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2nd floor Stabilitas Chambers 263 Kent Avenue

Ferndale Randburg 2125

Tel: 27.11.326 3090Fax: 27.11.326 [email protected]

Desk Research

Mogwase Shopping Centre North West Province

March, 2007

MOGWASE SHOPPING CENTRE SECONDARY MARKET RESEARCH

Desk Mogwase Shopping CentreReport

Introduction & Background

Moses Kotane Local Municipality lies on an almost flat but undulating landscape intercepted by mountain ranges, hills and rocky outcrops (koppies). The Pilanesberg and Dwarsberg Mountains serve as the two prominent topographical features in MKLM. The Pilanesberg Mountain and Molatedi area are two main proclaimed nature reserves. Other small isolated game parks, which serve as nature conservation areas exist such as the Impala Game, Arzona Game Reserves, Roodeval farm and the Kolotwane River Valley near Silwerkrans.

The municipality comprises of widely dispersed settlements characterized by increasingly improving accessibility routes, low density, large distances between settlements and their residential character. There are about 109 towns and villages. The largest concentration of settlements occurs around Mabeskraal and north-east of Pilanesberg (around Saulspoort) nature reserve. The two towns in Moses Kotane Local Municipality are Madikwe and Mogwase which previously operated as Transitional Representative Council (TRCs) areas. The council has taken the option in formalising the Mogwase area in order to create a strong community working in the mines and in the government and services industry in the region.

Mogwase is situated in the Moses Kotane local municipality in the North West. The municipality has been in the news recently because of their delivery in housing and other projects within the extended public works projects. The municipality is levying rates and taxes from residential and business areas of Madikwe and Mogwase townships as well as the famous Sun City hotel and nearby mining houses.

The Client, Greenwold Properrty Development (Pty) Limited, intends to create a regional mall in the platinum heartland of the area, in competition with the architectural feel and aesthetics to the retail offering in Rustenburg. The reason for this strategic thinking is:

a) The area has experienced significant growth over the past five years, largely as a result of the mining activities

b) The area is a strong tourist attraction and this is viewed as a high growth point for the future. Visitors to Sun City and the nature reserves do not have a retail destination, similar in offering to perhaps other tourist destinations.

c) The location point of the centre is equidistant to the provinces of both Limpopo and North West, creating an economic development corridor

d) The mall will serve a strong primary and secondary catchment area, and will in addition bring in revenue from a tertiary trading area from the surrounding region

e) The creation of a secondary growth axis to Rustenburg becomes less problematical for the infrastructure in the area. This growth finds it’s ideal point at Mogwase, halfway between Northam and Rustenburg,

MARKET DECISIONS – JUNE, 2007 PAGE 2


In this regard, the municipality will have to take an active role in the creation of a planned town at Mogwase, with proper town planning principals.

The Study Area

Research Objectives

This objective of this market research is to:1) Outline the detailed population and household dynamics in the area

2) Draw up a catchment area for the proposed Shopping Centre

3) Indicate the socio-economic and demographic profile of households living in the catchment area

4) Calculate the retail market potential for the catchment area

5) Establish the viability and size of the proposed new shopping centre.

6) Identify new developments for the area



Research Methodology

The information provided for in this report is based mostly on secondary sources of data. The limitation of secondary research is the reliability of data provided. In order to ensure that the updated information is correct, we have used the current information from the town council, as well as retailer’s operational information in the area to provide a more accurate and recent view. In addition, housing counts using aerial photographs were also used.

The most important point is that this area research will indicate whether the area can support and further retail development or if there is insufficient retail development to meet the needs of area residents.

Mogwase– Locality Plan

1 dot = 10 households.



Economic Area Analysis

Moses Kotane Local Municipality is a Category-B Municipality, falling within the Bojanala-Platinum District Municipality. The municipality was mostly a rural municipality, comprising 109 villages, and two small towns of Mogwase and Madikwe. However, the growth of the platinum industry and the opening of new mines has meant that the municipality is changing its status, as well as its role as a strong secondary node between Rustenburg and Northam.

