3.7 TRENDS IN EACH OF DURBAN'S MAJOR ECONOMIC SECTORS
3.7.4 Work and livelihoods
South Africa's increasing openness to the international economy has brought sweeping changes to the nature of work and livelihood of the city's people. Many other countries in the development world share this trend. Increasingly people are involved in atypical employment being either self-employed, working under less formal contracts, or with no contracts at all. More and more workers have little or no formal job security. Many people have lost their formal jobs, especially women. Some are now unemployed, some are doing home-based work on an outsourced basis. Cities all over the world are being faced with changing work patterns, and the challenge of how to manage the new places of work (Casale and Thurlow, 1999).
Only a third of Durban's economically active population is formally employed. In the absence of adequate formal work opportunities, many people rely on informal income-generating activities. According to the 1999 October Household Survey, 52%
of those involved in the informal sector worked for their own account, while 48%
were informal employees. Some employers avoid entering into contracts with their employees often leading to very low pay and low quality work conditions. Many poor people, and some wealthier ones, turn to informal self-employment as a way to
support themselves and their families (www.labour.gov.za).
Figure 3.8: Economically active population in Durban 1999(Source: StatsSA, 1996)
Composition of economically active population In Durban 2000
3.7.5 Retail market
Retail is one of the most dynamic urban markets. Itis characterised by quick changes, fierce competition, e-commerce on the horizon and major changes in demographics and lifestyle. The past two years have witnessed tough conditions, with dampened consumer demand resulting from low saving, high consumer indebtedness and lower consumption levels. Consumers include people who live and work in the city, those who are in the city temporarily on business, tourists, and long-distance shoppers from rural areas.
Expenditure in the retail and wholesale trade by those living in the metropolitan region is estimated to be R13.9 billion per annum (1998 prices). The composition of demand for retail and wholesale goods suggests that Durban is predominantly a mass
consumer market with a high promotion of expenditure on food and clothing. This profile is typical of markets with large numbers of lower-income consumers.
Although Durban is predominately a wage goods economy, there is also a sizeable market for luxury goods. Enterprises in this sector range from formal, relatively large fIrms, which are often branches of national or international companies, rapidly growing, labour-intensive small, medium and micro-enterprise component, and thousands of individuals in informal survival activities. The formal sector accounts for 92.3% of this market. Durban offers a range of shopping experiences, from international quality shopping malls to vibrant street markets offering unique and affordable products (www.durbaninvestment.co.za).
Based on formal retail trade sales data, the market experiences a large December peak and a much smaller mid-year peak, due mainly to seasonal tourism and additional expenditure derived from annual bonuses. Long-term trends show that Durban's share of South Mrica's retail trade sales has been slipping. There is nevertheless a 0.7%
increase in national share over December. The performance of the sector clearly relies on the extent to which jobs and incomes are created by lead sectors elsewhere in the economy. Tourism adds income at some times during the year and has helped to increase the annual value of expenditure in the city substantially (www.thedti.gov.za).
3.7.6 Property market
The property industry has just emerged from a prolonged 18month period of high real interest rates: investor interest in property was at an all time low. Signs of recovery were signalled by interest rates dropping to pre May 1998 levels during year 2000.
The market for retail property is influenced by the nature and size of the market segments that use different facilities. Low-to middle-income consumers rely on public transport and shop either close to home or work: the focus is often the CBD. The more affluent consumers use suburban shopping malls, theme shopping centres and shopper-tainment centres. Retail rentals, an indicator of demand, range from R120 per
square metre to R180 per square metre in the CBD to as high as R200 per square metre for Musgrave and the Pavilion shopping centres.
Office space within Durban is located primarily in the CBD and decentralised nodes at Westville, Umhlanga and the Berea as noted in figure 3.9 below.
Figure 3.9: Durban's office stock (Source: SAPOA).
Durban's office stock
Total office stock=1, 084,368 square metres
1%
59%
There are just over a million square metres of office space at key nodes. Anincreasing volume of higher-grade office stock is becoming available in decentralised areas, particularly in the north. Durban has an active residential property market offering relatively affordable prices when compared to other major urban centres.
A trend in this market has been affected by changes in the way that institutional investors view property investments. Until 2000, the property market offered investors the prospect of steady performance, based on secure and inflation-related rental increases. This has given way to a market characterised by greater volatility and a wider variation in returns in different sectors and locations. Investors' tendency of paying greater attention to their existing portfolios, picking and trading more
selectively and taking a shorter-term perspective had an impact on investments. Nodes change their mix more rapidly and the length of leases has generally come down.
High-interest rates and generally poor returns have affected new developments.
Returns on existing properties have tended to outperform those for new developments.
The macro-economic condition has improved for development activity and there is a projected up-turn in the business cycle, a lower interest rate environment and relatively low cost escalations of 4% per annum (www.durbaninvestment.co.za).