‘Mini city’ a go as developers clear hurdles

October 29, 2018 9:06 am

Original Source: Sunday Times, Business Times

JSE listed sugar and property development group Tongaat Hulett expects to attract R30bn in private and public sector investment to its latest mega property project in KwaZulu Natal the 2,000ha nTshongweni Urban Development on land straddling the N3 highway, 30km west of Durban.

The mixed-use nodal development is set to transform the rolling sugarcane fields that Tongaat Hulett owns at nTshongweni into a fully fledged town centre. Like the successful Gateway Umhlanga Ridge node, nTshongweni will be “anchored by an urban core”, including a regional shopping centre and mixed-use office, residential, hotel and retail developments.

About 100ha of the land will be for light industry and logistics. Green open space and lower density residential developments, for the affordable and upper-income markets, will make up the bulk of the broader project. Tongaat Hulett anticipates nTshongweni will be home to 20,000 households by the time it is fully developed over the next 20 years.

Ntshongweni is a new mini-city or town centre in the making,” said Andile Mnguni, Tongaat Hulett’s portfolio head on the project, during a media tour of the site.
“We’ve been planning this for over a decade and now have all approvals in place.”

The development is on a larger land parcel than Gateway and Umhlanga Ridge, but due to its location near SA’s horse racing hub of Summerveld and Shongweni Dam, as well as the communities of KwaNdengezi, Hillcrest and Assagay, half of the site will be open space.

“This will see 1,000ha of sugarcane land rehabilitated into natural green spaces and recreational parks,” said Mnguni.

Tongaat Hulett had already secured its first major investor in nTshongweni, with a site earmarked for an 85,000m2 regional mall sold to Durban based Fundamentum Asset Management, he said. The new Mall of the West would be the start of the nTshongweni development, with bulk earthworks commencing next year.

Ntshongweni’s future town centre has development rights for 500,000m2 of commercial space, including the regional mall. The mall has bulk rights to occupy up to 140,000m2 over time.

“Broad-based empowerment and community involvement will be a big part of nTshongweni’s development. For the mall development, Tongaat Hulett opted to go with private, locally based group Fundamentum as it included significant local empowerment within its plans.”

Fundamentum CEO Carlos Correia said on the sidelines of the South African Council of Shopping Centres‘ annual congress in Durban last week that his group would invest up to R2bn in the Mall of the West.” Our initial mall development will be between 78,000m2 and 85,000m2 based on demand. Mall of the West will have a strong empowerment component as we’ve earmarked 12.5% of the development to be held by a broad-based local empowerment trust,” he said.

Fundamentum beat several major listed and unlisted property groups, including the likes of Liberty and Investec, to secure the rights to the mall. Correia, who was a former director of JSE listed Vukile Property Fund, is behind Umlazi’s R360m KwaMnyandu Shopping Centre and other commercial developments around SA.

Mall of the West is set to compete with the nearby Hillcrest Corner shopping centre and 44,000m2 Watercrest Mall both owned by JSE listed Growthpoint Properties. Correia, however, said he believes his mall will create demand in the broader node. “Our nTshongweni mall is going to be on the other side of the N3 and will be a truly regional shopping centre within a new urban node.

“The malls in Hillcrest and Waterfall are 5km to 12km from the N3, this will become more community focused centres. Mall of the West will serve the broader region, including the under-serviced KwaNdengezi community,” he said.

The nTshongweni and new mall development come at a time when SA’s economy and retail sector are under pressure. However, Correia and Mnguni said there was “strong interest” in the developments. They expressed confidence the economy would turn around, with construction starting next year and the mall opening in 2022.

Dirk Prinsloo, a retail property expert and director of Urban Studies, said nTshongweni’s good N3 location was likely to attract warehouse and logistics related development.

However, he raised concerns about the planned size of the mall.

“At 85,000m2, the mall may be too big for its catchment area at this stage, especially as nTshongweni is a greenfields development. In addition, it will be competing with nearby ‘a Mall of the West will have a strong empowerment component Carlos Correia Fundamentum CEO malls and the Hillcrest CBD, which is in its primary catchment area. The KwaNdengezi community is also not exactly on its doorstep,” he said.

“Convenience and a strong primary catchment area are key aspects to a mall’s success. Yes, the mall is part of a bigger new node that will ultimately have residential developments around it, but right now you need critical mass to sustain a mall of this size,” said Prinsloo.

Bobby Peek, director of the environmental group GroundWork, said the scale of the development would change the fabric of the area. He said it was inevitable that nTshongweni would face urban encroachment, considering its location and the development boom in nearby Hillcrest. However, he raised concerns about more trucks on the road and increased pressure on local infrastructure.

“Durban’s western corridor along the N3 already handles a considerable amount of trucks. We need to ask if eThekwini is ready to deal with the increased pressure on bulk infrastructure in the area; not just roads, but sewage and electricity,” said Peek.

GroundWork is also concerned about EnviroServe’s Shongweni landfill site, near the KwaNdengezi community, which we have been warning about for years. We can’t have this toxic site operating as normal, especially as communities around the site expand.”

Mnguni said Tongaat Hulett would be spending about R300m to upgrade roads as part of its initial infrastructure rollout. He said the EnviroServe site was also on the radar for a possible landfill gas to electricity renewable energy project.

“The mall, urban core and logistics zone at nTshongweni will be located right next to the N3, which is the busiest national high way in the country. The N3 Durban – Free State – Johannesburg route has been identified by the national government as a strategic, integrated project corridor, which will see it attracting billions of rand in infrastructure investment.”

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