UPPER LEVEL LOWER GROUND Comparison Between Metropolitans / Cities

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Household Growth Comparison 2008 Source: Official Census Data. Stats SA

Johannesburg Tswhane Durban Cape Town Ekurhuleni PE Bloemfontein PMB East London Growth 1996 734,116 430,906 648,015 652,931 542,993 225,931 91,324 100,600 95,354 2001 1,006,414 562,537 786,314 759,655 744,142 260,724 113,235 111,244 121,018 2008 1,529,032 803,114 1,021,255 933,491 1,130,071 315,476 151,270 127,722 166,618 2010 1,678,352 871,851 1,088,380 983,158 1,240,337 331,119 162,137 132,430 179,646

Growth Rate 7% 6% 4% 3% 7% 3% 5% 2% 5%

Income Comparison 2008 Source: Official Census 1996 and 2001

Johannesburg Tswhane Durban Cape Town Ekurhurleni PE Bloemfontein PMB Average East London Income Group A++ 12,160 6,710 3,883 5,911 5,933 1,205 721 625 4,644 640 A+ 18,031 7,841 3,717 6,531 5,883 934 594 485 5,502 410 A 58,686 30,468 15,850 28,116 26,843 4,087 1,976 1,658 20,960 1,709 B 105,489 71,529 51,876 82,086 72,264 16,335 7,203 6,587 51,671 6,801 C 134,217 94,523 93,856 133,116 98,868 28,956 13,400 12,349 76,161 12,084 D 177,473 108,655 128,554 161,398 123,306 36,834 16,422 15,960 96,075 15,189 D Low 1,022,977 483,389 723,518 516,333 796,973 227,126 110,953 90,059 496,416 129,784 Total 1,529,032 803,114 1,021,255 933,491 1,130,071 315,476 151,270 127,722 751,429 166,618

Beacon Bay Retail Park (27,000 m² GLA) and Vincent Park 35,000 m² GLA included). Although Beacon Bay Retail Park is smaller than 30,000 m² GLA, the centre has a regional pull in context of East London. GLA/HSE Metropolitan Johannesburg Tswhane Durban Cape Town Ekurhuleni PE Bloemfontein PMB Benchmark EL Households 1,529,032 803,114 1,021,255 933,491 1,130,071 315,476 151,270 127,722 166,618 GLA (m²) 1,517,749 682,656 435,977 746,929 694,056 122,055 136,000 53,000 62,000 m² GLA / Hse 0.99 0.85 0.43 0.80 0.61 0.39 0.90 0.41 0.68 0.37 Below benchmark 45% For every 1 household = x m² GLA

GLA/HSE (A++ - C) Metropolitan Johannesburg Tswhane Durban Cape Town Ekurhuleni PE Bloemfontein PMB Benchmark EL A - C inc Households 306,929 202,224 138,349 317,047 170,609 51,516 23,895 21,703 21,645 GLA (m²) 1,517,749 682,656 435,977 746,929 694,056 122,055 136,000 53,000 62,000 m² GLA / A++ - C Hse 4.94 3.38 3.15 2.36 4.07 2.37 5.69 2.44 3.55 2.86 Below benchmark 19%

Conclusion

East London is by far smaller than any of the metropolitan areas in SA (on previous page), but larger than Bloemfontein and Pietermaritzburg. The A++ - C household count of East London compares very well with Bloemfontein and Pietermaritzburg. When demographics are compared with available regional retail space (centres > 30,000m²) per metro / city, East London has a 45% under supply. The m² GLA per A++ to C household in East London is 19% below the benchmark. Thus an opportunity exist in East London for more regional centre retail space.

Primary Catchment Si te

The primary catchment includes the entire East London city area as well as Gonubie. Mdantsane is excluded from the primary catchment as a new large retail facility has been built there. However, the Hemingways node is expected to capture some support from this area. Mdantsane falls within the secondary catchment area.

