New developments at Cape Town's waterfront
While 2014 was characterised by a slowdown in global economic growth, the V&A Waterfront has continued to buck the downward cycle with strong growth. Recently, the business announced their retail results for 2014, which showed an impressive 19% year on year growth, when comparing 2014 to 2013.
The V&A recently released results from an Economic Impact Assessment undertaken by independent, thrid party economists from Stratecon (formerly EiS) for the financial period 2012 to 2014. The research showed that the V&A Waterfront has consistently maintained growth of over 10% in contribution to nominal GDP since 2002.
The report highlighted the V&A Waterfront’s positive impact, not only on its immediate vicinity but also on the City, province and national economy, with an estimated contribution to GDP of R259.1bn between 2002 and 2014. The V&A has contributed R33.4bn to nominal GDP in 2014, almost three times the R10.37bn contributed in 2002.
The total contribution to nominal provincial GGP since 2002 was R227bn. The contribution rose by 3.7% to R29.3bn between 2012 and 2014, while the direct value added is equivalent of 1.75% of the Western Cape GGP in 2014.
Total visitor numbers have grown to 24 million a year by 2014 (at year end.) Although the V&A Waterfront remains South Africa’s favourite tourist attraction for international tourists they account for only 26% of all visitors. Visits by locals increased to 58%, while 16% of visitors were from upcountry.
The V&A Waterfront increased the total number of direct jobs created by 20%, growing from 16,155 in 2012 to 19,269 in 2014. Indirect jobs grew by over 30% to 16,894. Since 2002, the cumulative number of total jobs created by the V&A Waterfront in the province grew by just under 60%, from 22,645 to 36,162 in 2014. Nationally the number increased from 33,378 in 2002 to 52,676 in 2014, a 57% increase.
Explaining the reason for the jump in the numbers, Stratecon economist Barry Standish said, “Since 2002, capital expenditure has accounted for 3,922 additional jobs. A further 1,733 jobs have been created by operating expenditure at the V&A Waterfront Company, and the remaining 47,020 are from tenants.”
CEO of the V&A Waterfront, David Green added, “The increase in job creation over the past two years has come not only from the new developments underway, but also through our focus on fostering small business.”
Economic knock-on effect
The increase in employment numbers furthermore ensures an additional contribution of R2.9bn in indirect taxes and R8.5bn to indirect household incomes.
“This is in addition to the ongoing contribution to the local and national economies through the contribution to GDP, household income and taxes. In the V&A Waterfront’s ongoing evolution and development it has become less reliant on tourism, while the local tourism industry nonetheless benefits and grows from having this tourist magnet in the city,” explained Standish.
Small business development
Small business tenants have grown from 140 in 2012 to 181 by the end of the 2014 financial year. Green explained the focus on small business development, “Enterprise development is crucial for South Africa because of its ability to create jobs which in turn act as a catalyst for economic growth. Through giving practical assistance to small-scale businesses, and by providing them with a solid platform from which they can showcase themselves and develop into sustainable businesses, the V&A Waterfront is playing a vital role in generating meaningful economic growth.”
“We invested R50m in the redevelopment of our new Watershed. Today it is an open-ended, light and airy building that serves as a hub of innovation, creativity and small business. These businesses not only create direct jobs, but also impact the economy through the creation of indirect jobs, given the number of products sourced and produced locally. Its proving to be very sucessful and trading beyond expectations.”
The development of the Watershed was completed in October 2014, and thus its economic contribution was not included in these figures.
The contribution to nominal GDP from future development is anticipated to be R29.9bn. This almost matches the nominal contibution to GDP of R33.4bn in 2014, and brings the cumulative contribution since 2002 to R223.7bn. It is further estimated that the macroeconomic impact of development will translate into 17,806 additional national jobs in 2027.
The dramatic increase in the economic contribution of the V&A Waterfront is the result of an increase in the development of additional buildings. Particularly noteworthy is new Silo District that currently consists of the multiple award-winning No. 1 Silo commercial building and the No. 2 Silo residential complex.
Construction on the final phase of the R1.5 billion Silo District development is underway. Once converted, the old Grain Silo will house the Zeitz Museum of Contemporary Art Africa (Zeitz MOCAA). The new No. 3, No.4, No.5 and No.6 Silo buildings will introduce over 35,000m2 for new corporate offices, a health club, a residential development and a mid-range internationally branded hotel.
Earlier this week the V&A Waterfront announced the redevelopment of the Kings Warehouse in the Victoria Wharf Shopping Centre. When it is completed later in 2015, the area will introduce a further 4,500m2 multi-level retail space to accommodate Swedish clothing retailer H&M and a further 1,000m2 to accommodate British toy store Hamleys.
In conclusion, Green said “In 2014 the V&A Waterfront turned 25 years old, and the results of this study allow us to see what a catalyst this neighbourhood of the city has been for regeneration of the foreshore. All development has been based on creating a conduit between the citizens of Cape Town and the sea, while preserving the fascinating historical fabric of the area for generations to come.”
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[New developments at Cape Town’s V&A Waterfront [construction]]