Affordable housing developer, Alley Roads, has commenced construction on its first retail development, Riverstone Mall, strategically positioned between Johannesburg and the Vaal Triangle. The mall boasts a gross lettable area (GLA) of 18,000m² and will feature anchor tenants such as Checkers FreshX, Woolworths Food, and Dischem.

The total investment into Meyerton is projected to be R600 million, including the development of 337 apartments adjacent to the mall. A second phase of the mall development will add 3,000m² of motor-related retail.

Alley Roads plans to roll out its 175,000m² retail development pipeline over the next seven years. This aligns with the Group’s strategy of building new nodes through affordable housing and retail developments. These centers will be mainly in Gauteng, with additional projects in the North West, Free State, and Western Cape. The focus will be on rural convenience centers, emphasizing essential services and non-discretionary retail. The malls will range from 6,000m² to 12,000m².

Rand Merchant Bank (RMB) has provided funding for the development of the mall. Malls in areas with limited retail supply perform well due to wide primary and secondary catchment areas. Asset classes like township retail, affordable residential, student housing, warehousing, and logistics have growth potential as demand exceeds supply.

Johannesburg, South Africa, 16 May 2024 – Alley Roads, a leading affordable housing developer, today hosted a pre-launch of its first retail development, Riverstone Mall in Meyerton. The mall is situated on the outskirts of the established town that does not have a formal retail offering. The development of the R370 million 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.”

“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 3,000m² 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.

Upon completion, the convenience mall with a gross lettable area (GLA) of 18,000m² is expected to have 53 retail tenants. The mall will be anchored by Checkers FreshX, 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 load-shedding 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 centers 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 underserved 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 centers are often representative of the only formal retail offering in their catchment areas. They’re typically anchored by high-quality national tenants, so the cash flows 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 underserved 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.

Alley Roads’ vision is to remain a long-term holder of property for rental stock and unlock sustainable value from its assets under management through strategic developments and acquisitions. This vision is premised on prudent capital allocation, the ability to identify value-enhancing opportunities, a strong execution team, a firm approach to strategic partnerships, and long-standing industry relationships. Secondary to the development and acquisition of the property assets, Alley Roads GreenTech is focused on providing all sites within the Group with award-winning green solutions and ensuring value to end-users.

About RMB Rand Merchant Bank (RMB) is a leading African corporate and investment bank and part of one of the largest financial services groups (by market capitalization) in Africa – FirstRand Bank Limited (which is wholly owned by FirstRand Limited). We offer our clients innovative, value-added advisory, funding, trading, corporate banking, and principal investing solutions. As a leading African business, RMB’s expansion on the continent is a key growth strategy. RMB has a deal footprint in over 35 countries in Africa, as well as a presence in the UK, USA, India, and China. At RMB, we are passionate about solving problems for our clients by asking the hard questions. We challenge accepted thinking. We analyze and seek solutions beyond the obvious. We are innovative in our thinking and turn challenges into opportunities. Our ability to think differently, our collaborative spirit, our client-centric solutions, and our belief that great minds don’t always have to think alike are what set us apart.