Competition in new mall market hots up

18 Nov 2011

The race to build Burgersfort's first regional mall has taken an intriguing turn. JSE-listed property heavyweight Resilient has been dragged into a bitter legal battle by Limpopo-based Cranbrook Property Projects.

The latter is trying to stop Resilient from building the R600m Burgersfort Mall in one of SA's fastest-growing mining hubs. Resilient, which owns an R8bn portfolio of shopping centres primarily in non-metropolitan areas across SA, started earthworks on the 40000m² mall in October.

Just before that, Cranbrook's developer partner Abacus commenced earthworks on the rival 32000m² Tubatse Mall on the opposite side of town. Cranbrook's legal action against Resilient relates to claims that the zoning and development rights for the Burgersfort Mall were illgotten. Resilient is also being accused of not obtaining all the necessary approvals from the department of environmental affairs.

Cranbrook applied for an urgent interdict to halt all activity on site which was dismissed with costs by the high court last week. The main court action is still to be heard.

Resilient MD Des de Beer says the attempt to delay construction of the Burgersfort Mall is part of a campaign to scare retailers away. He says when Resilient bought the site in 2006, zoning rights had already been changed from agriculture to business.

In addition, the environmental approval needed to start construction was already in place in 2008. De Beer notes construction started only in October 2011 as they had to wait for electricity clearance from Eskom.

"Why would we push the button on a R600m project if we didn't follow the necessary regulatory processes? That wouldn't make sense," says De Beer.

Though Burgersfort is regarded as a highly lucrative but untapped retail market, the area is not big enough to sustain both regional malls. So the two developers will have to vie aggressively for the support of retailers, without which a new shopping centre can't go ahead.

De Beer believes his site has the best location, close to public transport facilities. He has secured leases with Shoprite, Edgars and Game. Abacus chairman Jaco Odendaal is not saying who he has signed up but claims the Tubatse Mall is already 50% pre-let.

Source: Financial Mail

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