WATERFALL BUSINESS ESTATE (WBE) ECONOMIC IMPACT ASSESSMENT

Transcription

1 WATERFALL BUSINESS ESTATE (WBE) ECONOMIC IMPACT ASSESSMENT DR DIRK A PRINSLOO & DIRK NICO PRINSLOO August 2013

2 WBE: Economic Impact Assessment Objectives: To understand the Gauteng economic environment; To understand and quantify the economic impact of WBE; To quantify the employment opportunities created: Construction Phase (total jobs created as well as by the end of 2013); Operation Phase. Socio-economic impact/output; To understand and quantify the multiplier effect; Tax contribution. The focus was to quantify the economic impact and employment creation as a result of the development of the Waterfall Business Estate (WBE).

3 Property Economic Indicators Macro Economic Environment (RSA Economy) Trend Current Indicators Q1 Comments GDP Growth (Source: StatsSA) GDP 2013Q1 = 0.9% q/q Annual 2012 GDP = 2.3% Inflation (Source: StatsSA) CPI June 2013 = 5.5% Rand/Dollar (Source: Fin24) Building Plans Passed (Source: StatsSA) Building Plans Completed (Source: StatsSA) Car Sales (Source: NAAMSA) House Price (Source: ABSA) Formal Employment (Source: StatsSA) R/US$ - R10 Positive trend is starting to emerge Sideways trend still dominate, with positive trends starting to emerge Total vehicle sales in 2012 = (9% y/y growth) Limited growth in all sectors of the residential market ±10 million formal employees (nonagricultural) in SA; Retail Sales (real prices) (Source: StatsSA) June 2013 y/y = 1.9% SACCI BCI (Source: FNB Building Confidence Index (Source: Interest Rates (Source: SA Reserve Bank) Repo Rate = 5.5% PMI (Source: Oil Price (Source: Sasol) Currently at 90.7 points (base year 2010 = 100) The FNB BCI for 2013Q2 was 41 points, up from 37 points in 2013Q1 July 2013 = 52.2 points (>50 points = expansion) US$110 per barrel Reserve Bank Leading Indicator (Source: SA Reserve Bank) Stable over the past 2 years

4 Macro Economic Environment: Indicator Definitions Economic Indicator SACCI BCI FNB Building Confidence Index Definition South African Chamber of Commerce and Industry (SACCI) Business Confidence Index (BCI); Reflects the business climate that is market-related and accounts for economic developments that has a bearing on the business mood in South Africa. This index reflects the state of the building industry (residential and non-residential) in South Africa. PMI Purchasing Managers Index; An indicator that reflects the health of the manufacturing sector. PMI is based on 5 major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

5 WBE: Central location within region One of the most central locations for the whole of Gauteng/Region

6 Gauteng Economy Average GDP Growth Rate Per Annum (>1997) Gauteng 3.3 Western Cape 3.12 KZN 3.11 Eastern Cape 2.78 Mpumalanga 2.09 Free State 2.05 Limpopo 2.04 North West 1.9 Northern Cape % Growth pa Gauteng growth was consistently higher than the other provinces over the past 15 years.

7 Gauteng Population & Households 2011 Census Data: Gauteng: Pop: HH: City of Tshwane: Pop: HH: West Rand: Pop: HH: Mogale City: Pop: HH: City of Jhb: Pop: HH: Randfontein: Pop: HH: Westonaria: Pop: HH: Merafong City: Pop: HH: Ekurhuleni: Pop: HH: Sedibeng: Pop: HH: Emfuleni: Pop: HH: Midvaal: Pop: HH: Lesedi: Pop: HH:

8 Gauteng: % of total population WBE City of Tshwane: 23.8% West Rand: 6% City of Jhb: 36% Ekurhuleni: 25.8% Sedibeng: 7%

9 Gauteng: Growth Rate Gauteng: 2.7% WBE City of Tshwane: 3.1% West Rand: 1.0% City of Jhb: 3.2% Ekurhuleni: 2.5% Sedibeng: 1.4%

10 Gauteng Economy Gauteng represents 34% of the South African GDP; CoJ represents 17% of the South African GDP; RSA GDP = ±R3 trillion (current prices); Gauteng GDP = ±R1 trillion; CoJ GDP = ±R500 billion;

11 Economy in General Summary of the SA & Gauteng outlook: SA = moderate (2.5%-3.5%) over the medium term; Gauteng market expected to continue to grow well (@>3%); Consumers in general are under pressure; Residential property market is starting to show growth; Global economic recovery is slow.