The estimated total population for Moses Kotane Local Municipality is 236 845 (Census 2001) representing a growth of about 3.2% since 1996 when the population was estimated at 229 410. It is projected that the population is around 253 799 in 2006 and 281 931 in 2011. This growth can be attributed to phenomena such as the natural growth of the population and inter-regional migration. The impact of HIV/AIDS on the population has not been factored into this analysis by the council, but we have allowed for this in the final market potential.

Sun City is a major international destination for conferences, tourism and also the gateway to the “non-Malaria” game reserves of Pilanesberg and the private lodges. The location of the Impala Platinum Mine in the area has created the need for a town status for Mogwase because of its location along the main road to the north as an economic node.

The municipality completed its IDP document during the year 2002 and the document has been under review 3 times. Since 2003 the municipality has been engaged in the purchasing of heavy machinery for maintenance and service delivery, and also to effectively implement the People Housing Process and the Extended Public Works Programme. In 2004 the municipality embarked fully on the People Housing Process of which through the process, it has already won a National Merit Award on Housing. In the coming 5 years the municipality intends intensifying the housing delivery, however this will depend on the approval of the housing applications or reservation of housing projects funds by the province.

A brick manufacturing plant was also established in 2004 to produce interlocking bricks; the success of the plant is one of the attributes to the success of the Municipality in obtaining the 1st price in the “most performing” municipality in the Province (Provincial Vuna Award) in 2004. In the coming years starting with 2005/2006 the municipality intends establishing further plants in the form of pavement brick making and other brick making plants around the municipality to further fast-track the delivery of houses.

The municipality is levying rates and taxes from the residential and business area of Madikwe Township and Mogwase. Sun City Hotel and Mining communities are also paying rates and taxes. The municipality has also started in 2005/2006 to establish the GPS/ GIS system which will assist in the compilation of the valuation roll and the collection of data on its communities.

In 2007, they could give us at least the total number of dwelling units at 69,000!



The 10 most growing wards the following villages are:

Atamelang, Dekweipi, Disake, Gamanamela, Katnal, Khayakhulu, Koedospruit, Kraalhoek, Ledig, Ledima, Legkraal, Legogolwe, Lerome, Lesetlheng, Mabelleng, Mahobieskraal, Manamakgotheng, Maologane, Matlametlong, Mmorogong, Mogwase, Mononono, Montsana, Mophyane, Moruleng, Motlhabe, Nkogolwe, Nonceba, Ramokgolela, Rampampa, Raserapana, Sandfontein, Segakwana, Sesobe, Silwerkraans, Tlhatlhaganyane, Voordonker, Welgeval

From the above villages, the top 20 fast growing villages are displayed below, with their population data:

1996 2001 2006 20111 Ledig 9034 12165 16589 228872 Mogwase 11392 13169 15857 198143 Lerome 4452 5919 8184 117894 Manamakgotleng 9711 9977 10272 106015 Silverkraans 5148 6280 7661 93456 Sandfontein 5985 5998 6674 84547 Dekweipi 1332 2311 4009 69538 Ledima 1268 2200 3816 66199 Tlhatlaganyane 3204 3953 4878 601910 Welgeval 907 1574 2730 473611 Kraalhoek 2871 3320 3839 443912 Lesetlheng 2493 2696 2915 315213 Disake 1992 2303 2663 307914 Motlhabe 2354 2545 2754 297615 Atamelang 2113 2285 2471 267216 Mahobieskraal 1273 1571 1938 239217 Mononono 1824 1972 2132 230618 Moruleng 1972 2046 2128 221919 Mopyane 1385 1601 1851 214020 Sesobe 1128 1381 1690 2069

73834 87267 107057 136672

The objectives of the economic development and infrastructure are:

To achieve sector and geographic specific growth and employment targets. To focus on and support opportunities for SMME development. To create conditions conducive to entrepreneurial activity and investment. To leverage funding for productive infrastructure delivery. To improve access to and optimal utilization of productive resources. To support innovation, research and knowledge development. To market and provide economic development opportunities and products. To develop appropriate information management and monitoring systems. To ensure environmental sustainable economic and infrastructure development. To maximize private sector investment and facilitate public and private partnership. To support Black Economic Empowerment as part of overall economic development.



