Presenter: Lindsay Williams  Guest(s): Francois Viruly 

Former dormitory city Soweto will soon boast three upmarket shopping malls - as it sheds its apartheid past. Property economist Francois Viruly says this might be a disaster for retail in the Johannesburg central business district

LINDSAY WILLIAMS: What are your concerns - are you honestly saying that business in the Johannesburg CBD is going to be transferred to Soweto because of these developments?

FRANCOIS VIRULY: Let’s first of all look at the scenario at the moment - there’s about 60,000 square metres of formal shopping centre retailing in Soweto at the moment. That will probably in the next two years increase by another 180,000 square metres - in order words we are going to have three times more retailing than we have there at the moment. The point is that many of those retailers are at the moment retailing in the CBD of Johannesburg. The point is what happened to the offices in the 1980s, and certainly in the 1990s - the decentralisation that happened - are we doing the same thing to the retail sector in the Johannesburg CBD at the moment by providing more and more shopping centres in and around Johannesburg. The point is whether it’s the right thing to do!

LINDSAY WILLIAMS: Is there a case to be said here that the Johannesburg CBD doesn’t have the same range of shops that shopping centres would have? I look at something like London - people in Johannesburg are not going to go out at lunch time and buy half a pound of spuds and a bag of skip. It’s a different type of retailing environment isn’t it?

FRANCOIS VIRULY: That’s correct, nevertheless at this point in time quite a number of national retailers are in the CBD of Johannesburg - I suppose they had nowhere else to go to capture that market. The point is would they expand their operations in the CBD if suddenly they had the option of going into a shopping mall? That’s the question that has to be asked. The question needs to be asked are there similar shopping centres being built close to many of the smaller towns in South Africa - the issue is what will happen to those high streets?

LINDSAY WILLIAMS: Exactly. It’s the same thing that happened when all the garages started opening shops - what happened to the corner café? I suppose it’s a natural retailing progression - there’s always going to be casualties in that progression. Is this a knock to the potential redevelopment of the CBD of Johannesburg?

FRANCOIS VIRULY: If we want to get a vibrant CBD going the retailing component is going to be a critical one that we have to actually bear in mind. What’s also going to be very interesting in this game - if we think that we’re going to produce the same type of shopping centres in Soweto as we have in the northern suburbs I think we could be wrong. I think there are good reasons for that. It goes the whole way to public transport - where many people buy by the trolley. In many of the decentralised nodes - if you have to get onto a taxi - you’ll go to your regional shopping centre, and you’ll buy the two baskets that you can carry, so I think the type of shopping is going to be very different.

LINDSAY WILLIAMS: Isn’t there a case to be said that in order to get the Johannesburg city centre going again you’ve got to attract the offices back. AngloGold Ashanti has just commissioned its new head office near Turbine Hall. Start getting the big offices back - the specialist retailers will come and feed off that…

FRANCOIS VIRULY: I think you’re making an interesting point there. What I’m certainly finding - where we often say that lifestyle relates to residential areas - I think lifestyle also relates to office nodes, and I’m certainly picking up at the moment that those office areas in Johannesburg that don’t offer some sort of retailing actually have very high vacancy rates. I think for companies to move back into the CBD, or to expand in the CBD, will be related to the shopping experience that can be offered.

LINDSAY WILLIAMS: Also, I suppose, related to the incentives offered by the municipality and the authorities in order to attract them back. What’s the process there? Is there an incentive for somebody to go to Johannesburg CBD - apart from the obvious one of traffic - rather than going to Fourways or Sandton?

FRANCOIS VIRULY: There’s an attraction if you are the investor - not if you are the tenant. I suppose what you could argue is that if the investor or the developer gets a benefit out of the urban development zones - that should filter down to the tenant as well, but I’m not always so sure that happens.

LINDSAY WILLIAMS: Is the Johannesburg CBD rejuvenation a myth - is it just a few art deco penthouses that have been sold to yuppie stockbrokers, or is there a genuine rejuvenation?

FRANCOIS VIRULY: I still have to be convinced to pay R800,000 for a flat - when I can buy a four storey building for just about that price. I think a lot more needs to happen - if you’re in that apartment you must be able to have your friends park their car outside safely at night. I still think we have a long way to go in this respect.