HARDLY a month went by last year without construction starting on yet another new mall or a newly completed one opening its doors.
In fact, at least 25 new shopping centres, each one exceeding 30,000m² in size, are expected to be added to the market between 2013 and 2016, according to figures from the South African Council of Shopping Centres.
That will bring South Africa’s tally of large, regional and super-regional malls to an estimated 180 — more than double the number five years ago.
The largest mall opening of 2013 took place last week: Sasol Pension Fund, Retail Africa and Pivotal Property Fund’s 76,000m² Cradlestone Mall, just off the N14 Krugersdorp highway on the West Rand.
Other mega-malls expected to open in the next two to three years include JSE-listed Attacq’s massive 120,000m² Mall of Africa at Waterfall City near Midrand, Billion group’s Bay West (87,500m²) in Port Elizabeth and Forest Hill (68,000m²) in Pretoria, and Flanagan & Gerard and Intaprop’s Atlantic Mall (78,000m²) in Cape Town.
The continued addition of new, multimillion-rand shopping centres raises the question of the extent to which (if any) South Africa is overshopped.
In a recent report, Macquarie’s property and retail research team said: “South Africa seems overshopped in some areas and regions and on certain indicators, such as mall space per capita. Yet overall, on indicators such as vacancies, trading density growth, occupancy cost ratios and bad debts, it seems that the South African retail property sector is still in decent shape.”
However, Macquarie property analyst Leon Allison said given consumers’ weak financial position and a sluggish economic growth outlook, there was little doubt that investment returns on new centres would decline unless the pace of retail development slowed down.
Mr Allison said that a clear indication that new opportunities for growth in the local retail market were becoming scarcer, was an increasing trend among developers, retailers and listed property funds to grow their portfolios beyond South Africa’s borders. For instance, Growthpoint has expanded to Australia, Redefine to the UK, Germany, Switzerland and Australia and Resilient to eastern Europe and Nigeria, while Hyprop is building malls in Ghana and Zambia in a joint venture with Atterbury. The entry of more international retailers to South Africa could, however, help mop up the growing supply of retail space.
The head of listed property funds at Stanlib, Keillen Ndlovu, said the recent arrival of global fashion brands such as Zara, Cotton On, Gap, Burberry, Mango, Forever New, Steve Madden, Topshop, fast food outlet Burger King, had buoyed demand for retail space, especially in regional and super-regional malls.
He says foreign tenants may well continue to be a driver of new retail development as many of the dominant centres have limited or no space available to accommodate new entrants to the market.