Farrell Retail (2009) PDF

Retail Development in Rural and
Underdeveloped Areas
Dennis Abram Farrell
Submitted in fulfillment of the requirements for the degree of

B.Sc (Hons) (Construction Management
In the faculty of Engineering, Built Environment and

Information Technology
University of Pretoria
Mr JH Cruywagen
October 2009
Final Submission
Abstract
Title of Treatsie: Retail Development in Rural and Underdeveloped

Areas
Author: Dennis Abram Farrell
Study Leader: Prof JH Cruywagen
Institution: Faculty of Engineering, Built Environment and

Information Technology
Date: October 2009
This research will determine it is possible to pursue turnkey retail

development in rural and underdeveloped areas in South Africa, which is
sustainable and satisfies the needs of the community, the tenants and the
investor. The areas of difficulty that have been experienced by developers
who have pursued retail development in these areas will be discussed and
solutions offered. The problems experienced in land acquisition will be
identified and discussed, the associated problems with leasing and tenant co-
ordination will be addressed, the processes and difficulties in obtaining
finance, and finally appropriate design and construction of the developments
Table of Contents
pg.
Chapter 1 – Introduction 1
1.1 Background 1
1.2 Statement of Main Problem 2
1.3 Statement of Sub-Problems 2
1.3.1 Land Acquisition 2
1.3.2 Leasing and Tenant Co-ordination 2
1.3.3 Finance and Budget Control 3
1.3.4 Design and Construction 3
1.4 Statement of Hypothesis 3
1.4.1 Land Acquisition 3
1.4.2 Leasing and Tenant Co-ordination 3
1.4.3 Finance and Budget Control 4
1.4.4 Design and Construction 4
1.5 Delimitations 4
1.6 Definition of Terms 4
1.7 Importance of Study 4
1.8 Research Methodology 5
1.8.1 Case studies 5
1.8.2 Tenant Studies 5
1.8.3 Financial Studies 5
1.8.4 Design and Construction Studies 5
1.8.5 Publications 5
Chapter 2 – Land Acquisition 7

2.1 Introduction 7
2.2 Location 8
2.2.1 Linkage 8
2.2.2 Exposure 10
2.2.3 Site Requirements 10
2.3 Cost 10
2.4 Obtaining Land 12
2.4.1 State Owned Land / Tribal Authority 12
2.4.2 Municipal Owned Land 14
2.4.3Privately Owned Land 14
2.5 Conclusion 15
2.6 Testing of Hypothesis 15
Chapter 3 – Leasing and Tenant Co-ordination 16
3.1 Introduction 16
3.1.1 Leasing 16
3.1.2 Tenant Co-ordination 16
3.2 Tenant Mix 17
3.2.1 Why design a Tenant Mix 17
3.2.2 Tenant Mix in Practice 18
3.3 Leasing Difficulties 20
3.3.1 Difficulties That Are Being Experienced 20
3.3.2 Dealing With the Leasing Difficulties 20
3.4 National Tenants 21
3.5 Local Tenants 23
3.6 Summary 24
3.7 Testing of Hypothesis 25
Chapter 4 – Finance and Budget Control 26
4.1 Introduction 26
4.2 Equity 27
4.2.1 What is Equity 27
4.2.2 How to Obtain Equity 28
4.2.3 Equity Survey 29
4.2.4 Why is Equity Required 32
4.3 Finance 33
4.3.1 Obtaining Finance 34
4.4 Budget Control 36
4.4.1 Controlling the Costs & Maximizing the Budget 37
4.5 Cash Flow 40
4.6 Summary 42
Chapter 5 – Design and Construction 45
5,1 Introduction 45
5.2 Building Practices 45
5.3 Skills Development 47
5.4 Design 49
5.4.1 Supporting Activities 49
5.4.2 Material Selection 51
5.5 Summary 54
Chapter 6 – Conclusions 56
6.1 Main Problem 56
6.2 Land Acquisition 57
6.2.1 Sub Problem 57
6.2.2 Statement of Hypothesis 57
6.2.3 Conclusions 57
6.3 Leasing and Tenant Co-ordination 58
6.4 Finance and Budget Control 59
6.5 Design and Construction 60
6.6 Solving of the Main Problem 62
6.7 Recommendations 62
Bibliography 63
Annexure 1 65
Questionnaire Regarding Patron Perceptions And Usage
of the Nzhelele Valley Shopping Centre.
Annexure 2 67
Questionnaire Regarding Patron Perceptions And Usage
of the Hubyeni Shopping Centre.
Annexure 3 69
Questionnaire Regarding Equity Investment in Property
Annexure 4 71
Case Study 1 – Hubyeni Mall
Annexure 5 73
Case Study 2 – Nzhelele Valley Shopping Centre
Annexure 6 75
Case Study 3 – Phangami Mall
List of Figures
pg.
Figure 1: Savings as a Result of Linkage 9

Figure 2: Phases of Obtaining State Owned Land 14
Figure 3: Patrons Feelings With Regards to Tenant Mix 19
Figure 4: Patrons Travelling Requirements 19
Figure 5: Hubyeni Occupancy Currently 22
Figure 6: Hubyeni Occupancy 2007 22
Figure 7: Nzhelele Occupancy Currently 23
Figure 8: Nzhelele Occupancy 2007 23
Figure 9: Total Capital Costs 26
Figure 10: Information Investors Rely On 30
Figure 11: Reasons Persons Invest in Property 31
Figure 12: Have Persons Invested in Property in Rural and 32
Underdeveloped Areas
Figure 13: Finance Costs 34
Figure 14: Typical Cash Flow Curve for a Property 42
Development
Figure 15: Community Steering Council Diagram 48
Figure 16: Elim Taxi Rank and Hawker Stalls 51
Figure 17: Hubyeni Mall Taxi Rank and Hawker Stalls 51
Figure 18: Clay Tiles 53
Figure 19: Locally Sourced Natural Stone 53
List of Tables
Table 1: FICA Requirements 36

Chapter 1 - Introduction
1.1 Background
South Africa has had a rich, troublesome and often violent history.
This saw our country divided along racial lines. Peoples of different
races were kept apart from one another, resulting in areas where
“whites” only lived and “blacks” only lived. In turn economic and
urban generation and development also took place along these
racial lines. The government at the time was not concerned with
the quality of life and basic services that was provided to the black
people, and it was not popular for private investors to provide these
amenities to the black people either. As a result almost all property
development took place in the so-called “white areas”. Very little or
no development took place in the so-called “black areas”.
A large part of the “black areas” consisted of rural and tribal land.
The lack of income in these rural and tribal areas made it difficult
for developers who were willing to defy the government to justify
investing money in these areas. However, with the demise of
apartheid these areas have received an increase in income per
capita. This increase has been caused by various factors such as
increased government spending in these areas, money being
brought back into the areas from the larger economic centres by
migrant workers, as well as some limited local economic
development. Even though the income per capita in these areas is
still extremely low compared to income per capita in the large
economic centres, the sheer number of “feet” that can be provided
to a retail centre in these areas can be sufficient reason for a retail
development to succeed financially.
These rural and tribal areas have, for the large part, remained
underdeveloped and are still experiencing a shortage of basic retail
services. Thus there is a need for private investors and developers
to provide the necessary services to the people. Development in
these areas will in return create a wealth of local economic spin-
offs that can greatly enhance a community’s quality of life.
The economic spinoffs include

• Temporary employment during construction.
• Permanent employment after construction.
• Creating business opportunities.
• Skills transfer, during construction, as well as through the
ongoing life cycle of the centre.
Retaining income within communities and the economic benefits

that a retail centre development can provide to an underdeveloped
area could assist in creating a sustainable economic environment
for the residents of these communities.
The land is available, the people are there, a product is required

which is aesthetically pleasing, economically viable, and suitable
for its intended purpose.
1.2 Statement of the Main Problem

How to deliver a feasible, sustainable “turnkey” retail development
in underdeveloped areas that satisfies the needs of the client,
tenants, community and the investor.
1.3 Statement of the Sub–Problems

1.3.1 Is it Possible to Acquire Land in Rural and Underdeveloped Areas
for Turnkey Retail Development?
How to go about acquiring land that will be suitable in location and
cost for the development. The difficulties that are involved in
obtaining state/tribal land and converting it into private land.
Dealing with Local Government institutions and officials to obtain
state/tribal owned land for development and making use of existing
private land in established townships.
1.3.2 Is it Possible to Let a Retail Centre, and Manage the Tenants in a
Rural and Underdeveloped Area?
Leasing of the centres can be difficult. Many national tenants are
unwilling to take the risk in these areas; they also harbour concerns
about the size of the centres’ GLA. The quality of the local tenants
could also be a deterrent for national tenants. How can these
difficulties be overcome?
1.3.3 Can the Developer Obtain Finance, and Control the Costs and
Budget for a Retail Centre in a Rural and Underdeveloped Area?
How can equity and finance be obtained from investors and
financial institutions? Can tight control of the project budget and
cash flow set the project on a path to financial success? Ensuring
that all the stakeholders of the project consider the venture a
financial success will be major consideration in the parties
becoming involved in similar projects later.
1.3.4 Can a Retail Centre be Designed and Built in a Rural and

Underdeveloped Area, which would not be Amiss in a Up Market
Suburb?
Can a centre be created which is aesthetically pleasing, of sound
construction and incorporates the use of local materials? How does
the contractor make use of all the local labour and skills that are
available to him/her, and furthermore developing skills that are
required instead of importing skills.
1.4 Statement of Hypothesis
1.4.1 Land Acquisition
Acquiring land in rural and underdeveloped areas for development
is possible and an alternative for developers to consider as
opposed to development in established developed urban areas.
1.4.2 Leasing and Tenant Co-ordination