Satellite imagery

• Hemingways Mall is the first of its size and offer in the region. The mall is expected to have a substantial catchment area as residents of the surrounding smaller towns will flow into East London for higher order goods and services. Secondary • Support from all income groups residing in the primary catchment are expected. Catchment However, support from lower income residents (D Low income) residing in the secondary catchment area are expected to be limited. These residents shop at the local stores in the villages or towns as transport costs are high.

Primar Catchmenty

Nelson Mandela Metropolitan (Port Elizabeth) is a strong node. Residents west of the catchment who are not included will rather travel to Queenstown is included in the catchment area as there is a Port Elizabeth for retail and direct national road link between services. the town and East London. Previous research has indicated that residents flow to East London for higher order goods.

Ave Trading Density Main Category Total Exp / month Total Exp / year (Rand / m² selling per year) Area Potential GLA Food & Groceries R 207,841,989 R 2,494,103,867 R 30,000 103,921 CFTA R 79,351,728 R 952,220,737 R 18,000 66,126 Speciality R 37,847,041 R 454,164,488 R 24,000 23,654 Home R 44,886,880 R 538,642,561 R 20,000 33,665 Furniture & Appliances R 45,742,795 R 548,913,545 R 11,000 62,377 Services R 28,137,709 R 337,652,511 R 7,500 56,275 Outdoor R 27,207,142 R 326,485,699 R 13,000 31,393 Wine & Dine R 35,942,806 R 431,313,670 R 23,000 23,441 Hardware / DIY R 32,357,935 R 388,295,218 R 12,000 40,447 Entertainment R 14,406,439 R 172,877,263 R 5,500 39,290 Total Potential R 553,722,463 R 6,644,669,558 R 16,400 Area warranted GLA 480,590 Add 10% for non-retail (banks, post office, etc.) 48,059 TOTAL 528,650 GLA warranted by catchment (m²)

Centre Size (GLA) Market Share 75,000 14%

•The primary catchment area warrants a total of ± 349,000 m² GLA by 2010 and the secondary catchment warrants approximately 179,000 m² GLA by 2010. Combined the total warranted retail floor space by 2010 is an estimated 528,650 m² GLA. • The Hemingways regional centre with size ± 75,000 m² GLA would have to capture ± 14% market share by 2010 from the combined catchments in order to be viable. In our opinion a 14% market share by 2010 over the entire catchment is achievable. • Assuming that the current growth rate remains, a total of ± 7,700 m² GLA per annum will be added to the warranted retail floor space over the combined catchment areas. 40

1. Prioritize Fashion Malls in RSA

• Malls > 35,000m² • Number of tenants • Number of fashion retailers • Rank: High, Medium & Low fashion

2. Demographic Assessment per SC

•Catchment DemarcationFree State • Income Classification (HSE’s) • Surrounding Support: Level of Risk

3. Comparison with Hemingways

• Comparison: SC demographic benchmark vs. Hemingways catchment demographics

Part 1: Prioritize Fashion Malls in RSA

We will identify the main fashion malls in South Africa. We will also rank these centres in terms of number of tenants, Number of fashion retailers and thirdly in terms of composition of high-end fashion retail per centre (Department Stores, Low Fashion, Medium and High Fashion). We will query the data and will select all centres with a high number of tenants and associated Fashion retailers. We will also split these fashion retailers into the respective groups as mentioned. All centres selected will be ranked in terms of the number of retailers and the proportion of high–end fashion vs. medium, low and department stores using store numbers. A centre with a high number of tenants and a high proportion of high-end fashion will rate high. It is expected that Sandton City will rank top of the list for example.

Part 2: Demographic Assessment per SC

We will also calculate the number of B to A++ income households within a logical catchment for the respective centres. A high number is good and a low number should signal risk (as demonstrated).Mpumalanga The surrounding support play a very important role in the success of the centre. Income levels of the surrounding/supporting households are a very good indication of the type of retailers located in the centre. Higher income households will normally mean High End Fashion Retailers. The size of the centre (goods on offer) also determine the sizeFree of State the catchment. Most larger shopping centres pull from a larger area. Similarly, shopping centres in towns will pull from a much larger area (such as Hemingways).

