Feasibility Study: Demographics & Retail Potential

Note: This project should be regarded as confidential as it contains Data, Information and Intellectual Property of Fernridge Consulting Copyright (Limited Distribution) Copyright 2008: Fernridge Consulting.

Introduction

This report aims at assessing the feasibility of a proposed site for a new shopping centre located within Tsakane, Ekurhuleni. The proposed site is situated on the corner of Modjadji and Malandela roads. A demarcated catchment area was digitized in order to extract the 2008 Fernridge Household counts and existing retailers. The site was assessed by physical inspection as well as aerial photography. Future developments were also taken into consideration for future growth figures. The final points of the report focus on our retail potential model which has been followed by an executive summary.

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Note: This project should be regarded as confidential as it contains Data, Information and Intellectual Property of Fernridge Consulting Copyright (Limited Distribution)

Macro Orientation
Tsakane is located in the Gauteng province, between Springs and Heidelberg. Tsakane is situated between the N17 and the N3 highways.

Site

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Orientation
Ekurhuleni is one of the fastest growing areas in South Africa and is characterized by many mines and industries.

Springs CBD

Site

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Note: This project should be regarded as confidential as it contains Data, Information and Intellectual Property of Fernridge Consulting Copyright (Limited Distribution)

Site - Detailed view Direction of view

The site is situated on the corner of Modjadji and Malandela roads. The proposed site is ideally located to capture passing traffic. With limited formal retail located within the area, the main form of retail consist of spaza shops and street hawkers.

Site Site

Site

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Note: This project should be regarded as confidential as it contains Data, Information and Intellectual Property of Fernridge Consulting Copyright (Limited Distribution)

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Retail Potential Estimate (2007)

Ave Trading Density Main Category Food & Groceries CFTA Speciality Home Furniture & Appliances Services Outdoor Wine & Dine Hardware / DIY Entertainment Total Potential Total Exp / month R 62,891,786 R 35,314,599 R 14,550,493 R 16,640,194 R 21,011,900 R 10,397,529 R 10,074,570 R 9,069,294 R 16,380,267 R 3,256,742 R 199,587,374 Total Exp / year R 754,701,433 R 423,775,184 R 174,605,915 R 199,682,329 R 252,142,800 R 124,770,354 R 120,894,845 R 108,831,530 R 196,563,203 R 39,080,898 R 2,395,048,491
(Rand / m selling per year)

Area Potential GLA 31,446 29,429 9,094 12,480 28,653 20,795 11,625 5,915 20,475 8,882 178,793 17,879

R 30,000 R 18,000 R 24,000 R 20,000 R 11,000 R 7,500 R 13,000 R 23,000 R 12,000 R 5,500 R 16,400

Area warranted GLA Add 10% for non-retail (banks etc.)

TOTAL

196,673

GLA warranted by catchment (m)

The current demographics warrants 196,673m of retail space.

Centre Size (GLA)

Market Share

30,000 32,290
A retail centre of 32,290m will have a 16% market share.

15% 16%

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Retail Potential Estimate (2010)

Ave Trading Density Main Category Food & Groceries CFTA Speciality Home Furniture & Appliances Services Outdoor Wine & Dine Hardware / DIY Entertainment Total Potential Total Exp / month R 70,026,829 R 39,321,023 R 16,201,239 R 18,528,016 R 23,395,690 R 11,577,124 R 11,217,526 R 10,098,201 R 18,238,600 R 3,626,217 R 222,230,466 Total Exp / year R 840,321,950 R 471,852,276 R 194,414,873 R 222,336,194 R 280,748,280 R 138,925,491 R 134,610,307 R 121,178,415 R 218,863,204 R 43,514,608 R 2,666,765,596
(Rand / m selling per year)

Area Potential GLA 35,013 32,768 10,126 13,896 31,903 23,154 12,943 6,586 22,798 9,890 199,077 19,908

R 30,000 R 18,000 R 24,000 R 20,000 R 11,000 R 7,500 R 13,000 R 23,000 R 12,000 R 5,500 R 16,400

2010 Demand (m) Existing Formal retail Under supply Centre size

218,985 9,133 209,852 32,290

Area warranted GLA Add 10% for non-retail (banks etc.)