It is possible to convince national tenants that they should be
interested in establishing themselves in these areas. The
combination of careful selection and “coaching” of the local tenants,
combined with a good mix of shops appropriate to the area, can
provide an interesting product for investors.
1.4.3 Finance and Budget Control

Obtaining equity, securing finance and tight budget control, can
ensure the overall financial success of the venture.
1.4.4 Design and Construction

Through appropriate design and careful material selection, as well
as skills development and skills transfer, it is possible to construct a
retail development of a very high quality and standard, which will
not be amiss in the most prominent suburbs of the larger economic
centres.
1.5 Delimitations
The direct research area is limited to the Limpopo Province, as that
is where the case studies are situated. Furthermore, the Limpopo
Province is significantly underdeveloped in comparison to Gauteng.
1.6 Definition of Terms
DFA Developments Facilitation Act
DPLG Department of Local Government and Housing
Feet Unit of measurement to track number of patrons that
frequent a particular store or centre
GLA Gross Lettable Area
NBR National Building Regulations
POPSA Population of South Africa
Turnkey Ready to use - complete and ready to use upon delivery
1.7 Importance of Study

All South Africans should be allowed to enjoy basic retail services if
they so desire. It is also necessary for individuals to feel morally
and socially obliged to assist with the economic growth of our
country and its people. If developers move outside of their comfort
zones they could have a real impact in the lives of the people that
they seek to make an income from.
1.8 Research Methodology

In determining whether a suitable, sustainable retail development
can be delivered in rural and underdeveloped areas various
research facilities and techniques, will be utilised to test the
hypotheses that have been put forward.
1.8.1 Four different case studies will be utilised. These studies will be
conducted on four different retail developments that took place in
the Limpopo Province. The group of companies, which were
involved in the conceptualization, design and construction on all
these developments have made available studies, which they have
conducted as well as information, for the purpose of this treatise.
The developments are all in varying stages of life cycle, ranging
from conceptual to trading for a few years.
1.8.2 Liaising with national and local tenants to determine what their
perceptions are regarding development in these underdeveloped
areas. Determining their willingness to change their requirements
to enable these developments to succeed. This research will take
place in the form of interviews and electronic correspondence.
Interviewing persons in the fields of property brokering and tenant
co-ordination.
1.8.3 To determine what is required to ensure the financial success of

such developments, interviews and electronic communication with
various stakeholders in the development process who hold a
financial interest in the development.
1.8.4 In researching the design and construction of these centres

consultation with building professionals who have been involved in
the case studies will take place, as well as the contractors and the
domestic and nominated contractors that have been involved. This
research will take place in the form of interviews and electronic
correspondence.
1.8.5 Publications, journals and web based information as well as

published print to assist in establishing my opinion and supporting
my hypothesis.
Chapter 2 - Land Acquisition
2.1 Introduction
Once a developer has recognized a need in a certain area for retail
services, and he or she wishes to potentially invest in a
development in that specific area, steps must be taken to identify
the correct site and then acquire ownership or control thereof.
The cost and location of property is always at the forefront of a

developers’ mind when determining the feasibility of retail projects.
When considering rural and underdeveloped areas for
development, these two factors need to be considered slightly
differently than when considering them for property in an already
developed area. The main reason being that the public do not
necessarily have the same means at their disposal, in comparison
with the public in urban and city areas. (Sloan 2009).
Sites in rural areas will present themselves in different forms, and if

a developer wishes to secure sites that are in prime locations then
he/she will have to deal with tribal authorities to obtain tribal/state
land, deal with Government officials to obtain land that has been
transferred to Provincial Government and Municipalities and deal
with private individuals and organizations to obtain privately owned
land.
When acquiring land for development there are many factors to

consider. (Cloete 2006:23)
a) Site Characteristics
• Site Description
• Services
• Subsoil Conditions
• Topography
• Vegetation
b) Environmental Factors
• Climatic Influences
• Adjacent and Neighbouring Site uses
• Environmental Impact of the Proposed Development
• Community Support
c) Location
• Linkage
• Exposure of site and Topography
• Vegetation
2.2 Location
The most important consideration regarding land in property
development is location. Sloan (2009) says location, location and
location will always be the most important determinant when
choosing a site as he feels that it is not worth developing a site
from which he cannot reap maximum reward, both economically
and socially. His sentiments are enhanced by Cloete (2006:23)
who states the importance of location, especially in retail feasibility
studies, is stressed by the Urban Land Institute which warns that a
site should be developed only if it is the best possible location,
otherwise a competitor will eventually develop the best site.
2.2.1 Linkage
Linkage relates to the accessibility of a site and is normally
expressed in relation to time and money, and thus in a low-income
rural area it is a very real concern of the public, that developers
need to consider. A great deal of the clientele that will frequent the
centre rely on public grants and little or other income, which needs
to be drawn from banks at major centres, intercepting these feet so
that they spend less on transport and more money in the stores is
an important consideration. Ideally a site should be located in a
area which has a higher density of residents than other surrounding
settlements, and should be on a transport hub, such as a taxi and
bus rank and if at all possible rail - a site which is located merely on
a transport hub, will invariably fail as the people which the
development wishes to attract will always be in transit and never
stopping. Upgrading of the existing transit hub or incorporating it
into the centre also offers the developer an easy way to involve the
community and begin creating a sense of ownership (Watts 2009).
In Case Study 1 and 2 there were already a well-established
transport hub situated adjacent to the sites. The hubs were
incorporated into the development, which ensures a constant
stream of feet through the centres. In Case Study 1, commuters
who terminated at the centre were saved R40, as that was the cost
of a taxi into the closest established town with adequate shops and
banks. As pointed out by Sloan (2009) R40 may not seem a lot, but
if you multiply it by the 60,000 baskets that pass through the
anchor store on a monthly basis, it adds up to a very large sum of
money.
Figure 1 below shows the average savings, which patrons of Case

Study 1 and Case Study 2 experience monthly as a result of not
having to travel to experience basic retail services. The results
show that respondents did experience an average saving of R150
per month on transport.
Figure 1: Savings as a result of Linkage

Source: Results of Question 2 Questionnaire to Patrons of Case Study 1
and 2
2.2.2 Exposure
Exposure of the site and the intended structure is another important
consideration. It is natural that in a rural, or underdeveloped area
that any large structure will be imposing. However it is still
important that a site is situated at a main intersection and clearly
visible from any major roads that may pass close by. Watts (2009)
says that the most important impression that he wishes to create
with these centres is that they would not be amiss in the most
expensive and “fashionable” suburbs in the largest South African
cities. Therefore when a site is considered it should have maximum
exposure so that the public can feel the full effect of the centre, and
a feeling of pride instilled in the community, as their involvement
will ultimately decide the social and therefore the financial success
of the centre.
2.2.3 Site Requirements

Lastly the site needs to meet all the requirements in terms of the
intended design of the centre.
• Area
• Access
• Orientation
• Infrastructure
• Geography
2.3 Cost
Feasibility is defined in Cloete (2006:4) by Anthony Downs as, “any
study aimed at determining whether a proposed development on a
particular site can be successfully executed”. Therefore, what is
required for the development to be successful needs to be
determined early on by the developer so that the feasibility study
reflects the developer’s vision and informed decisions regarding the
development can be decided upon.
The purpose of the financial feasibility study is to determine if the
financial requirements of the developer are met. “There are many
reasons why land is developed, but in the private sector the most
common and significant reason is to create wealth” Sloan (2009).
According to Watts (2009) “when developing turnkey operations the

financial feasibility is the last step in the process before
commencing with detail design. The reason for this is that the
financial feasibility is based on the cumulative effects of other
feasibility studies”. This is backed up by Cloete (2006:27) who
states that the results of the socio-economic, physical, legal and
marketing feasibility studies are incorporated in the parameters of
the financial feasibility analysis, which can be regarded as the
culmination of the feasibility analysis procedure.
The land costs are only a very small part of the feasibility study as
they only entertain a portion of the total capital outlay. However, it
is important to note that land can often be obtained at agricultural
market related value rates as that is what the land currently is used
for or un-serviced. But after dealing with all the processes of
upgrading and changing of the property the new market related
value is much higher. But according to Sloan (2009) this increase
in land value comes at a cost, which cannot be ignored when
considering the purchase price of a particular property.
Quite significantly that when dealing with rural and underdeveloped

land it could be difficult to determine the market related land value,
and therefore the price that a developer would be willing to pay for
a parcel of land. A financial feasibility would assist in determining a
suitable price. One of the tools available in the financial feasibility is
the residual land value, which can be employed to determine the
price that a developer is willing to pay.
The most common method of determining the residual land value is
the initial return method. This calculation is very sensitive to
changes in the total capital outlay, or the net income and should be
used therefore with care (Cloete 2006:218).
2.4 Obtaining Land