Part 3. Comparison with Hemingways

We will then compare the benchmark (average) of number of upper income households of typical fashion malls with the actual number of upper income households in Hemingways mall’s catchment (as was delineated in our 2008 retail study for the centre).

Canal Walk SC Sandton City SC

147,500m² 158,000m²

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65,000m² 94,000m²

Clearwater SC Cresta SC

Shopping Sandton City Centre / Square A++ 3,486 A+14,635 A 21,446 B14,917 C5,313 D9,217 TOT 69,014

Size of Centre = 158,000m²

Perc. Fashion = 29%

Foot count = 37,000,000

Total Households = 69,014

Perc. High Income = 57%

Nett Household Income

A++ >R100,000 / month A+ R40-100,000 / month A R20-40,000 / month B R14-20,000 / month C – D

Copyright 2009: Fernridge Consulting Foot count = 2006/7 Copyright 2008: Fernridge Consulting. Source: 2004 Aerial Photography, Official Census 2001, 2007 Primary and Secondary Catchment Demographics Community Survey and 2007 and 2008 Fieldwork

Primary Catchment Demographics Nett Monthly HSE Income A++ R100,000 / month Income Class 2004 2008 2010 A+ R40,000 / month R20,000 / month A++ 105 111 115 A Secondary B R14,000 / month A+ 1,278 1,355 1,395 Catchment C R7,000 / month A 7,275 7,712 7,943 D R3,000 / month B 8,176 8,667 8,927 DL

Secondary Catchment Demographics

Income Class 2001 2008 2010 A++ 847 936 964 A+ 411 454 468 A 796 880 906 Primary The residential growth within the Catchment B 3,446 3,808 3,922 primary and secondary catchment C 8,908 9,843 10,139 These residents make use of areas are both an estimated 1.5% D 16,545 18,282 18,831 the local shops in the towns per annum. The growth rates are Dlow D Low residents excluded and villages as transport costs are expensive. Limited support expected to remain at 1.5% per Total 30,953 34,203 35,229 expected from this income annum, as it I evident that a Annual Growth 1.5% band. number of developments are taking place or are proposed for Primary and Secondary Catchments the municipality. The primary catchment growth might increase Combined Demographics as the East London IDZ and port Income Class 2008 2010 developments take place. These A++ 1,047 1,079 projects are positive for the future A+ 1,809 1,863 of East London. A 8,591 8,849 B 12,474 12,849 C 14,933 15,381 D 25,278 26,037 Dlow 44,428 45,761 Total 108,562 111,819

