East London's booming

Posted On Tuesday, 17 October 2006 02:00 Published by
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The face of East London is due to change in the coming years as strong economic growth is starting to shift the city's wealth to new suburban areas
 
By Roux van Zyl and Tom Mapham

Local economy going from strength to strength.

The face of East London is due to change in the coming years as strong economic growth is starting to shift the city's wealth to new suburban areas.

The current centre of spending in the city is Vincent, with its critical mass of shopping facilities along Devereux Avenue, followed by the Central Business District and Beacon Bay.

With an economic growth rate of 5,7 percent over the past two years ? ahead of neighbouring Port Elizabeth's four percent ? the city's spending power is bound to spill over to new areas as Vincent is starting to reach maximum capacity.

Recently, four shopping centre developers have committed themselves to developing three areas where they think the spending will go next. These areas include Beacon Bay, Gonubie and a site next to Hemingway's Casino.

Buffalo City's development manager Craig Sam confirmed yesterday that the region was on the verge of entering a higher level of economic development. "We are now ready for the next regional shopping mall."

"I'm extremely upbeat about the future of the city and can see renewed interest by developers nationally. The fact that four developers want to set up regional malls in the city shows this. There's a level of confidence we haven't seen in a long time."

He said the interest was being translated into the number of building plans approved by the municipality. In fact, the value of building plans approved in the city more than doubled in the last four years, rising to R850 million in 2005 compared with R350m in 2001.

Looking back at past development, Sam said there was a definite move by East London businesses to move away from the CBD. The municipality then made a policy decision to contain this decentralisation in the Vincent and Berea areas, in a bid to keep the CBD from running empty.

The Vincent area has subsequently grown to contain the critical mass of East London's retail facilities, small businesses and car dealerships. A decision was later made to open up Pearce Street for business, but Sam said the area has "more or less" reached maximum capacity.

"We are getting a lot of pressure to rezone properties along Bonza Bay's main road for business. At the moment we say no, because we have to be careful how to play that so that we don't kill the CBD."

"The CBD also has major growth potential, especially the tax incentives could lead to a lot of upgrades of existing buildings. Our strategy is to build on the city's existing strengths," he said.

Border-Kei Chamber of Business executive director Les Holbrook agreed that Buffalo City was riding a wave of economic growth.

Holbrook said Buffalo City's growth had been supported by the "Black Diamonds", a group of up-and-coming black businessmen who were investing in the area.

While the municipality remained diplomatic about East London's next retail hub, the mall developers have their own visions of where the city's money will flow.

Sisa Ngebulana, executive chairperson of the Billion Group which plans to develop a R1-billion mall next to the Hemingway's Casino, said areas like Gonubie and Beacon Bay could not support a regional mall.

"With a population of close to one million, Buffalo City needs a big regional mall but can't carry two, and three is out of the question. The other two sites are fine for smaller malls, but not a regional one."

The Billion group believes that the Hemingway's site would attract more shoppers as it is visible, centrally located to the higher Life Style Measurement (LSM) households in the city and is already a popular destination.

According to a survey conducted by the group to measure the shopping preferences of 776 consumers in the Beacon Bay, Amalinda and Vincent areas, it revealed that 66 percent supported Hemingway's, 31 percent supported Gonubie and three percent was undecided.

"Also, quite bluntly, Gonubie does not have the 30000-plus households in higher LSM 7-10 and neither will it in the next 20 years to support a regional mall," Ngebulana said.

He added that the Gonubie site was not visible from the N2 and had poor accessibility.

However, two groups of developers see potential in commercial property development in Gonubie.

Last week, Atterbury Cape announced plans to develop a large multiple-use "node" at the Gonubie off-ramp on the N2.

Managing director Gerhardt Jooste said plans reflected the company's view of Gonubie as a sound long-term investment.

He said that developing more retail space near to the existing hub around Vincent Park would be "cutting the cake". "We don't want to cut East London's cake, we want to grow it."

Jooste said that by developing commercial activity in Gonubie, retailers would be provided with a new area and new markets.

The development, East Cape Boulevard, proposed by Atterbury Cape would target shoppers from surrounding areas as far as Kei Mouth and inland to Stutterheim.

He predicted that Vincent Park would become more accessible to shoppers after the construction of a regional mall and that it would keep its share of the market for this reason. Holbrook said that in the race for the malls two ?black diamonds? are going head to head, Ngebulana of the Billion Group and Prince Sivile Mabandla whose Salinga consortium is partnering Atterbury Cape.

About which site was the most appropriate for the next big shopping mall, Sam said the municipality would remain neutral and not become directly involved in the final decision. "It's the developers? role to influence retailers to choose their site."

Daily Dispatch
Publisher: I-Net Bridge
Source: I-Net Bridge

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