Enhanced earnings expected from mall
2005-09-29
SYCOM, the fourth-largest property fund on the JSE Securities Exchange SA, anticipates enhanced earnings as the major investor (with an undivided 70% share), in the soon-to-launch retail shopping development in Paarl.
The R320 million Paarl Mall development comes on stream in October, joining Sycom’s existing spread of regional shopping centres including Somerset Mall and N1 City in the Western Cape and Fourways Crossing and Southgate Mall in Gauteng.
Sycom MD Gerald Nelson explains that for the past ten years, the fund has employed its in-house development skills bringing new developments on stream. This strategy has proven to yield better returns, and ensure a higher quality property portfolio. Paarl Mall is no exception.
Confidence in the success of the new development is based, amongst other factors, on the growth shown in other comparable models.
Somerset Mall, for example, stood at 35 000m² in Phase 1 but now covers 70 000m². Sycom, along with co-investors, expects growth at Paarl Mall, with just over 35 000m², to be in line with the growth of Somerset Mall.
The development is in-keeping with Sycom’s core strategy of investing in regional shopping centres within trade areas that are ring-fenced, and therefore unlikely to attract another mall of similar size in the foreseeable future.
Paarl Mall’s primary trade area includes Paarl, Wellington and Franschhoek with secondary trade area Stellenbosch, Malmesbury, Worcester, Ceres and Tulbagh.
But this regional strategy is not only beneficial for the investors involved - it also has a positive catalytic effect on the entire region.
Sycom believes that Paarl Mall will add to the overall GDP of the Paarl Valley in two meaningful ways: firstly, by retaining the substantial consumer spend that is currently not being captured in the area; secondly, through the natural spin-off for further development of housing and satellite business that occurs when a development of any significant size takes place in an area.
In the case of the Paarl Mall development, the value to the region has been given further impetus. New on and off ramps to the N1 are being constructed through the parallel road works that have been required to accommodate the centre.
The new road network not only provides additional access and egress to the Mall from Paarl, but also allows the tourist potential of the town to be greatly optimised and increases the greater potential of the region.
It is estimated that the development will create 500 permanent jobs, which will be filled predominantly by local residents.
This in addition to the many jobs and opportunities created for SME and HDI businesses in the constructing field, during the construction
phase.
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