2.4.1 State Owned Land / Tribal Authority
Land in rural areas will often present itself as land that is state
owned and has a tribal authority, which resides on the land. In this
instance the state is the legal owner, however, the tribal authority
has a landowner’s right over the land. This right is granted by the
Interim Protection of Informal Land Rights Act 1996. The aim of this
Act is to provide for the temporary protection of certain rights to
and interests in land, which is not otherwise adequately protected
by law and to provide for matters connected therewith. This means
that any prospective development would have to obtain the
permission of the person who has the landholder’s right and the
developer would have to make a payment to the landholder, and
not the state for the acquisition of the land.
The state has provided a few mechanisms for obtaining this land,
however, according to Honeyborne (2009) the best route to take in
such an instance would be to make use of the Development
Facilitation Act no. 67 of 1995. This act allows for the facilitation of
reconstruction and development programs and successful and
rapid implementation thereof. The main purpose of the act is to
prescribe land development procedures with regards to land use
that includes and excludes small scale farming. Importantly, the act
sets out general principles that are applicable nationally for land
development.
They include principles that policy, administrative, practice and law
should incorporate such as:
• Effective integrated planning
• Optimal use of existing resources
• Promotion of sustainable development
• The requirement that land use be judged upon its merits
The process of obtaining state owned land could be separated into

three different phases:
• Information that must be collected
• Information that must be sourced
• Procedures which are to be followed
In Case Study 1 the land in question was state owned at a

provincial level, and the Elim Tribal Authority held the landowner’s
right. The process of obtaining the land and converting it into usable
developable land took approximately 2 years.
The phases are broken down in Figure 2 on the following page. It

should be noted that the process can be very fragmented and
officials who are responsible for certain processes in some
instances are not completely aware of the correct internal
procedures themselves. It would be wise to entertain a certain
degree of patience.
Figure 2: Phases of obtaining State owned land.
Source: Kerr Company Documents
2.4.2 Municipal Owned Land

Occasionally in rural areas municipalities have identified land which
they would like to be developed. However, often the municipalities
require assistance in the finalization of the steps and procedures as
they have very little experience and a high turnover of staff. This
was evident in Case Study 3 where the land had already been
transferred to the Municipality and a township established, but they
still required assistance to finalize the matter, with regards to
zoning and transfer of the land to the developer.
2.4.3 Privately Owned Land
If private individuals own land that is suitable for development and
wish to sell it, the initial cost is often higher and could be a
deterrent for prospective developers. In Case Study 2 the land was
privately purchased, and as a result it was more difficult to involve
the community, and as mentioned by Sloan (2009) it is very
important to involve the community and be seen to be giving back.
2.5 Conclusion
Finding suitable, developable land in rural and underdeveloped
areas is possible. The land will often be in a format which needs to
have the rights converted so that the development can take place.
The process that needs to be undertaken to convert the land will
depend on the format in which the land is represented.
There is legislation in South Africa which facilitates the procurement

process of state owned land, which is under tribal authority control,
and if the developer is patient, and willing to follow the procedures,
he stands to make a certain profit from the process when he sells
the property.
The normal studies have to be conducted to determine the

feasibility of the venture. The most significant reason that private
property development takes place is, the developers and investors
wish to make profit, and this should and can be the instance in
developing land in rural and underdeveloped areas.
2.6 Testing of Hypothesis

“Acquiring land in rural and underdeveloped areas for development
is possible and an alternative for developers to consider as opposed
to development in established areas.”
It is possible to obtain suitable land in rural and underdeveloped
areas and convert it to usable developable land. Therefore the
hypothesis can be accepted.
Chapter 3 - Leasing and Tenant Co-ordination
3.1 Introduction
3.1.1 Leasing
Leasing of a centre in rural areas can be very difficult. It requires a
sound sales strategy and motivated, experienced leasing agents
(Krige 2009). Difficulties that brokers often experience are
convincing national tenants that the centre is a viable proposition
for them to consider, obtaining local tenants that will run
businesses that are of a sufficient standard for the centre and
obtaining the correct mix. Krige (2009) says that the most important
factor for her when leasing, is to understand exactly what she is
selling, and being excited about what she is selling. If she can
transfer her excitement to a tenant then she is halfway to
convincing the tenant that the centre is viable.
3.1.2 Tenant Co-ordination

Another process, which goes hand in hand with leasing, is tenant
co-ordination. (Sloan 2009). Tenant co-ordination is an often
overlooked aspect of retail development. It is essential that, once a
shop has been let to a tenant, the lines of communication between
the tenant and the design team are kept open.
Watts (2009) states that the reasons for this are as follows:
• Both the tenant and the developer will have criteria, which need
to be aligned.
• There may be design work which the tenant has to undertake
that the design team would have to approve.
• Working in conjunction with the tenants to ensure a fluid flow of
information between the parties will enable the developer to
closely control the quality of the tenants shop fit.
3.2 Tenant Mix

3.2.1 Why design a Tenant Mix?
The tenant mix of a shopping centre is recognized widely as a
critical determinant of marketing and financial success (Fowler
2009). Fowlers’ sentiments are further emphasized by McGoldrick
(1992), who states that the tenant mix is a critical determinant in
the success or failure of planned shopping centres For new
shopping centres the early development of a strong tenant line-up
is particularly crucial as these centres endeavour to establish their
market position and market share. ‘One of the brokers’ greatest
advantages when letting in rural areas is that there is an
unsaturated market for them to advertise to prospective tenants.”
(Krige 2009).
From the above it can be established that the tenant mix design is
critically important not only to the developer, but the brokers,
design professionals and the tenants themselves. Thus it is
extremely important that from the beginning of a project the tenant
mix is considered by all parties. The tenant mix can be described
using a measurement-orientated approach, which combines a
number of factors. These factors are the proportion of space or
number of units occupied by different retail and service types, and
the relative position of these services and retail types (Kirkup &
Rafiq, 1994).
Krige (2009) indicates that when developing a tenant mix for

shopping centres in rural and underdeveloped areas the allocation
of GLA to national and local tenants needs to be addressed as
“Anchor” tenant often stipulates what ratio they require for the
fulfilment of the terms of their lease. She further states that
providing service tenants for the patrons is crucial, as a critical
marketing element and intended purpose of the centre is
denunciating the need of the local community to travel into the
larger economic centres to conduct their daily business and
personal activities.
Cloete (2006: Annexure 5,2) states that the factors crucial to

determining an appropriate tenant mix are:
• Current population
• Population development and growth
• Current retail
• Other retail
• Other developments (current and future)
These factors, and the consequent design resulting from them,

used in conjunction with demographic information obtained from the
feasibility studies, a basis can be formed, which the brokers can
approach prospective tenants.
Sloan (2009) says that in his experience the benefits derived from
designing and implementing a solid tenant mix, together with the
effective implementation thereof will continue to be evident
financially to the building owner and to the tenants in the form of
feet, for a significant period of time, and thus justifies spending time
and money on obtaining an effective tenant mix.
3.2.2 Tenant mix in practice?

Upon conducting research amongst the patrons of Case Study 1
and 2, with regards to their personal feelings about tenant mix it
was found that 63 out of 80 respondents were satisfied with the
selection of services and retail outlets, which the centres provided.
This is illustrated by the Figure 3 below.
Figure 3: Patrons’ feelings with regards to tenant mix

and 2.
In rural and underdeveloped areas, it is essential for a development
to maintain a tenant mix that ensures the clientele do not need to
travel into the larger economic centres. Thus the customer
satisfaction with regards to choice is extremely important. It would
seem that, clientele in the areas of Case Study 1 and 2 are
sufficiently satisfied with the amount of choice available to them.
However, in contrast to this result, 37 out of 80 respondents

indicated that they still need to travel into the closest town
(Makhado) to conduct shopping activities. The result is illustrated
by the Figure below.
Figure 4: Patrons travelling requirements

and 2
The results of Question 5, which asked respondents if they still
required to travel to experience basic services would indicate that,
even though the majority of the respondents were satisfied by the
diversity of services and retailers available to them, the tenant mix
has failed in Case Study 1 and 2 because almost 50% of the
respondents were still travelling into the larger economic centres to
conduct shopping activities.
3.3 Leasing Difficulties

3.3.1 Difficulties that are being experienced
Recent environmental changes, specifically the global economic
environment, are having a major impact on lettings and are
presenting significant problems for the development and
management of tenant mix in new centres. This further highlights
the importance of tenant mix
All four of the Case Studies (Shopping Centres) have been

struggling recently to secure the desired quantity and quality of
lettings. Amongst the daily challenges that they encounter the
brokers are experiencing:
• Increased competition from other developers who are also
attempting to get a foot in the door in the areas that they are
working.
• Reduced demands in property as national tenants are
increasingly feeling financial strain.
• In one instance, the failure of the schemes designs.
3.3.2 Dealing with the leasing difficulties

However Sloan (2009) says that by utilizing the difficulties that the
brokers are experiencing a leasing strategy can be developed and
implemented which addresses these issues and then be used to
the advantage of the development. For example when experienced
with a competitive market, getting a head start is the most effective
way of dealing with the competition – once tenants see that a new
development has broken ground they are more prone to pursue a
new store there than in a development which is still at concept
stage. The only way for vendors and franchisors to grow, is by
expanding, therefore if presented with a viable opportunity they will
still consider opening new stores – even in the current economic
environment.
3.4 National Tenants

Krige (2009) indicated that the anchor tenant in case studies 1,2
and 3 required a national tenant component of 70% of the GLA for
the fulfilment of the conditions of their lease. This she states is a
complicated task for various reasons:
• The centres in question often have a smaller GLA than the
national tenants require
• National tenants are unwilling to take on the risk of a centres in
rural and underdeveloped areas
• National tenants are currently experiencing financial difficulties
and are therefore even more circumspect about expanding into
areas, which have a low income.
Therefore, for Brokers to achieve the required 70% national

component, strategies have to be devised to counter the current
feeling of national tenants.
Fowler (2009) says that the most effective manner of convincing

national tenants that the centres in rural and underdeveloped areas
are feasible investment options, is by taking the prospective
tenants on a tour of the existing centres in the area, and then
comparing them with Case studies 1 and 2 which are all currently
trading, and have the tenants see how the centres operate in
comparison with possible opposition.
Below are Figures, which show Case Studies 1 and 2’s occupation
rates at their commencement of trading and their current
occupancy Figures.
Figure 5: Hubyeni occupancy currently

