Retail study Update Demographics Retail Potential Alexandra Wynberg

Retail study Update: Demographics & Retail Potential Alexandra / Wynberg Feasibility Study November 2007 Note: This project should be regarded as confidential as it contains Data, Information and Intellectual Property of Fernridge Consulting – Copyright (Limited Distribution) 1

Orientation Note: This project should be regarded as confidential as it contains Data, Information and Intellectual Property of Fernridge Consulting – Copyright (Limited Distribution) 4

Macro Perspective – South Africa Alexandra (sometimes nicknamed "Alex") is a township located in Gauteng province, South Africa. It is situated on the outskirts of Johannesburg, close to the wealthy suburbs of Sandton and is bounded by Wynberg on the west, Marlboro and Kelvin on the north, and Kew, Lombardy West and Lombardy East on the south. Alexandra is situated on the banks of the Jukskei River. The township covers an area of more than 8 km² and has an estimated population of 350, 000 people – some sources claim >400, 000 people. In addition to its original, reasonably well-built houses, it also has a large number of informal dwellings or "shacks“- hence the high density. 5 Copyright 2007: Fernridge Consulting

Background (i) Greater Alexandra is situated on the banks of the Jukskei River in the north-eastern suburbs of Johannesburg in Gauteng province, South Africa. The area is very well located, being adjacent to key arterial roads and the main highway that links Johannesburg to Pretoria. It is also in close proximity to the economic opportunities of Sandton, Wynberg and other neighboring industrial and commercial areas. For the urban poor, Alexandra is a prime location. The importance of location to the urban poor goes some way in explaining the huge densities within Alexandra despite difficult living conditions. While the physical infrastructural capacity of Alexandra should carry only 70 000 people, in reality it houses 6 times that number! In other words, an estimated ± 350 000 people (2007) live in Alexandra (Old + new sections). They occupy 10, 610 formal houses, ± 32 000 shacks, 3 hostel complexes, 2 500 flats and numerous old factories and buildings – (Source Fernridge Update 06/07) Alexandra has developed its own unique identity over a period of almost a century. This is a distinct community, proud of its history and culture. It has influenced the formative years of many of South Africa's writers, musicians, sportsmen, business people and politicians. We are of the opinion that Alex is different than most other townships and follow more closely in the footsteps of Soweto with respect to retail. We based this on the rich cultural heritage and location within Gauteng / Sandton. Most other townships are lacking this legacy and were formed due to urbanization and political land allocations or squatting. Alex is different as many prominent Black business people / political leaders still have strong links with family and friends. Poverty is still a major problem, however Alex is accepted as a legitimate suburb of Greater Johannesburg / Sandton. Residents of Alex are also used to shopping in Randburg, Sandton, Balfour Park SC and many other locations at more up market shopping centres and supporting a centre (as proposed at the only formal taxi transportation point) is seen as a natural next step. Outflow used to be very high (> 80%) which will change, as is the case with Soweto with the establishment of Jabulani Mall, Protea Garden centre, Bara Mall and now Maponya and the much talked about Orlando Ekhaya Project. There are no more political reasons for shopping outside Alex – only a lack of local facilities or substandard retail offers / informal trade. The latter is dying as formal retail is now replacing the informal trader. Fernridge is doing many projects in areas like Soweto, Mdantsane, etc. and we are of the opinion that the nature of informal trade is changing from the food vendor to more service orientated informal businesses, such as auto repair, hair / beauty salon - even the traditional shebeen is changing to a more formalised pub. The market is getting more status conscious and wants quality. House prices are also souring as places like Soweto and soon Alex still offer a good bargain for the “buck” compared to other areas. A recent Standard Bank research document confirm this statement by comparing the Soweto Rand to the Johannesburg Rand in terms of a R 380, 000 unit with a R 550, 00 unit of a similar size in Johannesburg. Fernridge argues that Soweto will be on par with the likes of a Weltevreden Park / far West and East Rand by 2010 given the current high demand for homes in Soweto. Alex will also follow suit as the exodus of the black middle class will catch-up with the property trend and rather consider to stay. We however excludes most other townships for reasons mentioned earlier. 6

