Risk in mixed-use property development in South Africa : a case study of Melrose Arch

Abstract

Mixed-use development is a growing trend that is transforming the real estate landscape and is defined as a real estate project with planned integration of some combination of retail, office, residential, hotel, recreation or other functions that are pedestrian-oriented, limit urban sprawl and have architectural expression. Without a tested framework to predict and mitigate risk in a development, it is difficult for investors and property developers to make accurate business decisions. The aim of the research was to explore the risks associated with a prominent mixed-use development and how these risks may be mitigated from a business perspective. From the existing literature, a framework was constructed of elements that would impact on the risk profile of a mixed-use development. Due to the limited amount of available literature, a qualitative and exploratory research design was employed. Due to its prominence and distinctiveness, Melrose Arch in Johannesburg was selected as a case study. A process of triangulation was used between observations, documentation and in-depth, open-ended interviews with the key role players in the development of Melrose Arch. The research indicates that Melrose Arch is riskier than traditional property development. Mixed-use development is an ongoing concern that requires ongoing strategic alignment and general management expertise. Findings from the research contributed to construct a comprehensive framework for risk mitigation in the mixed-use development process. Copyright