Figure 6: Hubyeni occupancy 2007

Figure 7. Nzhelele occupancy currently
Figure 8. Nzhelele occupancy 2007

Source: Kerr company Documents
From these Figures it is quite clear that it is possible to achieve the

correct ratio of tenants that are required. However the percentage
of vacant stores could be a mitigating factor in the argument.
3.5 Local Tenants

Watts (2009) says that according to him ensuring that local tenants
design and fit a store which complement the centre is paramount to
not only enhancing the quality of centre, but also its “attractiveness”
to potential investors.
The easiest and most effective way of managing local tenants and
therefore the quality of the store that they produce is through the
tenant co-ordination process. This requires a dedicated tenant
coordinator on each centre. (Honeyborne 2009).
The tenant coordinator should first and foremost develop a process

which allows for the free flow of information, is flexible enough to
accommodate the various tenants, and allows for the timely
approval of all information which is to be submitted by the tenants
(Sloan 2009).
The tenant coordinator should consider the following when dealing

with local tenants in rural and underdeveloped areas.
• Meeting with all the tenants personally to explain what is
required.
• Value engineering the developers’ criteria to maximise what
budget is available to the local tenant.
• Making available lists of approved designers and contractors to
the local tenants.
• Regular checks with the local tenants to ensure that they are
still on track.
• Explain to the tenants the value of marketing themselves and
their store through proper shop fitting.
Honeyborne (2009) states that if the tenant coordinator follows the

above steps he/she will assist the tenant in producing a store,
which complements the centre.
3.6 Summary
The difficulties that a developer experiences during the leasing
process of a shopping centre in rural and underdeveloped areas
can be dealt with.
Correct design of the tenant mix, in conjunction with managing the
tenants effectively, and using disadvantages that the brokers may
be experiencing to as positive influences all play a role in the
eventual success of a project from a leasing perspective.
Integrating the leasing team, as well as the tenant co-ordination

process into the professional team is extremely important to ensure
that all the design aspects, which affect the tenants, are taken into
consideration.
3.7 Testing of Hypothesis

“Leasing of the centre’s can be difficult. Many national tenants are
unwilling to take the risk in these areas; they are also harbour
concerns about the size of the centre’s GLA. The quality of the
local tenants could also be a deterrent for national tenants.”
It is possible to reach the required ratios of tenants. Obtaining local

tenants of sufficient quality is possible, however they do require to
be managed. Therefore the hypothesis can be accepted.
Chapter 4 - Finance and Budget Control
4.1. Introduction
The most common reason why property development takes place
is “business”. All the parties, which are involved, wish to earn
money, or make a profit on their investment (Watts 2009). Cloete
(2006:219) states that the objectives, of commercial property
development are to maximise the return on equity.
For example the developer wishes to make a profit on the resale of

the property or obtain sustainable income through rentals.
Investors wish to see a return on their investment. The building
professionals involved wish to earn professional fees, and the
contractor wants to be remunerated for his services. Thus it can be
discerned that most of the participants involved in the process of a
particular property development will describe the success or failure
of a property development in financial terms.
The financial basics of property development are always the same.

To make a profit the developer must: (www.diversefinance.co.uk
2009/08/18)
• Understand all the costs involved in both the acquisition and
build phases. The Figure below illustrates the components of
total capital costs that a developer needs to control throughout
a property development.
Figure 9: Total Capital Costs

Source: Cloete (2006:198)
• Accurately assess the potential sales price
• Manage the finances to project completion
“The means which that the developer employs to obtain and control
the funds for a development will ultimately ensure the success of
the project.” Sloan (2009)
4.2 Equity
4.2.1 What is equity
Equity is a form of financing that comes from investors. It is not
money that will have to be paid back to the investor, rather the
investors will expect a high rate of return or part ownership for
investing in a development. (www.womeninbusiness.about.com
2009/08/18).
The sources of equity financing vary, examples are:

• The developers’ private funds.
• Angel investors, these are individuals who invest in businesses
looking for a higher return than what they would yield from a
more traditional type of investment
(www.smallbusinessnotes.com 2009/08/18).
• Family and business associates.
• Stock sold to shareholders.
Sloan (2009) says that when developing property he always tries to

maximise the owners’ equity in the development, as experience has
taught him that the more he has personally invested in a
development the easier it has been to obtain the outstanding equity
from other investors.
Another reason for maximizing the owners’ equity is for the
developer to ensure that he has control of the project. Because
angel investors are investing for profit they can be very vocal about
the developers’ practices, strategies and performance. The
developer should therefore always consider with whom he is going
into business with when searching for additional equity
(www.womeninbusiness.about.com 2009/08/18).
4.2.2 How to obtain equity

To obtain equity a developer will need, a comprehensive business
plan, which incorporates a detailed marketing plan and realistic
financial projections. The business plan will ask the developer
questions of the proposed project which he might not have
considered and enable the developer to answer questions and
issues that potential investors might raise. Most investors will be
looking for the following core issues with a business plan
(www.businesslink.gov.uk 2009/08/18).
• What are the funding requirements of the proposed

development?
• Are the plans for the development realistic?
• Is the development appropriate for external development?
Pitching of the proposal to potential investors is equally as

important as the preparation thereof. The developer should try to
anticipate the concerns that the investor could have and in turn
show the investor the advantages of becoming involved in the
development. Emphasis should be placed on:
• The investment required.
• The terms that the developer is proposing.
• The ability of the developer to proceed with the project.
• The likely return of the investment.
The business plan should be adapted according to the particular

investor that the developer approaches. This will ensure that the
presentation is relevant, informative and engaging. Investors are
also interested in your own personality and values, they will be
more likely to invest their money with people that trust, and whom
they feel are reliable (www.businesslink.gov.uk).
Great care must be taken not to alter the information, as only one
the true and realistic information must be represented at all times.
Cloete (2006:196) states that financial feasibility studies should
never be manipulated to show the desired result. Botha (2009) also
states that presenting accurate information at all times enhances a
developers reputation as a business person of integrity and
honesty, which is vital to a person’s sustainability in the property
development industry. Botha (2009) further states that in his
experience, investors are much more likely to repeatedly invest
with a particular developer if the experience has been enjoyable
and transparent.
4.2.3 Equity Survey

To establish what potential investors’ feelings are regarding
property development a questionnaire was circulated to various
individuals, and venture capitalists (“angel” investors), which have
invested in property developments. The questions attempt to
establish what importance the investors place on information,
which assists them in making a decision whether or not to invest,
and the various reasons why they invest.
The Figure below illustrates the emphasis that investors placed on
specific types of information.
Figure 10: Information investors rely on

Source: Results of Question 3 Questionnaire to business persons & property
investors
Of the 13 respondents 5 indicated that their decision to invest in a

development would be based on the feasibility studies, whilst 4 of
the respondents showed that the ROI would be the determining
factor.
5 of the respondents indicated that the project concept was the

least important factor in making their decision. These findings
indicate that persons wishing to invest in property are mainly
concerned with financial considerations when making decisions.
This would suggest that when a developer seeks to obtain
investors, the financial information and the presentation of the
Figures would go a long way in determining the success of the
pitch.
The reasons why people invest in property are also of interest to
developers as this will also assist in preparing a proposal for
potential investors. The graph below illustrates why investors invest
in property development schemes.
Figure 11: Reasons persons invest in property.

Source: Results of Question 4 Questionnaire to business persons & property
investors
The results show that the main reasons why investors pursue
property development, is to receive a higher yield on income than
is available elsewhere, and for retirement purposes. This indicates
that when preparing proposals for investors developers should
clearly show the growth potential of the investment, as this is what
the investors are pursuing.
Question 1 of the survey to businesspersons and property

investors asked, if the respondents had invested in a property
development in a rural and underdeveloped area. The results were
that only two of the respondents had. The result is illustrated by
Figure 12.
Question 2 of the survey to businesspersons and property
investors asked if the respondents were willing to invest money in a
development situated in a rural and underdeveloped area. The
response was overwhelmingly positive, 12 of the 13 respondents
indicated that they would invest. This is illustrated by Figure 12.
Sloan (2009) states that the result does not surprise him, as a
venture capitalist by nature will invest his/her money in a scheme,
which is well presented, and shows potential for a high return on
investment.
Figure 12: Have persons invested in property in rural and underdeveloped

areas?
Source: Results of Questions 1&2 Questionnaire to businesspersons &
property investors.
4.2.4 Why is equity required

Property development typically comprises a large total capital
outlay. The outlay breakdown as illustrated in Figure 5, shows the
dispersion of funds on a typical property development. Very few
individuals or organizations have the financial capacity to fund a
property development without obtaining finance from an institution,
which specializes in financing property development. As financiers
carry a certain degree of risk in lending money towards a project,
they require the owners of the development to carry a certain
degree of risk as well. Financiers require the owners to carry this
risk in the form of an equity provision, sometimes also referred to
as a deposit (Beyers 2009).
In times of good economic growth the finance institutions typically

required a twenty percent equity contribution of the financed
amount. This is evident in Case Study 1 & 2, where de Kok (2009)
states that in each instance the financier - Standard Bank –
required the owners of the developments to provide twenty percent
of the financed amount. However more recently obtaining finance
has become more difficult, largely due to the National Credit Act,
market uncertainties and the global economic situation.
Beyers (2009) stated that most financiers currently require a forty

percent equity contribution on the financed amount of a retail
property development. This shows a hundred percent increase on
the financial demands of obtaining equity, to obtain finance, to fund
a development. Sloan (2009) states that this represents a very real
problem to most small to medium enterprises that are typically
involved in developing in rural and underdeveloped areas. They are
struggling to obtain finance based on the equity requirements that
the financiers are placing on them.
Watts (2009) states further, that if it were not for the pre agreed
sale of Case Study 3, on which construction commenced in 2009, it
would not have been possible to obtain the necessary equity, and
therefore the finance for the project. “It should be noted, that even
in times of economic difficulty, it has still been possible to develop a
shopping centre in a rural and underdeveloped area” (Sloan 2009).
4.3 Finance
Finance can be defined as the commercial activity of providing
funds and capital (www.worldnetweb.princeton.edu/perl/webwn
2009/08/18). Finance is necessary to facilitate the relatively high
total capital outlay that is associated with property development.
The acquisition of finance will also mean that a cost is incurred.
This cost is represented in the total capital outlay, as illustrated in
Figure 5. The components, which represent the cost of finance, are
illustrated below in Figure 13, and are namely (Cloete 2006:204-
205).
• Mortgage registration fee – this fee is calculated if a mortgage is
applicable and the fee is a percentage of the mortgaged
amount.
• Mortgage raising fee – this fee is included if a fee was incurred
in the process of raising a mortgage.
• Cost of capital and/or interim interest on mortgage – this covers
the finance fee and the cost of capital, during the construction
period.
Figure 13: Finance Costs

