At some point, Joburg and Pretoria will meet, creating a huge megacity.
Somewhere near the middle of this will be property fund Attacq’s Waterfall City, where the recently opened Mall of Africa is being pitched as the same kind of catalyst for urban densification as the Sandton City mall was back in 1977.
At a results presentation this week, Attacq CEO Morne Wilkens compared Waterfall to other major urban centres that were in essence kick-started by malls, such as Sandton, Gateway in Durban and Century City in Cape Town.
“Imagine if one company owned the whole of Sandton. We are that company,” he said.
Attacq is not ready to reveal the Mall of Africa’s trading density, which is a key measure of mall performance, or other financial metrics.
“We need it to stabilise first to give a representative number,” said Wilkens.
Competing mall-owning property groups have complained that there was an oversupply, with malls too close to one another, spreading their shares of consumer spending too thinly.
This has started reflecting in trading densities.
This measures the revenue of mall tenants divided by the lettable space in the mall. As a rule of thumb, a mall should charge its tenants less than 10% of the trading density for rent, said Wilkens. The higher the density, the higher the rent you can realistically charge.
Waterfall City makes up more than 30% of Attacq’s R27 billion property portfolio, with the mall alone worth R4 billion.
“Given that it is in Gauteng, it is not a big risk. If it were in Bloemfontein...” he said.
“I think in your big metropoles it will always densify more. If you start building far outside, I would be very concerned.”
The company has 1.2 million square metres of land left to develop at Waterfall, with developments to date covering about 350 000m².
The mall and office park at the heart of the city are complemented by an adjacent area for distribution centres.
Attacq is now planning to build its first residential apartments in its city – a mere 126 units.
“It is a minute amount, but our advantage is that we control all the residential supply,” said Wilkens.
The land would probably only be completely developed 15 to 20 years from now, said Wilkens.
Then it would be redeveloped and densified, he said.
Three large residential projects surrounding Waterfall City are being developed by other developers and Gauteng’s other notable privately owned “city”, Steyn City, is a mere 14km away.
A current strategic pillar for Waterfall is to pitch it as a place where companies that have more than one office can consolidate their workforce in one building.
Companies were being proactively approached and presented with the potential savings, said Wilkens.
This attempt to draw big tenants out of existing urban nodes was “unfortunately how the free market works”, said Wilkens.