Alley Road’s Riverstone Mall kick-starts R600m development injection for Meyerton

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17-05-2024
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Alley Roads (or “the Group”), a leading affordable housing developer today hosted a pre-launch of its first retail development, Riverstone Mall in Meyerton, situated on the outskirts of the established town that does not have a formal retail offering.

The development of the R370m mall, currently under construction, is financed by Rand Merchant Bank (RMB), a division of FirstRand Bank Limited and is scheduled for opening in early-2025.

Barry Chapman, Chief Executive Officer of Alley Roads commented: “Riverstone Mall forms part of our 175 000m2 development pipeline earmarked for underserved township and peri-urban areas across South Africa.

“Our business strategy is premised on building communities that prosper. Affordable housing and retail developments are some of the important drivers required to establish these new nodes.

“Initial market studies show that Meyerton, centrally located between Johannesburg and the Vaal Triangle is growing at 2% - 3% annually, and the area plays a catalytic role within the R59 development corridor,” said Chapman.

“We will soon launch a residential development adjacent to the mall, comprising 337 units as part of our strategy to leverage the symbiotic relationship between housing and retail to the benefit of all stakeholders. There is also a second development phase planned at Riverstone Mall, comprising 3,000sqm of motor related retail.

“On completion, our total investment into the Meyerton community will exceed R600 million,” Chapman added.

Alley Roads’ residential portfolio comprises over 6 500 affordable apartments and student accommodation. Rental prices range from R4 000 to R8 500 per month, catering to lower-to-middle-income households with an average annual salary of about R300 000.

In addition to bringing convenience shopping to Meyerton residents and surrounds, the development of Riverstone Mall creates jobs and economic opportunities for locals.

“During the construction phase, the mall will create 1 200 jobs, with an estimated 250 permanent jobs,” said Chapman.

On completion, the convenience mall with a gross lettable area (GLA) of 18,000m² is expected will have 53 retail tenants. The mall will be anchored by Checkers Fresh-X, Woolworths Food and Dischem. Other retailers include Clicks, Truworths, Mr Price and the Pepkor Group among others.

It will offer 1 000 parking bays, a food court as well as two fast food drive-thru outlets. A 1908Kva solar plant will be installed on the roof with a battery backup of 4800Kwh, equivalent to four hours of 1200Kva, ensuring the mall remains operational during loadshedding periods.

Chapman said the group will roll out its 175 000m2 retail development pipeline over the next seven years mainly in Gauteng with opportunities in the North West, Free State and the Western Cape. Alley Roads will develop rural convenience retail centres measuring between 6,000m2 to 12,000m2.

Loyiso Daka, Senior Transactor and Dealmaker at RMB Real Estate said there is high demand for quality retail supply in previously underserviced nodes as these malls play a crucial role in delivering goods, services and associated infrastructure to the surrounding community.

“We view this asset class as both being defensive and sustainable as township and peri-urban retail centres are often representative of the only formal retail offering in their catchment areas. They’re typically anchored by high-quality national tenants so the cashflows are relatively stable and predictable even during times of stress, such as the Covid lockdowns, as the primary retail activity is linked to essential goods and services,” said Daka.

Daka said Riverstone Mall is an example of limited retail supply within the primary and secondary catchment areas of the development, with the tenant demand proving the need for quality retail supply within the area.

In assessing funding for the mall, RMB looked at a funding structure combining project finance and balance sheet to ensure Alley Roads can bring Riverstone Mall to market on time and achieve scale and growth based on their stated objective to develop a best of breed residential and retail portfolio in underserviced communities.

“As a developing economy, South Africa has growth potential. We are of the view that asset classes that address core infrastructure requirements such as township retail, affordable residential accommodation, student housing, warehousing and logistics still have lots of runway as demand is likely to outstrip supply for some time to come,” added Daka.