Source: Adapted from (Cloete 2006:204-205)
4.3.1 Obtaining finance
To minimize the cost of finance and therefore maximise the
profitability of a development the following steps can be taken
(Cloete 2006:221):
• Obtain the best interest rate
• Shorten the building period
• Delay large payments
Watts (2009) says that like anything that you wish to purchase, the
asking price for finance is negotiable. Therefore one should always
“shop around” for the very best possible deal when obtaining
finance for a development. Beyers (2009) states, that the most
effective technique of obtaining the best finance deal is to have a
good business relationship with the financier, and to submit all
required information timorously and accurately.
The information that is typically required by financiers for retail

development is (Beyers 2009):
a) Copy of the Title deed & Purchase agreement of land (if

applicable)
b) Borrowing company
• Financial statements
• Banking detail
• Background on the group and list of projects completed
c) Shareholders
• Statements of assets and liabilities for individuals/directors/other
entity involved
• Banking detail for each director
d) The development
• Copy of the proposed site development plan, and preliminary
building plans
• Approved building plans will be required before the
disbursement of building draws
• Detailed development cost and feasibility study
• Proposed rent roll (specify area, rate/m , operational costs,
period of lease and escalations)
• Specifications & finishes
• Names, contact number, CV of professional team (company &
contact name)
• Zoning certificate (if the stand is in process of being zoned
please furnish the bank with a copy of the zoning application)
• Copy of a demographic and retail study
• Location map
e) FICA requirements - Financial Intelligence Centre Act (see
Table 1 below)
• The Financier will require that the Borrower provides the Bank
with information to satisfy the compliance requirements of FICA,
see Table 1 below.
The Borrower and the sureties, if the surety/ies are Surety - if the surety is a person
legal entities
A certified copy of the following detailing the name of the A certified copy of the person’s identity
entity and registration number: document.
A certified copy of 1 (One) of the following
In respect of a Close Corporation, the CK1 and CK2 documents reflecting the person’s name and
or; residential address:
In respect of a Company the CM1 and CM22 or; • Electricity or water bill;
In respect of a Trust, the Trust Deed or Letters of • A bank/mortgage bond statement;
Authority or; • Recent lease or rental agreement;
In respect of a listed Company, a print out from the • Municipal rates and taxes invoice;
relevant Stock Exchange’s website confirming the • Telkom account;
listing. • SARS tax return;
A certified copy of 1 (One) of the following documents • Pay slip or salary advice;
reflecting the physical business address and trading
• A life, or short term insurance policy;
name, if applicable:
• Recent correspondence from a body
• An original letterhead;
corporate or a share
• Electricity or water bill; block association.
• A bank statement;
• A recent lease or rental agreement;
• Municipal rates and taxes invoice;
• Telkom account;
• SARS tax return.
Except for the tax return, the above may not be older than Except for the tax return, the above may not
3 (Three) months. be older than 3 (Three) months.
Table 1: FICA requirements.

Source: Financial intelligence centre act.
4.4. Budget Control

“The most important thing to understand about cost control of a
project in any property development, is that each and every person
involved in the project, from the developer to the labourers’ have a
impact on the final cost of the project. This impact can be positive
or negative, and the effects will be felt by various stakeholders,
depending on the attitudes and the extent of involvement of the
particular person.” (Honeyborne 2009)
As illustrated in Figure 9 the total capital costs of a project are

typically represented by 6 costs namely:
• Land costs
• Escalated construction costs
• Professional fees
• Finance costs
• Marketing costs
• Other costs
According to Watts (2009) it is easiest to manage the different

costs separately and show the accumulative effect of the costs
when reporting. His reasons are as follows:
• The various costs can be determined to varying degrees of
accuracy at different stages of a project.
• In any organization there would be different personnel who will
be responsible for different facets of the project.
• The costs have an accumulative effect but they can still
represented singularly on their own.
The estimated costs of a development need to be established for
these costs to be controlled. The costs are typically established in a
financial feasibility study and reported on in a cost report as a
project progresses. It must be noted that any study, which is
undertaken, and report that is submitted is only as reliable as the
information, which goes into it. Information should always be used
with care and natural intuition so as to ensure that decisions are not
based on inaccurate information.
4.4.1. Controlling the Costs and Maximising the Profit

Controlling the costs to maximise profit has a far greater impact at
concept stage than it does towards the end of a project. Therefore
great care should be taken from the very beginning of a project to
maximise profit through applying cost control from the very the
onset of a project
a) Land Costs
The costs, which contribute towards obtaining land and converting
it into usable developable land, are collectively referred to as land
costs.
They are as follows (Cloete 2006:199-200):
• Value of the land
• Transfer costs
• Soil tests
• Bulk service charges
• Interim tax on land or improvements
These costs can be identified and estimated fairly accurately early

on in a development. Apart from the purchase price of the land and
tests done on the land, the costs on the land will largely be non
negotiable. Sloan (2009) says that when developing in rural and
underdeveloped areas, the difficulty that is experienced when
converting the land to usable land, cannot be ignored, and must be
considered as a cost to the development.
b) Escalated Construction Costs

Estimated construction costs can be calculated using different
techniques. In feasibility studies the estimate is usually based on an
elemental analysis, or on a square meter basis. The elements of
escalated construction cost are the following (Cloete 2006:201-
202):
• Escalated current building cost
• Pre-tender escalation
• Post tender escalation
As the project progresses and designs are streamlined and the

project goes out on tender, the final construction cost can be more
clearly estimated. The best possible method of controlling building
costs according to Watts (2009) is to ensure that the administration
of the building contract is done correctly, and to manage the design
development in such a way that all items are carefully considered
from a cost perspective before finalizing the designs.
c) Professional Fees
These are fees, which are due to the design and construction
professionals for services and disbursements. The fees are usually
calculated on a percentage of the construction cost.
Sloan (2009) says that when developing retail space in rural and
underdeveloped areas it is beneficial to make use of a project
manager, who has experience working in the environment as his
input and administration of the project, enables further savings.
Cloete (2006:204) states that a partially compensating saving of
the project management fee can be effected by in reducing fees
paid to other consultants as the project manager assumes
responsibilities that these consultants would normally assume.
In terms of turnkey development, making use of “in house” project

management services enables the developer to generate a stream
of income throughout a project, as well as ensuring that the
developer maintains a further degree of control on the project
(Watts 2009).
d) Finance Costs
Finance costs have already been discussed in Point 4.3, and are
illustrated in Figure 9. The costs involved represent costs, which
are incurred when securing and maintaining the finance.
Finance costs are directly influenced by other costs of a project.

For example, the building costs will affect the interim interest
charges. Therefore project control and savings will represent a
saving in finance costs.
e) Marketing Costs
Marketing costs typically comprise of the following (Cloete
2006:206):
• Marketing and promotional costs
• Leasing commissions
In retail centres the marketing and promotional costs could be a

substantial Figure (Cloete 2006:206). Sloan (2009) says that a
great marketing feature of retail centres in rural and
underdeveloped areas is that the centre is self-marketing. The
shopping centre from the onset of construction involves many
members of the surrounding communities. It becomes a prominent
landmark in the area and generates interest through labour desks.
Thus much of the marketing costs can be minimized.
4.5 Cash Flow

“All the money in the world is useless, unless you can access it”
(Richard Branson).
In broad terms cash flow refers to a period of time for which

specific amounts of money are utilised. Cash flow predictions are
made on the project period and utilizing milestone dates (de KOK
(2009).
Accurately forecasting a project’s construction time and cost is

critical to the development process as the anticipated time and cost
forms a basis for financing, planning and monitoring a project. It
can mean the success or failure of a project and is therefore in the
financier’s and developers’ best interest to forecast accurately.
Generally speaking, construction projects tend to use funds slowly
at first, then as additional trades commence on site, expenditure
tends to increase sharply and then tail off towards the end of the
project as major trades finish up. This pattern of expenditure is
illustrated by an S-curve, is shown in Figure 12 below. This curve
provides a good tool to monitor a project’s progress and rate of
expenditure against time and budget
(http://www.bmtqs.com.au/bmtqs/Articles/bmtqs24.htm
2009/08/18).
When actual monthly expenditures are applied against the forecast

curve, progress, can be assessed against the forecasted cash
flows. Generally speaking, projects tracking below the line indicate
they are expending funds faster than anticipated and are perceived
to be ahead of schedule and those below the line are falling behind
expected expenditure.
Combined with other forecasting methods as well as manual

assessments, the Cash Flow forecast and actual expenditure graph
can give an early indication of a project’s progress and forecast
anticipated completion dates well in advance
(http://www.bmtqs.com.au/bmtqs/Articles/bmtqs24.htm
2009/08/18).
The consequences of poor cashflow predictions are:

