South African Business 2020 edition

OVERVIEW
will rise 150m above the city
streets and will offer retail and
office space, a conference venue,
a hotel and accommodation
options ranging from one-bedroomed
flats to eight penthouses
and the Leonardo suite.
At national level, job losses
and business rescues were recurring
themes in the South African
construction sector in 2017 and
2018. The announcement in late
2018 that work on the R4.3-billion
Oceans Umhlanga project had
been halted seemed to confirm
this trend, but indications are that
work on this huge residential,
hotel and retail mall development
will resume.
In this context, it is easy to
understand why the annual Cesa
Aon Engineering Excellence
Awards acknowledged the developer
of eight large projects
covering commercial, industrial,
retail and residential. Property
company Tongaat Hulett
Developers won Visionary Client
of the Year at an engineering
awards event in 2017, a recognition
of how much construction
is underway north of Durban on
land that used to be covered in
sugar cane.
Tongaat Hulett has been rolling
out a series of developments
for several year, but in 2018 it
launched the large nTshongweni
Urban Development on either
side of the busy N3 highway west
of the city. Land use will be housing,
light industry and logistics
with a private developer committed
to building a shopping mall.
In order to fight urban decay and to encourage investment in inner
cities, a tax incentive was created called the Urban Development Zone
tax incentive. The UDZs for Johannesburg and Cape Town were first
allocated in 2004. Making inner cities more liveable is a worldwide
trend.
Trends
A big new development on Oxford Road in the Johannesburg suburb
of Rosebank says a lot about the South African construction and
property sector. The 300 000m² Oxford Parks mixed-use development
by Intraprop began construction in 2017 and the first phase
is valued at about R1-billion.
Firstly, South Africans love shopping malls. The South African
Council of Shopping Centres calculates that the country has the
sixth-highest highest number of shopping malls in the world. R2-
billion was recently spent on Menlyn Park in Pretoria to expand it
to 177 000m² of gross lettable space while the Gateway Theatre of
Shopping in Durban, South Africa’s second-biggest mall, recently
spent R750-million.
Secondly, development often follows existing patterns
(Rosebank-Sandton is already the richest and densest retail and
office precinct in Africa). Many of South Africa’s biggest firms have
their headquarters in this area: BPSA will take up residence in Oxford
Parks. Thirdly, the concept of “lifestyle” malls has caught on. The best
known of these is Johannesburg’s Melrose Arch.
Finally, the Oxford Parks project illustrates a big shift in the construction
sector away from large conglomerates towards smaller, blackempowered
companies. The sale in 2017 of Murray & Roberts
Construction to a black-led consortium is part of a wider trend.
Away from the glitz of multi-purpose malls and towering office
blocks, Statistics SA has found that the percentage of South
Africans living in flats has risen markedly. Whereas 26 out of 100
approved plans in 2013 were for flats, this figure reached 59 in 2016.
Although the total number of people living in flats is still relatively
small (5.4%), this figure will rise as urbanisation increases.
ONLINE RESOURCES
Construction Industry Development Board: www.cidb.org.za
SA Institute of Architects: www.saia.org.za
South African Property Owners Association: www.sapoa.org.za
77 SOUTH AFRICAN BUSINESS 2020