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BLUE ROSE CITY DEVELOPMENT
IMPACT ASSESMENT
© 2008 Demacon Market Studies
+27 12 460 7009 (t)
+27 12 346 5883 (f)
+27 82 8988 667 (c)
hein@demacon.co.za
www.demacon.co.za
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PRESENTATION OUTLINE
 Study Area
 Economic Overview
 Economic Activity
 Turn–Key Projects
 Impact Modelling
 Synthesis
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STUDY AREA
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ECONOMIC OVERVIEW
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Economic Growth - (Midvaal)
Midvaal Economic Growth
7.0%
6.5%
6.4%
5.6%
6.0%
5.0%
5.0%
4.4%
4.4%
4.0%
3.0%
2.2%
2.0%
1.9%
1.7%
1.0%
1.0%
0.7%
0.0%
-1.0%
-2.0%
19951996
19961997
19971998
19981999
19992000
20002001
20012002
20022003
20032004
20042005
20052006
20062007
-1.3%
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Economic Profile - Midvaal
13.5
Community, social and other
personal services
15.1
15.6
Finance and business
services
14.8
6.4
Transport & communication
7.2
18.5
Wholesale & retail trade;
catering and accommodation
17.3
8.3
Construction
6.2
4.0
Electricity & water
5.0
30.6
Manufacturing
30.5
2.0
Mining
2.5
1.1
Agriculture, forestry and
fishing
1.4
-
5.0
10.0
15.0
2003
20.0
2005
25.0
30.0
35.0
2007
Percentage
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Main Industrial Areas
12
15
Key:
4
13
11
Manufacturing
industrial areas
Heineken
9
8
3
Mittal Steel Company
2
1
7
5
6
14
4
13
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Number of people employed in
manufacturing sector
Number of people employed in Manufacturing sector
48,000
IskorMittal
(MittalSteel
Steel)Retrenchment
retrenchment exercise
47,208
47,000
45,643
46,000
45,000
44,575
44,768
44,000
43,209
42,734
43,000
43,512
42,517
42,000
42,315
41,000
40,000
39,000
1999
2000
2001
2002
2003
2004
2005
2006
2007
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Regional Employment Perspective
• Approximately 11 637 additional people per annum to the
area of which 63% is economically active and at
employment rate of 56% – 4 105 people
Vs
• Average labour absorption rate: 719 per annum
• Gap: On average 3 387 people per annum need to find
work outside the Sedibeng District.
• Blue Rose City Projects could help to reverse this
downward trend.
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Development Drivers – Surrounding
Area
• Mainly driven by Manufacturing Industry
-- Steel and heavy industry dominate the sector.
-- Mittal Steel South Africa company
• Eskom power station
-- Lethabo Power station
-- 1100 people employed
• Also driven by wholesale and trade sectors,
-- Vaal Mall 40 000m2
-- Sebokeng Plaza 5 778m2
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Synthesis
• Sectoral dominance in Sedibeng
- Manufacturing
- Retail Trade
- Finance and Business
• The economy is highly dependent on manufacturing
activities
• The local economy have been heavily affected by
changes in global steel prices and fall demand of steel
products during the 2002- 2004 period.
• Fluctuations experienced in the manufacturing sector
directly affect employment levels in the area.
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ECONOMIC ACTIVITY
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Economic activity
Residential
areas
Approximate time taken to
work - 12minutes for 15 km
Residential
areas
Manufacturing activity
Residential areas
Manufacturing
activity
Residential
areas
Manufacturing
activity
Manufacturing activity
Residential
areas
Residential
areas
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Accessibility to Jobs & Traffic Congestion
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Transport modes
Rail line
Rail line
Major roads
Freeway
(N1)
Rail link
Rail link
The majority of the residential areas , industrial sites,
mining areas, farms and urban centers are well
linked by rail and road transport.
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Synthesis
• Transport within each local municipality area is fairly
good. Main transport networks in and around the
municipal areas is road (N1, R59, R23, R554, R82) and
rail modes .
• The rail line links in surrounding area is fairly good.
The rail line from Merafong City links to major rail line
from Lenasia and then stretches through to
Vanderbijlpark, servicing all areas along the rail line.
The rail line from Vanschalkwykdam services areas
along R59.
• Informal settlements and low income residential areas
are limited to road transport mainly due to lack
interlink of rail lines between residential suburbs
especially areas located in western part of Midvaal,
places such as Roshnee.
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TURN-KEY PROJECTS
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Turn Key Projects
1
3
4
2
5
1.
2.
3.
4.
5.