• Delays in planning and construction due to lack of funds;
• Exhausting funds before the end of the project – leaving the
project unfinished and with no money to complete it; and
• Reduced quality of workmanship due to having to cut corners to
make cash go further than expected.
Figure 14: Typical Cash flow curve for a Property Development
Source: www.bmtqs.com.au/bmtqs/Articles/bmtqs24.htm 2009/08/18
In Case Study 2 and 3 there were payments made to the

contractor, which were late. In both instances it resulted in the
contractor being awarded default interest and an extension of time.
The result was that the contractor was also paid and acceleration
fee. The reason that the payments were late was because of
inaccessible funds. The resultant penalty and additional fees had to
be absorbed by the developments, decreasing the profitability of
the developments.
Sloan (2009) states that most developers do not appreciate the

importance, of tracking cash flow, and monitoring it. It is a
procedure that all developers should undertake on a daily basis to
ensure that funds are available when needed.
4.6 Summary
Most stakeholders in a property development will base their opinion
on the success of a project from a financial perspective. Investors
wish to make a high return on their investment, the developer
wishes to earn intermediate income and profit on the sale, building
professionals wish to earn fees for their services.
For a property development even to take place equity has to be

acquired in order for finance to be secured. It is possible to obtain
equity, though in the process of securing the equity developers
should be selective of the sources of equity, and never mislead
potential investors by any means, but especially by deliberately
misrepresenting information.
Without finance there would be very few individuals or

organizations that would be able to participate in retail development
in rural and underdeveloped areas. The steps that are to be
undertaken when obtaining finance are necessary to ease the mind
of the financiers, however no developer should ever accept terms
that are stipulated by a financier, as there is always a possibility of
obtaining better terms from other financiers.
Through exercising control of the projects capital costs it is possible

to ensure that a project stays within its budget, and the potential
income from the project is maximised. However, where there is no
control of the costs, the developer and the investors could
potentially lose money, or not realize a return on their investment.
The cash flow predictions, and realities need to be carefully

planned and managed so that the developer always has sufficient
funds, which are accessible to ensure that progress on a project
does not halt due to inaccessible funds.

“Obtaining equity, securing finance and tight Budget control, can
ensure the overall financial success of the venture.”
It is possible to obtain equity and finance. Proper budget control will
assist in controlling costs. Therefore the hypothesis can be
accepted.
Chapter 5 - Design and Construction
5.1 Introduction
When designing and constructing any structure the professional
team, together with the contractor should strive to deliver a product,
which is within the brief and built to a quality and standard, of which
they can be proud (Watts 2009). This is especially relevant in rural
and underdeveloped areas, where there is a tendency for
developments to appear “second rate”. Sloan (2009) says that an
important part of obtaining the required rentals, finance and land is
the ability to deliver a product, which is aesthetically pleasing,
structurally safe and built according to best building practices.
Amongst the difficulties that are experienced when working in rural

and underdeveloped areas are appropriate design, skills shortages
and material selection. These issues can be addressed early on
and solutions should be implemented at all stages of the project, to
ensure the quality of the build and the end product.
5.2 Building Practices

Regulatory Affairs promotes uniformity in the understanding and
implementation of NBR’s made in terms of the National Building
Regulations & Building Standards Act 103 of 1977
(www.sabs.co.za 2009/09/12). The erection of buildings however
generally falls within the regulatory jurisdiction of local authorities
and local government.
The NBR’s set standards for the technical performance for all
buildings constructed in South Africa, to ensure the health and
safety of occupants. The NBR’s have been reprinted in the SABS
0400:1990 - The code of practice for the application of the National
Building Regulations (www.sabs.co.za 2009/09/12).
The JBCC suite of contracts is the most commonly used suite of

contracts used in the building industry in South Africa (Watts 2009).
According to the JBCC principal building agreement, contractors
are not responsible for building design or specifications. They can
however be held accountable by owners for quality of
workmanship, adhering to specifications. Ensuring that contractors
adhere to this is according to Watts (2009), one of the essential
ongoing duties of the professional team in turnkey projects.
Reasons for ensuring that quality of workmanship and
specifications are adhered to are as follows (Honeyborne 2009):
• Ensuring that the building will be fit for occupation
• Ensuring that the, building, is allowed to be occupied on
commencement of trading.
• Preventing delays due to re-work.
• Delivering a product of which all involved can be proud of.
Goosen (2009) says that in his experience as a Main Contractor

working in rural and underdeveloped areas, obtaining the
necessary skills required to ensure the building is of the standard
desired is the biggest problem that he is faced with. There are
basically two options available to the contractor, either import the
required skills, or develop the existing skills in the area.
Sloan (2009) states that often in the negotiations in the process of

obtaining land it is necessary to submit a plan, which indicates how
the local economy will benefit. It is also a key concern of local
governments that if development happens in their areas, then the
wealth is retained in the area. Therefore if a developer wishes to
have longevity in the industry, then the developer must be seen to
be effective in enhancing the local economic benefit of the areas
surrounding the development. Thus a contractor only has one
option available to him if he wishes to ensure that best building
practices are adhered to, and that is developing the skills that are
locally available.
5.3 Skills Development
To facilitate the skills development and ensure the employment of
locals on developments in rural areas in Limpopo, Sloan has
developed a model, which incorporates the local community – The
Project Steering Council. The project steering council system is
made available to the main contractor, and he is encouraged to
make use of it through a benefit scheme. The project steering
council system is implemented prior to construction beginning and
is facilitated by the developer.
The system aims to ensure that local labour is utilised during

construction and later by the tenants. It identifies available skills,
suppliers and materials, which are indigenous to the area. It takes
cognizance of shortages in the previously mentioned fields, and
allows the professional team to alter designs, to accommodate the
available skills (Sloan 2009).
The project steering council is made up of representatives from

various stakeholders in the project, most prominently the
developer, the contractor, local leaders, and major tenants - at a
later stage, and domestic sub-contractors.
The Steering Council’s first order of operation is to establish a

labour desk. A community liaison officer, who is appointed by the
steering council and who is paid for his services by the developer
and is responsible to the council, operates the labour desk.
The labour desks duties include:
• Sourcing local labour and CV’s.
• Sourcing local suppliers.
• Maintaining relations with the community.
• Advising the steering council on local representation in the
project.
• Running skills development workshops when required.
Sloan (2009) states that the most perceivable and noticeable

benefit of utilizing the project steering council system is that the
developer is visibly seen to be active in community upliftment and
involved in local economic development.
The function of the council needs to be carefully managed to

ensure that it, is a successful endeavour, and not just a farce
(Honeyborne 2009). The council needs to be educated in their
purpose so that they do not hamper the building process, and
interfere with the daily business of the contractor and professional
team. The members of the council will by nature very often be local
political Figures, and their objectives will differ greatly from the
developers, and thus the process can be exhaustive, however the
benefit that is derived from it exceeds the negative aspects (Sloan
2009). Below is a Figure, which shows the compilation of a typical
project steering council, and shows how the benefits flow of the
system flows back to the developer.
Figure 15: Community Steering Council Diagram

Source: Author’s own
Mukhari (2009) a domestic sub-contractor on Case Study 2 and 3,
states that his personal knowledge with regards to construction as
well as that of his employees has greatly increased with the
developments. He further says that his teams’ productivity has
increased, and the quality of their workmanship has evolved to a
point, where his company is now being considered for an up-
market residence in Louis Trichardt. This illustrates how the skills
development workshops, and exposure to projects where the
professional team has taken an uncompromising stance on quality
has provided a domestic sub-contractor the opportunity to employ
more persons, and develop his product delivery.
5.4 Design
The design of structures in rural and underdeveloped areas in
Limpopo province is extremely modular, and in the majority of the
existing buildings incorporate very little of the surrounds and the
culture of the people. There is very little in the built environment,
which evokes an emotion in one when you enter the space
occupied by the building (Botha 2009). An important concept in
developing shopping centres in rural and underdeveloped areas is
that the design must create a feeling of community the shopping
centre must become a place of meeting for the community, a place
which they call their own (Sloan 2009). To accomplish this it is
necessary for the designers to consider the communities’ needs
and wants. They should consider activities, which are already
taking place in the area and incorporate them into the design.
Materials, which are locally available, must be incorporated into the
design. Amenities, which will be available in any shopping centre,
should be provided.
5.4.1 Supporting activities
The most common supporting activities of a shopping centre in a
rural and underdeveloped area are taxi ranks, bus stops, hawker
stores and schools. Instead of being repulsed by them as many
developers would in the larger economic centres, they should be
embraced and incorporated into the centre, to increase the
community feel (Sloan 2009).
In Case Study 1 the site is situated on an area, which was used for
sports fields by the neighbouring school. Adjacent to the site was a
taxi rank, which was a stop for taxis travelling in several directions
and a drop of point for busses, which commuted to the closest
town. Surrounding the taxi rank were approximately 67 hawker
stalls. To incorporate these supporting activities into the centre the
designers incorporated a new transport system, which incorporated
busses and taxis which in appearance is similar to a train station.
The system was developed in conjunction with the bus operators

and taxi association to bring the people in and out of the centre
directly. New hawker stalls were built – some with built in cooking
facilities – and the hawkers from the taxi rank were given an
opportunity to move their businesses into the centre. In the opinion
of Watts (2009) these measures even though costly at the time, are
now an integral feature of the shopping centre, and in large are
responsible for the acceptance of the centre by the community, and
prevented any backlash from local businesses. Below are Figures
which depict the new taxi rank, and hawker stall area at the centre.
There are before and after shots to illustrate the difference.
Figure 16: Elim taxi rank and Hawker Stalls
Figure 17: Hubyeni Mall taxi rank and hawker stalls