Aerial Photograph

The aerial photograph shows the proximity of Mogwase to both Rustenburg and Northam, and its important for both towns in the future.



Current aerial photographs:

In June, the developer undertook a trip to the area and the visuals indicate that the pace of development has been as rapid as the council figures indicate.

Northam to Mogwase



Market Analysis

The market in which the centre will operate will have a strong economic presence of tourism and mining. The proposed centre will also attract the high value customers from Sun City, both the tourist and workers in the area.

The proposed site is located on the edge of the Pilanesberg and within proximity to both Northam and Rustenburg, as indicated in the map below:

The mines are shown in order to link the importance of the work areas in relation to Mogwase. This has some implication for the trade area, because in the long run, the two areas are likely to merge into the middle, which is where the site is.

The municipal economic development manager has also realised the importance of formalising this area in order to create a secondary node that operates as a sister city to Rustenburg.

The border to Limpopo Province starts at Northam, which is a small town which has also benefited strongly from the mines.



New Retail Developments in the Area

The proposed centre is intended to be developed as a mall for the northern region. In theory, this will halt people from the north into Rustenburg, which has seen suburban mall expansion to Waterfall Mall. The area has become quite congested and indicates that the large growth in population will be good for Mogwase as it reaches a town status. In this regard, the town planners will have to place emphasis on developing a smart city, able to compete with the best of its kind, and also allow for increased retail traffic from Limpopo.

Due to the growing demand on retail within Northam, there are plans to expand the existing Northam Centre.

The council has proposed a theme park in time for 2010, where people can watch the world cup on giant screens, and also have a strong recreational attachment to it. This follows from a visit to Dubai. While there has been some interested parties, nothing concrete has been done. The proposed site is still under debate.

Finally, there are likely to be some small development to the north of Rustenburg, which is fast developing to cope with the growth of Rustenburg itself. There are also plans to expand the Waterfall precinct, largely as a result of suburban upmarket population growth. Applications have been made with the council for a retail expansion of around over 100,000m² in total.

Sizing, Site Specifics

The total market potential at the centre for goods and services for the primary and secondary trading areas is approximately R1500 million. This is based on a market share of 30 to 35% for Groceries, Fast Food and related, 20% for Clothing and around 10-15% for all other categories.

The furniture & household component includes Home ware, mobile phones, accessories, and part of hardware. This category is likely to increase due to residential development that is ongoing in the area. Platinum prices continue to rise and this is also to the benefit of the community and the area.

The Site

The site is ideally placed on a key route, with R510 being the most important north-south transporter.



Site Detail

Based on the market dynamics of the area, the total size of the proposed development for this market, extending to a distance of 25-30 kilometres, is able to sustain 26 000m² to 30,000m². There are several developments in the broad area, including the Bafokeng Plaza which suffer from poor product offering leading to a major retail outflow. The total number of households is 55,000, which is likely to expand as the area develops. The justifiable sizing suggest a regional node, serving the growing broader community.

Because of the presence of Implats, Sun City and other strong draw cards, we propose the following:

The site is able to support a hotel school that could be a joint venture between Sun City and Government, and could become the training ground for future chefs for the broader area

The first platinum museum should be developed here. Although Saulspoort area been demarcated for this, it is a cultural museum and can be a strong drawcard for tourists to these parts.