Background (ii) The site should appeal to the aspirational shopper, the status conscious and the quality seeker or just someone that wants all, whilst enjoying a convenient shopping experience or social get-together with friends near his / her home. It is also important to note that the taxi rank is not just for the people of Alex. It will also serve as the breakpoint for people working in the adjacent light industrial area of Wynberg which will effectively serve as inflow potential as some of these commuters (workers) are coming from all across Gauteng. Other than the household updates, there are not much new info regarding the demographic profile of the residents as documented in the 2001 Census- we have updated these figure for 2007 (Main Catchment only – Old Alex plus a portion of the new developments). Some of the basic indicators are: Households : 67, 533 – Fernridge Update 2007 People : 283, 638 Ave people per household: 4. 2 people People Age 7 - 12 : 31, 200 Children People Age 13 – 34: 127, 637 -The demographic profile of Alexandra is youthful and male. Unemployment: There is a high unemployment rate (± 58%) and very low-income levels. Most people are unskilled and regarded as unemployable within the sub-regional economy. 10% is registered to receive social-grants (June 2007). Average Household Income : R 2, 800 / month (Within the Fernridge D Low income category) 75% of the households are dependent on taxi or bus transport (no private transport) – Source: Taxi associations. The new sections (outside the indicated main catchment) are predominantly D and Higher income groups with a monthly income > R 3, 000 – R 9, 000 / month (From RDP to smaller C income Dwellings) – most people are employed and is changing the overall profile of the greater Alexandra as less depressed. Alex is growing as more land is allocated along the N 3 Freeway and the township is seen as a high priority for the Government due to political reasons. 7

Orientation – Johannesburg Alexandra, located in the north-eastern suburbs of Johannesburg, was originally a dairy farm owned by a Mr. Papenfus and established as a township in 1905, named after his wife Alexandra. Little demand existed for these stands among the white population and the township was reproclaimed as a ‘non-white’ township with some 2, 300 stands of approximately 1, 000 m² each, which in the mid 1910’s were sold to black and colored South Africans. After the introduction of the 1913 Land Act, no further freehold land could be proclaimed for black ownership. The resulting shortage of land a large migration of people into Johannesburg, particularly after the outbreak of the Second World War in 1939 when labour was needed for the expanding industrial and commercial sectors, meant that all existing areas designated for black occupation, such as Sophiatown and Western Native Location, became increasingly overcrowded. In 1998 a new development framework for Alexandra was drawn up. The consultants were appointed by the Eastern Metropolitan Council and the Greater Johannesburg Transitional Metropolitan. The planning areas included the whole of Alexandra and surrounding suburbs. Catchment Area Proposed Site The plan started with the premise that the population density of Alexandra should be reduced from about 770 per hectare to about 220 people per hectare. This would involve the removal of some 150 000 to 160 000 people. Some indication was given of those who would be earmarked for relocation out of Alexandra: Illegal immigrants, people living in hazardous areas such as the banks of the Jukskei River and those living on land zoned for use other than residential. 8 Copyright 2007: Fernridge Consulting

Orientation of Alexandra / Wynberg Catchment Area Industrial area – not residential support but results in high inflow to the area. Proposed Site 9 Copyright 2007: Fernridge Consulting

The Site Note: This project should be regarded as confidential as it contains Data, Information and Intellectual Property of Fernridge Consulting – Copyright (Limited Distribution) 11

The Site 3 rd stree t The development will be situated at the main taxi rank in Alexandra in the traditional CBD. The Alex Junxion Development consists of 2 phases on either side of 3 rd Street. - Block A consists of Taxi Holding Area and Long Distance Taxi Terminus of approximately 40, 000 m 2 - Block B consists of a Retail Centre of ± 16, 000 m². - Tenant, Public Parking and a Taxi Terminus will be on the First Floor of Block B. 1 Construction has started at the development and projected opening date is April 2008. Retail Site 2 BLOCK A BLOCK B Pan Africa Triangle 1 2 The retail site as indicated should have reasonable off-street visibility as it is facing 2 nd & Watt Streets. However, with the ease of congestion of the roads, the visibility will be enhanced. The site should attract a lot of pedestrians in addition to taxi support as a large number of commuters walk from the rank to their homes in Alex and it is anticipated that the site is well located to intercept commuters in the afternoon. This development will be the first retail development with enough critical mass to provide an alternative to the likes of Randburg, Balfour Park SC and even Sandton City (to a degree) and the mix should include quality retailers and not just the traditional mix of brands catering for low income households. Overall this is a “numbers game” (people) and the proposed site is well located to provide high awareness and maximum exposure being on the corner of the main road passing the site. Copyright 2007: Fernridge Consulting 12