5.4.2 Material selection

Material selection plays an important role in design (Botha 2009). It
impacts the aesthetics and cost of the building. Both these factors
are of significance to the developer, as they both play a role in the
appeal of the building as an investment. Goosen (2009) states that
some of the problems that are faced with, when obtaining materials
in rural areas are:
• High transport costs.
• Longer than average lead times.
• Availability
• Quality
It is easier to compensate for these problems in the design of the

building than to, attempt to rectify them during construction.
Utilizing the project steering council system it is possible to
determine, what is available in the area in terms of standard
building material, and finishing materials. Making use of locally
available materials assists with local economic development, as
well as, enhancing the feelings of ownership in the community. In
Case Study 1, the architect made use of a clay tile on the façade,
which was manufactured by the local pottery ladies. The tiles
caught the attention of a local businessman who now distributes
their ware. In Case Study 2 the architect wished to use a natural
stone finish on the entrance towers and there was an abundance of
loose rock in the area. Locals were paid to bring the rocks to the
site for rework, creating further spin-of opportunities for wealth
creation within the area.
Building materials, which may seem readily available in the large

economic areas such as aggregate and stock bricks are not always
available in the quantity required. Therefore careful planning and
management of the builders’ resources is necessary (Goosen
2009). Below are Figures, which illustrate the use of locally
available materials.
Figure 18: Clay Tiles (visible on the column to the left)
Figure 19: Locally sourced Natural Stone

5.5 Summary
The developers need to be seen to be actively involved in the
community is most visible through his attempts to make use of local
labour and stimulate local economic development. The design and
construction phase of the project allows the developer to meet his
obligations in this regard. The design and construction of shopping
centres in rural and underdeveloped areas, does not need to be of
a sub-standard, and through applying themselves the professional
team can deliver a product, which is of superior quality and
standard.
The project steering council system that Sloan has developed and
applied to projects in rural and underdeveloped areas, allows the
developer to make use of local resources and labour. The system
is effective because it incorporates the community on a certain
level of decision making, without compromising the projects ability
to be financially successful. The spin-off enterprises that can result
from the system further enhance the status of the project, as a
community-benefitting venture.
The skills that the local domestic contractors, amass during the
construction of the projects, allows them to develop their
businesses to the point where they are able to participate in a wider
variety of projects, as their quality and productivity are increased.
There are materials, which are locally available and aesthetically

pleasing, and extra effort required to source them is advantageous
to all the stakeholders involved from a reputation and cost
perspective.

“Through appropriate design and careful material selection, as well
as skills development and skills transfer, it is possible, to construct
a retail development of a very high quality and standard, which will
centres.”
The hypothesis can be accepted.

Chapter 6 - Conclusions
6.1 Main Problem
“How to deliver a feasible, sustainable “turnkey” retail development
in underdeveloped areas that satisfies the needs of the client,
tenants, community and the investor.”
This problem was investigated under 4 sub-problems. The four sub

problems were namely:
• Is it possible to acquire land in rural and underdeveloped areas
for turnkey retail development?
• Is it possible to let a retail centre, and manage the tenants in a
rural and underdeveloped area?
• Can the developer obtain finance, and control the costs and
budget for a retail centre in a rural and underdeveloped Area?
• Can a retail centre be designed and built in a rural and
underdeveloped area, which would not be amiss in an up
market suburb?
In discussing and determining solutions for the problems research

was conducted on 3 case studies. Initially 4 case studies were
planned, however the, fourth was cancelled by the developer for
private reasons, and therefore there was insufficient material to
consider the information for inclusion.
Surveys were conducted on patrons of the case studies, as well as

known property investors to determine whether statements made
by the developer were realistic.
Interviews were conducted with the staff of the developer of the

developer of the 3 case studies, to determine procedures that they
followed and constraints that they experienced.
An interview with a member of a prominent South African finance
house was conducted to ascertain the requirements of financiers in
the development of retail property.
Various publications – in print and Internet based – were utilised to

support theories and statements made during the interviewing
process.
6.2 Land Acquisition

6.2.1 Sub problem
How to go about acquiring land that will be suitable in location and
cost for the development. The difficulties that are involved in
obtaining state/tribal land and converting it into private land.
Dealing with local government institutions and officials to obtain
state/tribal owned land for development and making use of existing
private land in established townships.
6.2.2 Statement of hypothesis

Acquiring land in rural and underdeveloped areas for development
is possible and an alternative for developers to consider to
development in established developed urban areas.
6.2.3 Conclusions
When obtaining land for development in rural and underdeveloped
areas the factors that make a site suitable for developments alike
to the factors which would make a suitable site in a larger
economic centre. The location of a site is the most important
determining factor of the projects potential success.
Land in rural and underdeveloped areas will be found in different

forms, namely state owned under a tribal authority, municipal
owned land and privately owned land. The status of the lands
ownership, and the rights associated with the property will have an
influence on the cost of the land. There is legislation in South Africa
which facilitates the development of land in rural and
underdeveloped areas, namely the Interim Protection of Informal
Land Rights Act of 1996, which protects the interests of persons
residing on state owned land and the Development Facilitation Act
no. 67 of 1995, which allows private individuals and organizations
to obtain control of this land.
It was shown that it is possible to obtain the land and develop it

irrespective of the format in which it is found in, as the three case
studies were initially each found in one of the aforementioned
formats.
On this basis the hypothesis for land acquisition was accepted.
6.3 Leasing and Tenant Co-ordination

6.3.1 Sub problem
Convincing national tenants that they should be interested in
establishing themselves in these areas, is possible. The
combination of careful selection and “coaching” of the local tenants
combined with a good mix of shops appropriate to the area can

Convincing national tenants that they should be interested in
establishing themselves in these areas, is possible. The
combination of careful selection and “coaching” of the local tenants
combined with a good mix of shops appropriate to the area can
6.3.3 Conclusions
Leasing and tenant co-ordination are two of the development
processes, which are interrelated and crucial to the success of the
development. The lines of communication between the
representatives of the two disciplines must be maintained at all
times. The tenant coordinator serves as a link between the design
team and the leasing agents, which is vital to the flow that stems
from brokers negotiations and the tenants’ requirements.
The importance of designing and obtaining the correct tenant mix

will have an effect on the cost of the development, its potential
yield, obtaining finance and the marketability of a shopping centre.
Even though the results of questionnaire 1 and 2 showed that the
patrons of the centres were satisfied with the tenant mix, a
overwhelming majority of the patrons still travelled to the closest
large economic centre to conduct activities. These results are
contradictory however not much should be read into them.
Utilizing the tenant co-ordination process, and careful selection it is

possible to educate the local tenants, and ensure that they produce
a store of significant quality so that it their stores do not degrade
the centre.
On this basis the hypothesis for leasing and tenant co-ordination

was accepted.
6.4 Finance and Budget Control

6.4.1 Sub problem
How can equity and finance be obtained from investors and
financial institutions? Can tight control of the project budget and
cash flow set the project on a path to financial success? Ensuring
that all the stakeholders of the project consider the venture a
financial success will be major consideration in the parties
becoming involved in similar projects later.

Obtaining equity, securing finance and tight budget control, can
ensure the overall financial success of the venture.
6.4.3 Conclusions
Obtaining equity for property development is possible. The reasons
that investors will invest in a development vary, however they are
always interested in the financial reward for the investment. The
developers ability to fit all the relevant information of the
development into a comprehensive business plan and pitch it to
potential investors, will determine whether investors are interested
or not. The reason that equity is required in property development
is mainly to obtain finance.
Finance is necessary in property development to facilitate the high

capital costs that is associated with the industry. When obtaining
finance the developer should always consider his/her options, as
the cost of finance will impact heavily on the potential profit of the
scheme should the terms of the deal be un-favourable. The
requirements of the financial institution, and the applicable
legislation – namely the financial intelligence act - will have to be
met before finance can be accessed.
To ensure the ultimate financial success of a property

development, there needs to be a high degree of control over the
budget. For the development to be financially successful, all the
stakeholders’ financial objectives should be met. The most efficient
means of meeting all these objectives is through managing the
budget. Budget control will ensure that there are sufficient funds to
complete the project, and that the investors returns are realized.
On this basis the hypothesis for finance and budget control was
accepted.
6.5 Design and Construction

6.5.1 Sub problem
Can a centre be created which is aesthetically pleasing, of sound
construction and incorporates the use of local materials? How does
the contractor make use of all the local labour and skills that are
available to him/her, and further more developing skills that are
required instead of importing them.