A nature reserve retail outlet which is the first of its kind that would be similar to the KZN Wildlife that becomes a global brand.


Site


Recommendations & Conclusions

Mogwase is in the middle of a corridor of platinum mines. It is halfway between Northam and Rustenburg, and the municipality has to be a partner in the project in the creation of additional sustainable projects that would serve to strengthen the area and the retail offering at the centre.

However, the infrastructure does not lend itself to tourism in its full sense, because if one accepts that Sun City was developed as a “Las Vegas” type of out of town centre, then it follows that there has to be an improved employment for tourism, white collar workers and perhaps a hotel training school as well. Issues Identified by the municipality are: Lack of a diversity of job opportunities; High unemployment rate Long distances to existing job opportunities; Inefficient or lack of public transport; Lack of proper skills; Low education or high illiteracy, Lack of funding for LED projects, lack of resources, lack of training institutions, Lack of infrastructure such as water and roads and inefficient communication system. Focus on smaller projects; Fencing of farms; Veld Fires; Integration of LED with other sector programmes, infrastructure provision, housing,

disaster management, environment etc.

The way that the issues are to be tackled is as follows:

Issues Gross Objectives Derived Objectiveslack of a diversity of job opportunities; To diversify job opportunities; To diversify job opportunitesHigh unemployment rate To reduce high unemployment rates; To reduce high unemployment rates by

3% annually.Lack of funding for LED projects, To facilitate more funding for LED

projects;To facilitate more funding for LED projects;

Long distances to most existing job opportunities;

To shorten distances to most existing job opportunities;

To shorten distances to most existing job opportunities and markets by 2010;

Lack of proper skills; To provide proper skills; To provide proper and diversified skills to SMMEs. Unemployed and the youth (refer to Education sub-theme)

lack of resources, To improve resources for economic growth;

To improve resources for economic growth

lack of training institutions, To facilitate the provision of training institutions;

To facilitate the provision of training institutions;

Focus on smaller projects; To focus on projects with bigger impact; To focus on projects with bigger impact;Fencing of farms; To facilitate fencing of farms and to

crackdown on fence thieves;To facilitate fencing of farms and to crackdown on fence thieves;

Integration of LED with other sector programmes, infrastructure provision, housing, disaster management, environment etc.

To Integrate LED with other sector programmes. To Integrate LED with other sector

programmes.

Source: IDP



The proposed Mogwase Shopping Centre has the following major strengths at present:

The zoned site is in a highly accessible area, especially for residents living within almost 30 kilometres from the site. The fact that it is on a very busy intersection will result in shoppers coming from the south, east and north of the site. In addition, it is a Greenfield site, which enables creative development solutions.

The market is scattered, but there is constant growth, and Unit 6 is poised to become a major middle income area.

The site is also in a growing economic area, with mining and tourism as two key economic sectors. The former has unleashed a tremendously high buying power.

The centre's location is within a predominantly low middle and middle market, and poses major retail challenges for the developer in that the aspirations are growing.

The site has good visibility from all directions.

The site is within walking distance to the core catchment area.

The location of centres directly into residential nodes creates an anchor for the community and this is much needed in underserved areas. In addition, the council is keen to see catalyst projects. While they want to preserve some of the agricultural land, they realise that mining is providing much needed jobs and new wealth.

It would be important to ensure that the government delivery in terms of proper planned towns makes Mogwase a place of opportunities and a re-definition of “African towns”

There is likely to be continuing support for retail spend outside the centre, but the comparative element, if correctly put together, will result in a retention of the spend within the area.

The residents from the greater Northam area will support the centre only if the mix is attractive. Likewise people living in the Sun City catchment area will be drawn to destination outlets.

The competitive presence indicates a lack of proper retail in that most of the centres are convenience in nature.

A household or telephone market survey will yield good results on key tenants required.

Finally, Implats and Sun International are willing to be participants for economic growth, provided it fits in with the Council’s strategic objectives.


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