Gugs goes shopping

Yet “Gugs”, one of Cape Town's oldest townships, has little to offer residents in the way of formal retail, and nothing that ranks with upmarket malls like Maponya in Soweto, Vangate in Mitchell's Plain or Canal Walk in Cape Town.

This will change with Gugulethu Square, a 34,000m² upmarket shopping complex on the township's main road. “If all goes well, we will open the first phase of the centre in September,” says Greg Ross of project contractors JG Ross.

The R350m centre represents the biggest investment in Gugulethu to date. It is developed and funded by West Side Trading, a consortium that includes the Ideas Fund (a partnership product between Old Mutual and Unity, a trade union grouping), Group Five, Khula Finance and Mzoli Properties. “Retail developments are catalysts for further growth,” says Mzoli Ngcawuzele, a partner in West Side Trading.

The intention is to use this as the first step towards the establishment of a Gugulethu central business district, he says. Other plans include the development of a new police station, redevelopment of the local clinic, and in the longer term the development of offices and even hotels. “The dream is to make this a community like any other.”

Ngcawuzele, owner of popular township butchery Mzoli's, spearheaded the development and was instrumental in bringing together Khula and the Ideas Fund, the project's cofunders.

Unlike other shopping centres, which are developed with little or no community interaction, in this case the developers say they have gone to great lengths to engage with community stakeholders — local subcouncil structures, trade unions, political parties, taxi associations, schools, civic associations and previous tenants of the now-demolished Eyona shopping centre.

“This is a vibrant community,” says the head of infrastructure and development assets at the Ideas Fund, Sean Friend. “People don't just roll over.”

The only outstanding dispute was settled in court a fortnight ago. SS Skhoma's Butchery, situated at what will be the south mall of the centre, had refused to vacate its site and had delayed development of that wing.

The parties settled in the corridors of the courthouse. “West Side will relocate the butchery at its own expense and cover the butchery's rental costs in the temporary accommodation — this was offered to all the previous tenants,” says Sidney Pretorius, Cliffe Dekker Hofmeyr's commercial attorney acting on behalf of West Side Trading. “Once the mall is complete, West Side will move them into the mall and offer them a preferential rental for 18 months.”

An allocation of 15% of ownership of the centre has been made available for local investors to co-invest — some of it exclusively for the former tenants. Another 10% of the ordinary equity has been donated to a trust for the community. West Side estimates this to have a present value of R15m.

Not wanting to exclude the small traders, the developers have set aside 3000m² of space — some in allocations as small as 9m² to ensure the tenant mix includes local entrepreneurs. Almost 70% of the remaining space has been let to national retailers like Shoprite, Spar, Cashbuild, Truworths, Ellerines, Capitec, FNB and Nedbank.

Operations like Nando's and SpecSavers have been encouraged to find local operators for their franchises. “Nine entrepreneurs have already been sourced to operate various franchises,” says Friend.

The developers are also committed to draw 25% of the workforce from the local community.

Projects such as these have worked well in other areas as catalysts for growth. There is plenty of development in Soweto, the country's biggest township, but injections of equity in places like Randfontein in Gauteng and Bushbuckridge in Mpumalanga are also facilitating growth away from the major urban centres.

Source: Financial Mail

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