Through appropriate design and careful material selection, as well
as skills development and skills transfer, it is possible to construct a
retail development of a very high quality and standard, which will
centres.
6.5.3 Conclusions
If the particular needs and requirements of a community in a rural
and underdeveloped area that is being considered for a potential
retail development are addressed during the design development
phase of a project are considered then the project will benefit from
community support, which is vital to the project’s success. If the
design incorporates features such as public transport, hawker
stalls, and community areas then the centre can become a natural
congregation area for the community.
The project steering council system is an effective tool to facilitate

skills development and skills transfer, as well as a invaluable
source of labour and materials to the development. The project
steering council also integrates certain stakeholders in a mutually
beneficial relationship where issues and policies can be discussed.
The developer’s facilitation of such a system also further enhances
his status as a socially responsible developer, whose interests lie
not only in personal wealth creation.
Through diligence and use of available resources the project will

also result in a centre, which can be associated with much
wealthier areas. This factor is very important for the potential future
sale of the development, as well as the longevity of a developer
concentrating in a particular area.
On this basis the hypothesis for design and construction was

accepted.
6.6 Solving of the Main Problem
Based on the conclusions reached in the four sub problems, the
practical application of the three case studies and the research
conducted the main problem has been solved, within the
delimitations set out in Chapter 1.
6.7 Recommendations
Further studies on similar developments in other provinces within
South Africa, to determine whether the conclusions reached for the
sub problems hold true across the country, and within different sets
of social groups would enhance the value of this study.
Bibliography
Books
Cloete, CE. 2006. Feasibility studies – principles and practice. Second edition.
The South African Property Education Trust.
McGoldrick, PJ. 1990. Retail Marketing. London: Mcgraw Hill
Journals
Kirkup, MH & Rafiq, M (1994) Managing tenant mix in new shopping Centres.
International Journal of Retail and Distribution Management, vol.22 p.6
Other Sources
Beyers, M. 2009. Account Executive, Standard Bank
Botha, P. Pr.Arch M.Sc Architecture. Managing Director, Botha & Associates.
Fowler, V. 2009. Certified Financial Planner, EAAB. Senior Leasing Agent,

The Property Practice.
Goosen, F. 2009. B-tech Civil. Contracts Manager, Vision Construction.
Honeyborne, AC. 2009. B.Sc (Honours) Construction Management. Project

Manager, Kerr Developments.
Kenneth-Watts, A .2009, Pr.Eng M.Sc Eng (Civil). Senior Project Manager,

Kerr Developments.
Krige, B. EAAB. General Manager, The Property Practice.
Mukhari, J. 2009. Small Business Owner.
Sloan, LCK. 2009. Pr. Eng M.Sc Eng (Civil). Managing Director, Kerr
Developments.
World Wide Web Sites
“Angel Investors”
http://www.smallbusinessnotes.com/financing/angelinvestors.html
“Architecture & Building – Products & Services”

https://www.sabs.co.za/Business_Units/Regulatory/RegulatedProducts_Servi
ces/Architecture/Overview.aspx (12 Sep. 2009)
“Cash Flow Forecasting”

http://www.bmtqs.com.au/bmtqs/Articles/bmtqs24.htm (18 Aug. 2009)
“Financial Definitions: Definition of Equity Financing.” http://www.womenin

business.about.com/od/financinginvestingterms/g/equityfinancing.htm (18
Aug.2009)
“Financial Terms “ http://www.worldnetweb.princeton.edu/perl/webwn (18

Aug.2009)
“How to Finance a Property Development Project”

http://www.diversefinance.co.uk/property-
finance/how_to_finance_property_development_proj/ (18 Aug. 2009)
Annexure 1
Questionnaire Regarding Patron Perceptions and Usage of
the Nzhelele Valley Shopping Centre:
Nzhelele Valley Shopping Centre
Questionnaire Regarding Patron Perceptions and Usage:

Please indicate in the box provided what your answer to the question is.
1. Are you satisfied with the diversity of services and retailers that the centre
currently provides?
Yes No
2. What transport and other related savings do experience as a result of the

centre’s location?
R0 – R50
R50 - R100
R100 – R200
R200 & more
3. Do you feel that the shopping centre has benefited and involved the community
through its life cycle thus far?
Yes No
4. Please order the benefits by importance, that the centre has provided to the
community, as you perceive them to be 1 being the most important.
Temporary job creation & Skills transfer
Permanent job creation
Convenient shopping
Competitively priced goods and produce
Reduced transport costs
5. Do you still experience the need to travel into Makhado to conduct monthly
shopping activities?
Yes No
Annexure 2
Questionnaire Regarding Patron Perceptions and Usage of
the Hubyeni Shopping Centre:
Hubyeni Shopping Centre
Questionnaire Regarding Patron Perceptions and Usage:

1. Are you satisfied with the diversity of services and retailers that the centre
currently provides?
Yes No
2. What transport and other related savings do experience as a result of the

centre’s location?
R0 – R50
R50 - R100
R100 – R200
R200 & more
3. Do you feel that the shopping centre has benefited and involved the community
through its life cycle thus far?
Yes No
4. Please order the benefits by importance, that the centre has provided to the
community, as you perceive them to be 1 being the most important.
Temporary job creation & Skills transfer
Permanent job creation
Convenient shopping
Competitively priced goods and produce
Reduced transport costs
5. Do you still experience the need to travel into Makhado to conduct monthly
shopping activities?
Yes No
Annexure 3
Business Persons and Property Investors

1. Have you invested in a property development in a rural and underdeveloped

area previously?
Yes No
2. Are you willing to invest in a property development provided that is situated in a

rural and underdeveloped area?
Yes No
3. Please number the following information in order of importance, on which you

would base a decision on to invest in a project.
Project Concept
Feasibility Studies
Business Plan
Return on Investment
4. Please indicate for which reason you became involved in, investing in a
property development.
To obtain a higher yield of your investment, than through more traditional
methods of investment
Creating work for yourself
Obtaining additional monthly income
Building a property portfolio
Retirement investment
Annexure 4
Case Study 1 – Hubyeni Mall
Hubyeni Shopping Centre
Professional Team:
Developer: Kerr Limpopo Property Investments (Pty) Ltd
Project Manager: Kerr Developments (Pty) Ltd
Architect: Studio 3 Architects (Pty) Ltd
Quantity Surveyor: Storm Sciocatti (Pty) Ltd
Civil Engineer: Dekker & Gelderblom (Pty) Ltd
Structural Engineer: Dekker & Gelderblom (Pty) Ltd
Electrical Engineer: Wood & Associates (Pty) Ltd
Mechanical Engineer: Q-Mech (Pty) Ltd
Tenant Coordinator: Kerr Developments (Pty) Ltd
Leasing Agent: The Property Practice (Pty) Ltd
Main Contractor:
GD Irons (Pty) Ltd
Community Liaison Officer:

Samuel Mbhombi
Annexure 5
Case Study 2 – Nzhelele Valley Shopping Centre
Nzhelele Valley Shopping Centre
Professional Team:
Developer: Kerr Limpopo Property Investments (Pty) Ltd
Project Manager: Kerr Developments (Pty) Ltd
Architect: 3 – Point Architects (Pty) Ltd
Quantity Surveyor: Storm Sciocatti (Pty) Ltd
Tenant Coordinator: Kerr Developments (Pty) Ltd
Main Contractor:
Platinum Mile Investments (Pty) Ltd. t/a Vision Construction – Frik Goosen

Lucas Ramathavana
Annexure 6
Case Study 3 – Phangami Mall
Phangami Mall
Professional Team:
Developer: Omigpi Kerr Property Investments (Pty) Ltd
Project Manager: Kerr Property Investments (Pty) Ltd
Architect: Boogertman & Partners (Pty) Ltd
Quantity Surveyor: GK Projects (Pty) Ltd
Tenant Coordinator: Kerr & Walker Property Developers (Pty) Ltd
Main Contractor:
Platinum Mile Investments (Pty) Ltd. t/a Vision Construction – Frik Goosen

Margaret Ndu

Farrell Retail (2009) PDF

Uploaded by

Copyright:

Available Formats

Farrell Retail (2009) PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Farrell Retail (2009) PDF

Uploaded by

Copyright:

Available Formats

Retail Development in Rural and

Dennis Abram Farrell

Submitted in fulfillment of the requirements for the degree of

In the faculty of Engineering, Built Environment and

Title of Treatsie: Retail Development in Rural and Underdeveloped

Author: Dennis Abram Farrell

Study Leader: Prof JH Cruywagen

Institution: Faculty of Engineering, Built Environment and

Date: October 2009

This research will determine it is possible to pursue turnkey retail

Chapter 2 – Land Acquisition 7

Figure 1: Savings as a Result of Linkage 9

Table 1: FICA Requirements 36

The economic spinoffs include

Retaining income within communities and the economic benefits

The land is available, the people are there, a product is required

1.2 Statement of the Main Problem

1.3 Statement of the Sub–Problems

1.3.4 Can a Retail Centre be Designed and Built in a Rural and

1.4.2 Leasing and Tenant Co-ordination

1.4.3 Finance and Budget Control

1.4.4 Design and Construction

1.7 Importance of Study

1.8 Research Methodology

1.8.3 To determine what is required to ensure the financial success of

1.8.4 In researching the design and construction of these centres

1.8.5 Publications, journals and web based information as well as

The cost and location of property is always at the forefront of a

Sites in rural areas will present themselves in different forms, and if

When acquiring land for development there are many factors to

Figure 1 below shows the average savings, which patrons of Case

Figure 1: Savings as a result of Linkage

2.2.3 Site Requirements

According to Watts (2009) “when developing turnkey operations the

Quite significantly that when dealing with rural and underdeveloped

2.4 Obtaining Land

The process of obtaining state owned land could be separated into

In Case Study 1 the land in question was state owned at a

The phases are broken down in Figure 2 on the following page. It

2.4.2 Municipal Owned Land

There is legislation in South Africa which facilitates the procurement

The normal studies have to be conducted to determine the

2.6 Testing of Hypothesis

Chapter 3 - Leasing and Tenant Co-ordination

3.1.2 Tenant Co-ordination

3.2 Tenant Mix

Krige (2009) indicates that when developing a tenant mix for

Cloete (2006: Annexure 5,2) states that the factors crucial to

These factors, and the consequent design resulting from them,

3.2.2 Tenant mix in practice?

Figure 3: Patrons’ feelings with regards to tenant mix

However, in contrast to this result, 37 out of 80 respondents

Figure 4: Patrons travelling requirements

3.3 Leasing Difficulties

All four of the Case Studies (Shopping Centres) have been

3.3.2 Dealing with the leasing difficulties

3.4 National Tenants

Therefore, for Brokers to achieve the required 70% national

Fowler (2009) says that the most effective manner of convincing