Doornkuil
Evaton Urban Renewal
Blue Rose City Development
Heineken Projects
Heidelberg / Ratanda housing
projects
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R59 DEVELOPMENT FRAMEWORK CORRIDOR
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Synthesis
• Demand for affordable residential accommodation
thus remains very high.
• Additional Commercial and Industrial / Warehousing
Space Demand constitute about 15% of the total
demand for space, and Industrial / Commercial
developments remain desirable.
• Strategies to develop and increase economic activities
which generate jobs, should be put in place in order to
enhance demand for non residential space .
• Net Effect: Increase tax base from which lower and
middle income segment will benefit greatly.
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IMPACT MODELING
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Impact modeling
Total Economic Impact – Construction Phase
PORTION
NEW BUSINESS
SALES
GGP
EMPLOYMENT
The Valleys
11,243,903,000
3,755,226,000
22,500
Wood Acres
3,223,066,000
1,076,436,000
6,400
Mountain View
3,299,477,000
1,101,956,000
6,600
The Grace
18,965,556,000
6,334,096,000
37,800
Eye of Africa
13,543,092,000
4,523,108,000
27,000
Heineken
12,355,102,000
4,126,344,000
24,700
4,751,962,000
1,587,056,000
9,500
Graceview
21,497,877,000
7,179,838,000
42,900
TOTAL
88,880,035,000
29,684,060,000
177,400
R59 Industrial Park
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Impact modeling
Summary of Economic Impact – Construction Phase
VARIABLE
DIRECT
IMPACT
INDIRECT
IMPACT
TOTAL IMPACT
Additional Business Sales
61,620,354,000
27,259,681,000
88,880,035,000
Additional GGP
18,499,684,000
11,184,376,000
29,684,060,000
113,600
63,800
177,400
Additional Employment
VARIABLE
CAPITAL EXPENDITURE
Additional Business Sales
Additional GGP
Additional Employment
TOTAL IMPACT
R88.9 bn
R37.4 billion
R29.7 bn
177,400 employment
opportunities
* The impact in terms of employment opportunities refer to temporary and roaming construction
employment opportunities, and is expected to benefit between 30 000 and 40 000 people.
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Impact modeling
Total Economic Impact – Operational Phase (Sustained Annually)
PORTION
NEW
BUSINESS
SALES
GGP
EMPLOYMENT
The Valleys
93,378,000
50,178,000
60
Wood Acres
61,289,000
32,934,000
80
Mountain View
72,698,000
39,064,000
80
8,023,410,000
3,658,678,000
13,500
290,038,000
187,437,000
2,858
Heineken
3,593,624,000
1,636,585,000
6,050
R59 Industrial Park
1,365,577,000
621,902,000
2,300
Graceview
6,265,348,000
2,853,324,000
10,550
19,765,362,000
9,080,102,000
35,478
The Grace
Eye of Africa
TOTAL
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Impact modeling
Summary of Economic Impact – Operational Phase
(Sustained Annually)
VARIABLE
DIRECT
IMPACT
INDIRECT
IMPACT
TOTAL
IMPACT
Additional Business
Sales
9,136,200,000
10,629,164,000
19,765,362,000
Additional GGP
5,234,795,000
3,845,307,000
9,080,102,000
23,218
12,260
35,478
Additional Employment
VARIABLE
CAPITAL EXPENDITURE
Additional Business
Sales
Additional GGP
Additional Employment
TOTAL IMPACT
R19,8bn
R8.6 billion
R9.1bn
35,478 employment
opportunities
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Impact modeling
Synthesis of Economic Impact Modeling Results
VARIABLE
INPUT VALUE
TOTAL IMPACT
Construction Phase (Once-off)
Additional Business Sales
Additional GGP
R88.9 bn
R29.7 bn
R37.4 billion
177,400 employment
opportunities
Additional Employment
Operational Phase (Sustained Annually)
Additional Business Sales
Additional GGP
Additional Employment
R19.8 bn
R8.6 billion
R9.1bn
35,478 employment
opportunities
* Values are NPV 2008, for a total project duration of 15 – 20 years. Benefits
indicated above are therefore accrued over the total time period of the investment.
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SYNTHESIS
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Impact modeling
Additional Impact of New Households
 ±R2.2 billion to national fiscus through employee’s tax
 ±R1.4 billion additional retail spend annually
 ±R1.7 billion additional spend on transport, housing,
medical etc. annually
 The proposed Blue Rose project will (at maturity) lift
the local economic growth rate to well in excess of 6%
and more than double the current size of the Midvaal
Local economy, and thereby assist to meet and
exceed ASGISA goals in terms of aspects such as job
creation and poverty alleviation
© 2008 Demacon Market Studies