V&A SET TO BECOME CAPE ECONOMIC POWERHOUSE
Large-scale developments at the V&A Waterfront are having a strongly
discernible impact on the national economy. Globally ranked as a unique geographic destination, the Waterfront is providing investors and businesses with the sought-after combination of live, work, and play.
An economic impact study completed by the City of Cape Town in the first half of 2014 showed a cascade of benefits from new properties, and facility upgrades extend beyond the city to influence the province’s and the country’s performance. Approximately R198 billion was contributed to the national economy by the V&A from 2002 to 2014, with the Western Cape’s gross economic output buoyed by R29.3 billion last year alone. New developments are projected to raise nominal GDP by a cumulative R188 billion by 2023, with the V&A as a whole expected to generate R220 billionover the next decade.
As part of the research into the drivers of this economic potential, tallies have demonstrated 26% of total tourist time spent in the Western Cape is accounted for by the historic landmark. 23.1 million visitors were drawn to the destination last year, up from 21.5 million in 2012. This growth trend is forecast to continue for the next decade.
The V&A has spent hundreds of millions implementing the expansion of the Victoria Wharf shopping centre and its surrounding precinct. This has led to double-digit retail sales growth for the fourth consecutive year – an effective 19% annually. The Waterfront has opted for retail space densification to accommodate the growing demand from local and international retailers: internal refurbishment projects designed to increase the gross lettable area have successfully stimulated commercial traffic and improved the visitor shopping experience.
Along with the growth in consumer numbers has been an increase in the number of direct jobs, up 16.3 percent from 2012 to reach 19 269 in the 2013/2014 fiscal year. Economists analysing the V&A Waterfront have noted the creation of two types of job (two avenues via which GDP growth occurs):
- direct employment from ongoing operations and capital ventures;
- jobs indirectly supported by the multiplier effects of capital investment and the sales turnover of retail tenant
- The GDP growth has also been attributed to property developments in the new Silo district and Watershed Africa’s new craft and design
The dramatically increased significance of the Waterfront would not be possible without the construction of new buildings. Pointing out the foundational imperative of small businesses flourishing, the V&A recently committed R500 million to the establishment of the Zeitz Museum of Contemporary Art Africa, situated in the Grain Silo complex. Nearby, the No.1 Silo (housing investment firm Allan Gray) is notable as part of the award-winning network generating tenant rentals.
Industry players have noted the importance of long-term planning in attracting investors. Strategies spanning 15-year periods have thus far led to the allocation of 400 000m2 of the available 600 000m2 for projects in and around the Waterfront. External factors heightening the potential for commercial property returns include the current expansion of the Cape Town International Convention Centre (CTICC); and the Western Cape Government’s intention of sale of city land adjacent to the V&A. In the former case, events and conferences attract retailers, restaurant owners and caterers, while the latter presents development opportunities for investors. The V&A Waterfront has already expressed interest in obtaining housing development rights: a greater number of residents translate into increased commercial activity (plus returns on the residential market) for the full spectrum of participating stakeholders.
Future of the Waterfront
The current short-term development focus, the Silo district is on schedule for completion in early 2017, at an investment of R1.5 billion. Four developments – reflecting continued high demand for office and residential areas with harbour views – are set to introduce over 35 000m2 of mixed-use space.
1. No. 3 Silo will offer around one hectare in the form of 75 luxury apartments;
2. No. 4 Silo will encompass a 4000m2 Virgin Active facility;
3. No. 5 will feature 13 500m2 of corporate office space upon completion in mid-2016, providing working space sufficient for 2500 staff.
4. No. 6 will house an 8000m2, 220-room international hotel.
Further along the development timeline is the City of Cape Town’s vision for a new Waterfront. Announced late last year, the vision to overhaul the Foreshore is intended to restore access via the central city to the waterfront. Involving the City, the provincial government, Transnet National Ports Authority and the V&A Waterfront, the Port Gateway Precinct Plan has, as its initial stage, the opening of a new cruise liner terminal at E berth.
The direct linking of central Cape Town and the harbour is to be accompanied by the opening of previously inaccessible land to create a ‘people-friendly’ environment. This would entail new commercial, residential, and retail elements along the Foreshore while contemporaneously executing multi-billion rand port expansion plans. Since the vision has been conceptualised within a fifty-year frame, no specific courses of action have yet been formalised.
The eventual intention is to double the city’s container-handling capacity, in order to meet the regional economy’s growing freight demands. Aside from retailers, businesses holding a stake in industrial property (such as warehousing) or logistics stand to benefit from Cape Town’s long-term seafront redevelopment.