has now become more of a steady stream.
The Public Investment Corporation (PIC) has been behind a slew of recent investments in township areas. Wayne van der Vent, the PIC’s head of properties, says, ‘When we started in townships in 1997, not much had happened. In Soweto, it’s only in the last four or five years that everything has started to explode.’

The PIC now has a portfolio of 26 retail centres located in townships, with 350 000m2 of gross lettable area. ‘Eleven years ago there was not even 50 000 gross lettable area in total. The fact that we, on our own, have so much space shows how much growth there has been in retail. But only in the retail sector,’ Wayne says.
The explosion in retail investment compared to the little investment in residential or commercial developments can be explained by the old chestnut of supply and demand. Demand for the convenience of doing your shopping on your doorstep has increased to the point that services such as supermarkets and banks want to be located closer to their consumer markets.
Speaking of his company’s investments in the townships, Wayne admits, ‘I’d like it to look very altruistic, but it was done because it was where Shoprite wanted to be.’

There isn’t yet the same demand for office space in townships, and for that to change, Government may need to take the lead. Why, when almost 50 per cent of Cape Town’s population live in the Khayelitsha/Mitchells Plain belt, do local and provincial governments not decentralise more services to the townships? Why are factories and new industrial developments not being built closer to their workers?
The answer is partly due to cost. Established industrial areas of Cape Town, such as Ndabeni or Maitland, already have plentiful infrastructure and the cost of supplying that infrastructure to a new site is prohibitive.
An exception is the Soweto Empowerment Zone, an industrial park that is split into seven clusters. Each cluster is anchored by a relevant industry champion, including the auto and printing industries. Offices of various city departments are also located on site to offer support to small businesses.

In an effort to kick-start the development and integration of the different communities of Inanda, Ntuzuma and KwaMashu (INK) in KwaZulu-Natal, the PIC is busy with a R740-million deal to build the Bridge City Mall north of Durban. Alongside the mall will be a new bus and taxi rank at a cost of R90-million to the eThekwini Municipality, and a new railway link to other KZN stations is being constructed below ground level at a cost of R450-million. The mall is the latest development in a massive R5,8-billion investment in the new Bridge City, which has brought a town centre to the neglected INK communities of 800 000 people, who previously had little access to services.

While developments such as these may encourage township residents who had moved to the suburbs to return to the townships, estate agent Thuli Khumalo from Gilbert Estates in Protea, Soweto, says her experience is of a stagnant house market. ‘What we have been encountering,’ she says, ‘is that people are struggling to buy homes now. Banks will only give an 80 per cent loan and it’s difficult for buyers to raise the other 20 per cent plus lawyers’ fees. Those who have homes to sell find that no-one wants to buy.’
Of a nearby housing development completed in 2007, Thuli says only three of the approximately 100 homes (priced at R400 000 each) have been sold. But ‘Maponya Mall is always full,’ she marvels. ‘I don’t know where they get the money. Though it has helped for people in the townships not to have to go to other suburbs [to shop] and it has cut their transport costs.’
Wayne says, ‘It’s the first problem: people who live in townships don’t invest in the townships because 90 per cent of them don’t own the homes they live in.’ The answer may lie in another kind of investment: jobs.

The Centre for Development and Enterprise’s executive director, Ann Bernstein, says, ‘The essential economic policy priority must be to encourage the creation of more jobs. Every other economic goal and policy should be tested by whether it helps to create jobs. If it doesn’t, we should dump it.’
Jobs remain an investment the country cannot ignore.