Umlazi Newtown Centre Feasibility Study and Socio-Economic Impact Assessment 30 August 2019 DOCUMENT INFORMATION Document title: Umlazi Newton Centre Feasibility Study and Socio-Economic Impact Assessment Prepared by: Urban-Econ Development Economists Contact details: 37 Hunt Road Glenwood Durban 4062 South Africa Tel: +27 (0)31 202 9673 Email: [email protected] Contact Person: Eugene de Beer Prepared for: Hedraphase Investment Pty (Ltd) Contact Person: Desiree Naidoo Contact details: Email: [email protected] *Disclaimer: The research and analysis contained in this report is based on acceptable planning parameters and information available to the researchers at the time of the study. The decisions based on the findings in this report is that of the investor and Urban-Econ Development Economists cannot be held responsible for any changes that may occur in the environment and economic conditions of the study area. i 1 CONTENTS EXECUTIVE SUMMARY .............................................................................................................................. 5 1 INTRODUCTION ................................................................................................................................ 9 1.1 PURPOSE OF THE STUDY ............................................................................................................... 9 1.2 REPORT METHODOLOGY .............................................................................................................. 9 2 SITE ASSESSMENT ............................................................................................................................ 10 2.1 LOCATION OF THE SITE ............................................................................................................... 10 2.2 MARKET DELINEATION ................................................................................................................ 14 2.3 RETAIL LOCATION ASSESSMENT ................................................................................................. 16 2.4 CONCLUSION ............................................................................................................................... 17 3 SOCIO-ECONOMIC PROFILE ...................................................................................................... 18 3.1 ECONOMIC ASSESSMENT OF LOCAL ECONOMIC ENVIRONMENT .............................................. 18 3.1.1 Assessment of Economic Growth in South Africa ............................................................... 18 3.1.2 Regional Growth ................................................................................................................. 18 3.1.3 Gross Value Added .............................................................................................................. 19 3.2 DEMOGRAPHICS .......................................................................................................................... 20 3.3 EDUCATION AND EMPLOYMENT ................................................................................................ 22 3.4 INCOME AND EXPENDITURE PROFILES ....................................................................................... 23 3.5 CONCLUSION ............................................................................................................................... 25 4 RETAIL ANALYSIS ............................................................................................................................. 26 4.1 MARKET ASSESSMENT ................................................................................................................ 26 4.1.1 Macroeconomic Factors ...................................................................................................... 26 4.1.2 Retail Sector Outlook in South Africa .................................................................................. 27 4.2 RETAIL SUPPLY ............................................................................................................................ 28 4.2.1 Upcoming Development ..................................................................................................... 34 4.2.2 Rental Rates ........................................................................................................................ 34 4.3 RETAIL DEMAND ......................................................................................................................... 36 4.3.1 Income and Expenditure ..................................................................................................... 36 4.3.2 Leakages and Injections ...................................................................................................... 38 4.3.3 Trading Densities ................................................................................................................. 39 4.3.4 Retail Demand Model ......................................................................................................... 39 4.4 CONCLUSION ............................................................................................................................... 40 5 SOCIO-ECONOMIC IMPACT ASSESSMENT .............................................................................. 42 5.1 DESCRIPTION OF THE SOCIO-ECONOMIC IMPACT ...................................................................... 42 5.1.1 Direct impacts ..................................................................................................................... 42 5.1.2 Indirect and induced impacts .............................................................................................. 42 ii 5.2 MEASURING ECONOMIC IMPACTS ............................................................................................. 43 5.3 ECONOMIC IMPACT OF THE PROPOSED RETAIL DEVELOPMENT ............................................... 44 5.4 POTENTIAL SOCIO-ECONOMIC IMPACTS .................................................................................... 45 5.5 CONCLUSION ............................................................................................................................... 46 2 LIST OF TABLES Table 1: Primary and Secondary Market Area ............................................................................................ 14 Table 2: Site Assessment Matrix ................................................................................................................. 16 Table 3: Demographic Structure of the Study Area .................................................................................... 21 Table 4: Employment profile of Market Area ............................................................................................. 23 Table 5: Income Category in the Primary and Secondary Market .............................................................. 23 Table 6: Weighted Average Household Income 2019 ................................................................................ 24 Table 7: Major Retailers in Umlazi .............................................................................................................. 30 Table 8: Other Retail and Bulk Buying Centres within Umlazi .................................................................... 32 Table 9: Gross Retail Rental Rates for Umlazi ............................................................................................. 34 Table 10: Rental Rates in 2019 (Based actual advertised prices found during on desktop research)........ 34 Table 11: Income Category in the Primary and Secondary Market ............................................................ 37 Table 12: Weighted Average Household Income 2019 .............................................................................. 37 Table 13: Trading Densities ......................................................................................................................... 39 Table 14: Retail Demand Model -Gross Leasable Land (GLA) ..................................................................... 40 Table 16: Impact of CAPEX .......................................................................................................................... 44 Table 17: Impact of OPEX ............................................................................................................................ 44 Table 18: Potential Socio-Economic Impacts .............................................................................................. 45 3 LIST OF FIGURES Figure 1: Year-on-Year Growth in GVA, 2008 – 2018 ................................................................................. 19 Figure 2: Sectoral Contribution 2018 to GVA.............................................................................................. 20 Figure 3: Age Profile in the Study Area ....................................................................................................... 21 Figure 4: Level of Educational Attainment .................................................................................................. 22 Figure 5: Consumption Expenditure of Households in eThekwini Central by Goods/Services in 2017 ..... 24 Figure 6: Consumer Price Inflation.............................................................................................................. 26 iii Figure 7: Shopping Centre Performance Indicators .................................................................................... 27 Figure 8: Trading Density Growth per Category