Category Property update
The proposed 1 200 hectare Cornubia mixed-used development north of Durban will contribute 2 percent, or R50.4 billion, to South Africa’s gross domestic product (GDP) over its 20 year development period, according to an analysis conducted by KPMG.
Cornubia is being developed jointly by the eThekwini municipality and Tongaat Hulett Developments and has been declared a national priority project.
Denny Thaver; the project manager at the municipality, said as important as the economic and financial considerations were, the Cornubia development was regarded as a catalytic intervention undertaken jointly by the municipality and Tongaat Hulett Developments to establish the first fully integrated human settlement in the country.
The development commenced in 2011 and it is envisaged to ultimately have 10 000 affordable and middle-income units, 15000 subsidised units, 2.5 million square metres of commercial and industrial bulk and a full suite of social facilities.
Karen Petersen, the development director at Tongaat Hulett Developments, said the project would over the 20-year development period not only change the economic landscape of the city but deliver significant socio-economic benefits to the regional, provincial and national economy.
Petersen said “The total impact of the Cornubia development will contribute about 10 percent or R3.3bn to eThekwini’s GDP and 5 percent to the provincial economy’s GDP of R22.9bn, with Tongaat Hulett Developments creating the large impact by contributing R9.4bn to the GDP of both the local and provincial economy. “Nationally, the Cornubia development will contribute 2 percent or R50.4bn to South Africa’s GDP,” she said.
The construction phase was expected to contribute about R8.5bn to the economy of eThekwini, representing 4 percent of the local economy’s GDP, but once operational was expected to contribute about R3.3bn directly to the local economy, with the provincial GDP being boosted by an estimated R1.2bn.
An estimated 285 000 new employment opportunities will be created in the long term by the commercial activities associated with Cornubia, which will represent 12 percent of total employment in the province. This will be achieved through 39 000 direct jobs, 144 000 indirect jobs and an additional 45 000 jobs in the rest of the province, as well as 54 000 jobs resulting from the economic impact of salaries and wages paid to employees at the development.
These jobs exclude the 250 000 employment opportunities expected to be created during the construction phase of Cornubia which represent 20 percent of the total employment in eThekwini over a 20-year period.
In additional, the construction phase of the project would pump an estimated R700 million into lower-income households through job creating opportunities, which nearly doubles to R1.3bn in income for these households during the operational phase of the development.
The development will contribute to poverty alleviation through its impact on household income, with the social accounting matrix indicating that through downstream generation of income, households in the municipality will receive about R8.9bn, of which R1.4bn would be received by lower-income households.
Author: Roy Cokayne