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Home » April 2011 » What else are we working on?

What else are we working on?

New booklets to be published soon

The impact of retail centres in townships in South Africa

Almost a third of new retail space developed over the past five years can be found in townships. Retail development represents one of the few avenues through which private investors are prepared to invest in these areas. But while formal retail centres play a strong role in developing economic nodes in these locations, concerns have been raised about their impact on local enterprises.

Research commissioned by Urban LandMark and carried out by Demacon shows that the development of retail centres in townships has resulted in a far greater proportion of shopping taking place within these areas. Previously consumers would mostly shop outside the area, resulting in significant leakage of income from townships and exaggerated travel distances. Formal retail centres have a positive impact on consumers because they provide greater choice, reduce the price of goods and services, and cut down on people's travel and time costs.

Their impact on local enterprises appears more mixed, with some reporting that they have been negatively impacted through lower turnover and greater competition, while others state that retail centres have a beneficial impact because of the numbers of people it draws to the area.

Our research suggests that retail centres have a positive role to play but that small enterprises need to be incorporated in the broader planning around formal malls, and that a beneficial interface should be created between the centres and the broader trading environment. To facilitate the progress of small enterprises up the retail ladder to a point where they can viably operate out of a formal retail centre, greater attention needs to be paid to the business training and skills development of such enterprises.

We have presented this research on the impact of retail centres in township areas to various stakeholders recently, and from this and other engagements around the market analysis, we are developing a booklet detailing the main findings and recommendations, to be published and launched in May 2011.

Value capture from transit-oriented development and other transportation interchanges

Cities attribute much of their economic expansion to the development of transit systems that link people efficiently to jobs. Many of South Africa's cities lack modern mass transit systems for transporting commuters, who rely on increasingly gridlocked roads.

Partly as a result, South Africans spend a relatively high share of their disposable income on transport. Low-income workers especially bear a huge financial cost as well as economic opportunity cost for transport in this country.

The Gautrain Rapid Rail Link, along with the Bus Rapid Transit System, Metrorail, new highways and other major transport infrastructure projects represent a huge new investment in the region's transportation network. These systems provide an exceptional opportunity for South African cities to promote development and 'capture' the increase in associated land values as a public good.

Urban LandMark therefore commissioned African Development Economic Consultants (ADEC) to investigate the concept of value creation and value capture around transport interchanges in South Africa. Using three case studies - a BRT station in Soweto, a highway interchange on the proposed PWV9 near Diepsloot and a metrorail station in Khayelitsha - the analysis:

  • examines the increase in land value that can be expected from the development of South Africa's transport interchanges
  • assesses best practices from around the world in capturing this increase for public good
  • recommends optimal ways of capturing the value gained from transport interchanges to the benefit of communities in the vicinity and municipalities.

These recommendations, along with the assessment of best practices, will be made available in a short, accessible booklet in May 2011.