12 Waterfall Business Estate: Market Information Centrally located within the Gauteng market; Midrand market is attractive due to the agglomeration effect of JHB and PTA (MAS Rank = 5, Rank will improve to 2 in 2017); Considered as an infill development ; > households in the surrounding market (mainly LSM 9-10+); Midrand office market = ± m² (3 rd largest office node in JHB), 4% Vacancy Rate; Strong distribution and warehouse hub.

13 Gauteng Economy The Market Attractiveness Score (MAS) model was developed by Urban Studies to give an indication of the past, current and expected growth taking place in each node. The MAS highlights the attractiveness of each node in terms of property development. The following table shows the MAS for the most important nodes in South Africa (2009, 2013, 2017): Node Rank 2009 Rank 2013 (current) Rank 2016 Sandton Midrand Century City Umhlanga Menlyn Rosebank Centurion Cape Town/ V & A Waterfront Clearwater Greenstone/ Modderfontein

14 10b Waterfall Business Estate (WBE): Status Quo a

15 WBE: Bulk Info Parcel Township Area (m²) FAR Bulk (m²) Zoning 3 tbc Commercial 8 JV X Commercial JV X Commercial JV X Commercial JV X Commercial Phase 1 JV X Office Surplus Rights JV X Retail/Office/Hotel JV X Special Office JV X Office JV X Special JV X Retail/Office/Hotel Surplus Rights JV X Retail/Office/Hotel JV X Office/ Hotel JV X Office/ Hotel 10 - Phase 1A JV X Office JV X Office JV X Office JV X Office 10 - Phase 2 JV X Office 10 - Phase 3 JV X Office JV X Mixed Use JV X Motor Retail JV X97 Mosque JV X Retail JV X Special 10 - Phase 4 JV X Residential JV X Residential JV X Residential JV X Residential JV X Motor Retail a - Phase 2 JV X Office 10b JV X Office 12 JV X Office 15 JV X Special Office JV X Value Retail JV X Shopping Centre JV X Office 21 Buccl X Commercial 22 Buccl X Commercial 24 JV X Special Industrial/ Commercial Total

16 WBE: Economic Impact: Construction Phase Cost Summary Construction Phase Total Building Cost Professional Fees Cost VAT Total Cost (excl. esculation) Total Cost (incl. escalation of 4% for 15 years) Total employment created during construction phase Employment created per annum Impact already significant during initial development phase.

17 WBE: Economic Impact: Construction Phase Employment during different construction phases Start-up phase Initial development phase Peak development phase Slow down phase Mature phase 2023/24

18 WBE: Economic Impact: Construction Phase Worker Output The amount spend within the community due to the jobs created in the construction phase: Socio-Economic Output Total WBE (monthly) Total WBE (annual) WBE (end of 2013) (monthly) WBE (end of 2013) (annual) Consumer/ Retail Goods Transport Insurance Income Tax Medical Education Housing Other Total Output

19 WBE: Economic Impact: Multiplier Effect The multiplier effect illustrates the way in which Economic Impact has a ripple effect on other role players, sectors and industries in the economy; Also referred to as indirect or induced impact; General benchmark multiplier values: National Impact = ; Provincial Impact = ; City Impact = Impact Total Total Construction Cost (WBE) Net Economic Impact 1.5) Total Economic Impact

20 WBE: Economic Impact: Operational Phase The operational phase highlight the activities following the construction phase; Total number of workers at operational phase: WBE (total) = ± workers; WBE (end of 2013) = ±6 500 workers.

21 WBE: Economic Impact: Operational Phase Output of the workers employed within the WBE: Socio-Economic Impact (monthly basis) Total WBE (R) WBE (end of 2013) (R) Consumer/ Retail Goods Transport Insurance Income Tax Medical Education Housing Other Total Monthly Output

22 WBE: Economic Impact: Tax Contribution Tax income per annum for the WBE = ±R440 million WBE (when completed) will contribute 4% of the total property rates income for the City of Johannesburg (CoJ); Variable Commercial Residential Total Replacement Value Tariffs (cents in the rand) WBE Rates & Taxes (per annum) Estimated CoJ Rates & Taxes for 2022/ Constribution of WBE to Total Propery Rates Income 4%

23 Conclusion Construction Phase: Total Cost = ±R30 bn; Total number of jobs created = ±27 000; Total number of jobs created (2013) = ±2 700; Multiplier effect (indirect 1.5; Total economic impact = ±R45 bn. Operation Phase: Number of workers = ±60 000; Number of workers (end of 2013) = ± Tax contribution: ±R440 million per annum; 4% of City of Johannesburg property rates income. Waterfall Business Estate will become one of the strongest nodes within the Gauteng Market.