Fashion High End TOT B to Shopping Centre Tenants Fashion % A++ A+ A B C D Total HSE % (CFTA) Fashion A++ Access Park 113 50 44% 1 55 891 3,740 12,246 17,099 13,868 47,899 16,932 35% Bayside Centre Table View 98 23 23% 4 70 1,521 4,590 11,230 9,935 3,451 30,797 17,411 57% Brooklyn Mall 164 36 22% 21 709 4,535 8,040 5,860 4,373 4,542 28,059 19,144 68% Canal Walk 367 98 27% 47 455 2,773 9,119 17,486 22,841 31,904 84,578 29,833 35% Capegate Regional Centre 145 28 19% 2 15 262 2,226 9,966 13,132 20,490 46,091 12,469 27% Cavendish Square 209 60 29% 46 1,128 3,288 6,743 14,477 15,548 6,356 47,540 25,636 54% Centurion Mall 210 50 24% 9 643 4,619 10,262 22,240 12,013 221 49,998 37,764 76% Clearwater Mall 186 46 25% 16 281 2,717 6,519 13,792 6,326 163 29,798 23,309 78% Cresta Shopping Centre 239 57 24% 27 1,039 5,337 14,332 23,044 19,086 10,074 72,912 43,752 60% East Rand Galleria 66 5 8% 1 197 1,552 7,392 13,633 13,092 15,021 50,887 22,774 45% Eastgate Shopping Centre 269 82 30% 51 778 3,618 6,518 11,003 11,173 10,393 43,483 21,917 50% Fourways Mall 167 37 22% 13 977 6,337 7,556 6,298 3,512 74 24,754 21,168 86% Gateway Theatre of Shopping 348 100 29% 39 328 3,531 4,000 1,908 222 2 9,991 9,767 98% Greenstone Shopping Centre 151 25 17% 4 145 1,236 5,000 8,318 6,471 2,860 24,030 14,699 61% Hyde Park Corner 127 36 28% 32 1,870 8,043 13,751 10,162 3,001 1,673 38,500 33,826 88% La Lucia Mall 115 26 23% 7 425 2,824 4,146 3,479 820 68 11,762 10,874 92% Liberty Midlands Mall Pmb 167 52 31% 12 117 1,061 4,864 10,181 12,282 6,938 35,443 16,223 46% Loch Logan Waterfront 117 51 44% 14 298 2,216 7,591 19,743 6,777 43,019 79,644 29,848 37% Maponya Mall 163 71 44% 15 0 0 114 516 819 7,839 9,288 630 7% Menlyn Park Shopping Centre 268 82 31% 48 2,043 10,664 21,674 23,131 15,625 3,449 76,586 57,512 75% Musgrave SC 104 24 23% 7 53 562 3,649 9,420 17,550 27,638 58,872 13,684 23% Northgate Shopping Centre 109 11 10% 2 63 984 4,896 10,658 7,025 59 23,685 16,601 70% Riverside Mall Nelspruit 128 29 23% 8 45 543 4,023 1,672 3,304 282 9,869 6,283 64% Sandton City 303 88 29% 60 3,486 14,635Annual 21,446 Net Sales 14,917per Outlet (R) 5,313 9,217 69,014 54,484 79% Somerset Mall 183 37 20% 12 816 3,480 6,923 12,722 7,056 15,188 46,185 23,941 52% The Glen 150 38 25% 11 744 4,212 11,136 16,302 17,109 14,107 63,610 32,394 51% The Mall of Rosebank 125 32 26% 17 1,622 5,296 8,583 8,301 383 4 24,189 23,802 98% The Pavillion DBN 222 55 25% 25 131 2,398 8,230 18,158 21,532 39,990 90,439 28,917 32% Tyger Valley SC 271 60 22% 20 508 3,830 12,953 26,985 20,215 17,933 82,424 44,276 54% V & A Waterfront 195 67 34% 41 3,869 11,626 8,909 11,752 7,746 1,193 45,095 36,156 80% Waterfall Mall 147 34 23% 5 85 326 1,595 5,356 5,732 4,242 17,336 7,362 42% Woodlands Boulevard 116 32 28% 12 979 3,260 7,417 9,184 4,537 5 25,382 20,840 82% World Wear 62 46 74% 24 382 2,702 7,768 9,889 8,565 6,044 35,350 20,741 59% 176 48 27% 20 738 3,663 7,749 11,940 9,703 9,646 43,439 24,090 55%

HEMINGWAYS MALL 1,047 1,809 8,591 12,474 14,933 25,278 64,132 23,921 37% • From the above demographic comparison it is clear that Hemingways has almost exactly the same number of upper income (B to A++) households (± 24,000), compared to the catchment of the average top South African fashion mall. • This bodes well for high-end fashion in Hemingways and given the centre’s size it is expected to dominate the region’s retail landscape. Should a high-end fashion retailer consider the East London market, we are of the opinion the only viable option is Hemingways. CONTACT DETAILS

Eugene Potgieter

Mobile: 083 269 9996 Phone: 011 844 9000 Fax: 011 234 5788 Email: [email protected] Internet: www.commpropnetwork.co.za

Errors and Omissions Please note that whilst reasonable care has been taken to ensure that the information contained herein is accurate, we cannot guarantee such accuracy and reserve the right to revise or update the information at any time without prior notice.

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