TOTAL
Centre Size (GLA)

218,985
Market Share

GLA warranted by catchment (m)

According to 2010 projected demographics there is a total retail GLA demand of 218,985m. Formal retail in the area makes up only 9,133m (4% of potential) which leaves an undersupply of 209,852m. The proposed centre will need to capture 15% of the total market potential in the area. This is feasible, as it still allows for 81% outflow and support towards informal retail.

30,000 32,290

14% 15%

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Copyright 2008: Fernridge Consulting

Note: This project should be regarded as confidential as it contains Data, Information and Intellectual Property of Fernridge Consulting Copyright (Limited Distribution)

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Executive Summary
Ekurhulenli is located within the province of Gauteng, located between Johannesburg and Witbank. The area of Tsakane is located on the southern side of Ekurhuleni, between the the N17 and N3 highways. Ekurhuleni is known for its large industries and mines. The site is situated on the corner of Modjadji and Malandela roads. It is very visible and accessible to passing traffic and surrounding residents. The site rates as good. With very limited formal retail within the area, residents are forced to visit smaller spaza shops and other shopping nodes outside the catchment to provide in their needs. Residential development is at a healthy level within the catchment and a 5% growth rate over the past 10 years has been calculated. The projected demographics for 2010 estimate the total retail market size at 219,000 m GLA. With the proposed development at 32,000 m GLA, a 15% market share has to be achieved in order to be viable. We believe that reaching this market share is achievable, given the very low levels of competition and the quality of the site. A centre of this (large) size, at this (good) site, in this (growing, low competition) surroundings, will effectively dominate the market and maximize market share for retailers to be hosted within. These type of retail developments are becoming more prevalent in townships nationally as this market is returning to their respective communities for shopping purposes. Jabulani and Maponya Malls in Soweto are two recent examples of this trend. This bodes well for this particular new scheme in Tsakane, especially given the massive undersupply of retail as reported in this study. A proper transport facility (and break-point) at the site channeling all taxis past the site is vital for the establishment of a shopping centre at the site.

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CV & Contact Details

Fernridge Consulting (Pty) Ltd is a retail optimization consultancy that was founded in 2002. We are based in Johannesburg, South Africa and specialize in spatial retail analysis using GIS (Geographic Information Systems) technology, the latest demographic data and information from significant retailers. We are part of the UCS Group, a publicly listed IT company. We are the undisputed leader in this field in South Africa with 12 shopping centre development / revamp studies per month conducted in all nine South African provinces, as well as neighboring countries (such as Namibia, Botswana, Swaziland, Lesotho, Mozambique, Zambia), and abroad (India, Mauritius). We offer this service to banks, landlords, property managers, corporate and private investors and developers. We also assist some of the leading retail groups in South Africa in their store expansion and rationalization strategies, location analyses etc. Our clients include, among others: Spar, Woolworths, McDonalds, Nandos, Mr Price, Supergroup, Massmart, Cashbuild, Ster Kinekor, Virgin Active, Clicks, MTN etc. This is an objective, independent report with the sole aim of limiting risk for our client and optimize development potential.

Fernridge Consulting (Pty) Ltd

26th Floor 209 Smit Street Braamfontein Johannesburg South Africa P.O. Box 31266 Braamfontein 2017 South Africa

Sybrand Strauss
Tel: Mobile: e-mail:

Director: Property Development & International +27 11 712 1720 +27 82 330 5168 sss@fernridge.ucs.co.za

Fax: +27 11 339 1833 www.fernridge.co.za

Andre Annandale
Tel: Mobile: e-mail:

Manager: Property Development +27 11 712 1714 +27 82 776 6353 ana@fernridge.ucs.co.za

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