Retail Potential Estimate (i) Nett Monthly HSE Income R 100, 000 / month A++ R 40, 000 / month A+ R 20, 000 / month A R 14, 000 / month B R 7, 000 / month C R 3, 000 / month D <R 3, 000 / month D Low Total warranted retail GLA within catchment area with current demographics. CFTA = Clothing Footwear Textiles and Accessories Copyright 2007: Fernridge Consulting 26

Executive Summary • The site is located on Watt Road between 2 nd and 3 rd road in Wynberg, adjacent to Alexandra. Traffic flow past the site is high as a prominent taxi rank “linked” the site to commuters residing within the proposed catchment area. • The Site Evaluation rates the site as Excellent for a community type centre due to its prominent orientation and proximity towards the market, both residential and commercial. The active public transport facilities at the site is also a positive to make the site feasible for trading. • Complementary facilities (other commercial, offices) around the site may also become feasible in time as the centre becomes established and a real node is created there. • There a large number of smaller retailers (spaza shops) within Alexandra. There are however only two other formal retail centres – Alexandra Plaza and the Darklight City Centre. These two centres are in close proximity of the site and strengthens the node. Another retail scheme proposed on the Far-East Bank just off the N 3 should be noted, however the western side of Alexandra (where the site is located) is seen as the preferred side as most residents travel westward. • Outflow, especially to the CBD of Johannesburg and Sandton, Randburg are still expected to be high due to travelling to and from work. • The area demographics reflects a typical emerging market with a high presence of informal residential dwellings located mostly in “Old Alex”. The Alexandra Renewal Project is currently busy with numerous projects to provide more formal housing for residents. • Alexandra is not growing in terms of numbers, but its area coverage is increasing, as well as the general quality of living as residents move into more formal housing. • There is scope in the area for a retail development. We conclude that the proposed centre of ± 16, 000 m² is justified at this site, given its offer (design, tenant mix and related facilities) can sufficiently limit the existing high levels of outflow. • A high level of community involvement / loyalty is essential in the success of the proposed centre and we have to be cautious of the possible negative effect the development may have on the Spaza industry. Copyright 2007: Fernridge Consulting 28

CV & Contact Details Fernridge Consulting (Pty) Ltd is a retail optimization consultancy that was founded in 2002. We are based in Johannesburg, South Africa and specialize in spatial retail analysis using GIS (Geographic Information Systems) technology, the latest demographic data and information from significant retailers. We are part of the UCS Group, a publicly listed IT company. We are the undisputed leader in this field in South Africa with ± 12 shopping centre development / revamp studies per month conducted in all nine South African provinces, as well as neighboring countries (such as Namibia, Botswana, Swaziland, Lesotho, Mozambique, Zambia), and abroad (India). We offer this service to banks, landlords, property managers, corporate and private investors and developers. We also assist some of the leading retail groups in South Africa in their store expansion and rationalization strategies, location analyses etc. Our clients include, among others: Spar, Woolworths, Mc. Donald’s, Nando’s, Mr Price, Supergroup, Massmart, Cashbuild, Ster Kinekor, Virgin Active, Clicks, MTN etc. This is an objective, independent report with the sole aim of limiting risk for our client and optimize development potential. Fernridge Consulting (Pty) Ltd 26 th Floor 209 Smit Street Braamfontein Johannesburg South Africa Fax: P. O. Box 31266 Braamfontein 2017 South Africa +27 11 339 1833 www. fernridge. co. za Sybrand Strauss Director: Property Development & International Tel: Mobile: e-mail: +27 11 712 1720 +27 82 330 5168 sss@fernridge. ucs. co. za Andre Annandale Manager: Property Development Tel: Mobile: e-mail: +27 11 712 1714 +27 82 776 6353 ana@fernridge. ucs. co. za 29 Copyright 2007: Fernridge Consulting