V&A Waterfront’s accelerated growth contributes to national GDP
Continued development at Cape Town’s V&A Waterfront is impacting positively on the national economy. The Victoria and Alfred Waterfront, which enjoys global rankings as a unique geographical setting and landmark, is increasingly providing investors with the much desired commodity of work, live and play.
A recent economic impact study conducted by the City of Cape Town reflects that growth in investment and consumer offerings at the V&A Waterfront is benefiting the city, the province and the country. The study showed that an approximate contribution to the national economy of R198-billion has been made by the V&A over the last 10 years. New developments, such as the Victoria Wharf extension initiated in 2013, are set to contribute a cumulative R188-billion to nominal GDP by 2023. The creation of direct and indirect job opportunities brings the number of employees accommodated at the V&A to a total of 47 000. In 2013 alone, the V&A contributed R28.9-billion to the local economy of Cape Town.
From a national and global tourism perspective, research shows that 26% of total tourist time spent in the Western Cape occurs at the V&A. As a historic landmark, it has gained recognition as the most visited and prominent property in the mother city due to an estimated 24 million visitors per annum passing through this property stretching across 123 hectares from Granger Bay toward the Foreshore.
Commercial property players say potential investors are lured by sustainable property solutions where both long- and short-term returns are enhanced through good planning and management practices, as well as top local and international hotel and retail brands. Long-term planning strategies over a 15-year period have seen the allocation of 400 000m² of the available 600 000m² for various projects, of which several initiatives to date have delivered improved trading density and foot count.
Growthpoint Properties’ chief executive officer, Estienne De Klerk, says the V&A has spent extensive resources and time in planning and implementing the systematic and efficient expansion of the Victoria Wharf shopping centre and the broader precinct. He says in-depth research, which has allowed tailoring of the tenant profile and mix to address shoppers’ requirements, is set to benefit local and foreign retailers in offering more representation all round.
V&A chief executive officer David Green says, “Our overall retail strategy has seen a great deal of attention given to refreshing the retail experience and maximising on the interest expressed by new local and international retailers.”
De Klerk says new expansion and renewal projects include the successful R35-million redevelopment of the Food Court and amphitheatre initiated in 2011. Then there is the R140-million retail expansion project of the Victoria Wharf planned for completion in 2014, which has improved retail trade performance over the nine-month construction period and increased visitor numbers to the centre over the same period. Faced with growing demand for retail space from local and international retailers, the Waterfront has through innovation achieved densification rather than increasing the retail actual footprint while maintaining day-to-day trade without disruption. He says development work in this case was necessary to increase the gross lettable area and improve visitor access and overall convenience.
Green says the benefits of the yearlong redevelopment and refurbishment projects have paid off in strong trading, plus increased visitor numbers across the business. The V&A Waterfront continued its 2013 double digit retail trade sales growth with a reported 20.6% increase in December. This included 29 straight months of consistent growth since August 2011, and 2013 was concluded with an impressive 19.8% year-on-year growth. Annual visitor numbers measured at Victoria Wharf Shopping Centre have increased by 7%, and saw a peak of 175 000 visitors per day on 31 December 2013.
He says other recently announced projects include the R50-million redevelopment of craft offerings at the Blue Shed. “Enterprise development is enormously important to us, not simply because we want to see small businesses grow, but also because we have a vested interest in their success.” The V&A is also committing R500-million to the establishment of the Zeitz Museum of Contemporary Art Africa (Zeitz MOCAA) in honour of the renowned Zeitz Collection. Zeitz MOCAA is a new not-for-profit institution to be housed in the historic Grain Silo at the V&A Waterfront.
Also on the cards for the precinct is the addition of a three-star hotel, which De Klerk says as a mid-market, internationally branded hotel will be focused on attracting the business travel market, while remaining an attractive and affordable offering to the local or foreign tourist. Green says significant growth of international Free Independent Traveller (FIT) online bookings has been seen as international travellers seek familiar internationally branded hotels to benefit from loyalty programmes. “Cape Town is currently under-represented in this category of hotel, and if we look at the past 18 months, this segment has shown the strongest recovery and growth.”
CEO of Pam Golding Hospitality Joop Demes says, “The V&A and Growthpoint’s development of a three-star hotel as opposed to yet another five-star hotel is spot on.” He says a recent room inventory study for the City of Cape Town considering additional rooms led to cautious optimism that performances over the past 12 months show enough evidence to provide scope for 1 500 new rooms across different segments of the hotel sector. Demes says, “While five-star hotels are leading increased performances from year to year, there is a gap in the market for three-star hotel accommodation within close proximity of the Waterfront. “
Other outside influences impacting on long-term planning and investment at the V&A precinct include the expansion of the Cape Town International Convention Centre (CTICC), which is currently underway. Green says increased conferences and events at the CTICC are beneficial for the local economy and will have a significant knock-on benefit to retailers, restaurant owners and leisure tenants. He says the range of offerings, 11 hotels and its close proximity makes the V&A Waterfront a convenient and secure location and compelling proposition hard to come by anywhere else in the world.
Another factor to consider is the Western Cape government’s intention of selling off neighbouring city land, such as four sites including a nursing home at Somerset Hospital for housing development. Green says, “The V&A Waterfront sees this as an opportunity to participate in the process of securing development rights, and this particular site is a logical extension in its adjacency to the Waterfront. Any housing development on our doorstep gives residents access to the facilities the V&A Waterfront offers.”
Growthpoint’s long-term strategy, says de Klerk, is, “To attract more permanent residents in to the V&A to work, live and play.” He says the current residential offering caters for affluent investors, which often results in unoccupied units, and that there is a feasible rental market at lower cost. This new offering will not compete with the existing V&A Marina Residential development, which will continue to function as a stand-alone exclusive residential precinct.
Long-term investment growth at the V&A Waterfront poses future economic benefits to stakeholders and consumers across all levels.
Text: Anna-Marie Smith