Inside the spooky South African shopping mall where most shops are empty

·2 Dec 2024

The Tshwane China Shopping Mall, formerly known as the Zambezi Mall, is dark and eerie. Most shops are empty, and none of the escalators or lifts work.

The Zambezi Mall shopping centre is located in Derdepoort, Tshwane, on the corner of Sefako Makgatho Street (formerly Zambezi Road) and Moloto Road.

The mall formed part of the Sharemax scheme in which South Africans invested around R543 million between 2008 and 2009.

Zambezi Mall, developed by Capicol, promised to enrich and nurture the surrounding environment in the northeast of Pretoria.

Sharemax was confident of the mall’s success because of its fast-growing catchment area and its location on a high-traffic route, including a busy public transport route.

The first phase of construction commenced in November 2005, and one year later, the second phase was under construction.

The first two phases boasted 40 shops, with tenants including Spar, Tops, News Cafe, Build It, Ocean Basket, Video Den, Pizza Chicken Perfect, Music Mate, MTN, and Speedy.

Building on the initial success, Zambezi Mall introduced the multi-storey third phase, which included a lettable area of 30,000 square meters.

The retail space and shops, which range from 12 square meters to 2,600 square meters and include covered parking, were set to open in 2009.

After a few delays, the multi-story section of the Zambezi Mall officially opened its doors in early 2010. At the time, the shopping centre was valued at over R1 billion.

Cracks quickly started to show, with articles at the time pointing to serious financial problems and large amounts owed to Capicol.

Vic de Klerk wrote that Sharemax bought the Zambezi Mall from Capicol for R930 million. However, investors only provided around half of that money.

He highlighted that even if all the planned money was raised, it would amount to R539 million – only 57% of the R930 million buying price.

Sharemax investors were promised a guaranteed interest of 10% on their Zambezi Mall investment.

Achieving that would have required a very high occupancy rate with a net rental income far exceeding industry standards.

The situation unravelled quickly, and within six months after opening its doors, the forensic auditor André Prakke said the Zambezi Mall was almost worthless.

In September 2010, the South African Reserve Bank issued directives to Sharemax and its property syndication companies to repay the funds obtained from members of the public.

This directive triggered the collapse of Sharemax’s property syndication schemes, in which investors lost millions.

Zambezi Mall becomes the Tshwane China Shopping Mall

The Zambezi Mall was a dismal failure. Within months of opening its doors, shops closed down because of a lack of people visiting the centre.

In October 2013, the Zambezi Mall was reopened as the Tshwane China Shopping Mall, with Tomas Hu as its new manager.

Hu said that 80% of the shops had been filled. They had big plans to increase occupancy and make it a successful retail hub.

The Nova Property Group, which tried to resolve the problems associated with Sharemax, described the situation in communication to shareholders.

It said the Tshwane China Shopping Mall, previously known as Zambezi Mall, was tenanted by an Oriental City on a head lease basis.

“Extensive marketing of the shopping centre has been undertaken, and footfall at the shopping centre has increased drastically,” it said.

It also explained the behind-the-scenes financial battles, which included a settlement between Zambezi Retail Park Investments (Zambezi) and Capicol.

It explained that Zambezi became entitled to the transfer of 100% of the Zambezi Mall property in 2011. However, the full amount owed to Capicol was not paid.

A dispute over how much money Capicol owed led to “disputes and substantial litigation”.

Over the next decade, the Sharemax debacle continued, with numerous parties subject to litigation and legal battles.

Noluntu Bam, the Ombud for Financial Advisory and Intermediary Services (FAIS), recently found that Sharemax directors were liable for an investor’s loss.

This finding opened the door for numerous Sharemax investors who lost money to institute claims against the company’s former directors.

The Zambezi Mall today

BusinessTech visited the Tshwane China Shopping Mall to see whether there have been any improvements.

The mall’s exterior is run down, and the roads around it are overgrown with grass and weeds. It is clear that the mall is not maintained.

There is only one entrance open, and it is not very inviting. The entrance, like the mall, is run down and poorly maintained.

Entering the mall is eerie. It is very dark, and there are nearly no people in it. None of the escalators work, and there is one shop playing loud music.

Security guards are sitting in strange spots all around the mall, which one can assume is to keep vagrants from occupying the space.

The shops look well-maintained, but nearly all of them are empty. It is clear that many of them used to be occupied in years gone by.

One security guard told BusinessTech that nearly nobody was visiting the mall and that she was unaware of any plans to improve the situation.

Unlike many other deserted shopping centres, the Tshwane China Shopping Mall is not so dilapidated that it could not be saved.

However, it is unlikely that a developer would invest large amounts of money when it is not certain the mall would succeed.

The litigation and shareholder mess linked to the Zambezi Mall may also scare away investors who want to try to make it successful.

Inside the Tshwane China Shopping Mall, formerly known as the Zambezi Mall