The magnificent march of SA's malls

03/10/14 at 10:49am

Men in hard hats and overalls were busying themselves in every nook and cranny of the Newtown Junction mall when it was launched last week. Worth R1.4-billion, the 85 000m2 development was six years in the making and aims to play a major role in the rejuvenation of inner-city Johannesburg.

The centre is light and bright: professionals in suits and women in sky-high heels saunter past the modern piazza fountains. Inside, shopkeepers adjust mannequins that display the latest fashions. Retailers include Truworths, Foschini, Jet and Mr Price, and a Pick n Pay is already bringing in substantial foot traffic.

Its location at the junction of Newtown and Fordsburg is aimed at lower income groups although, as the mall matures, it is expected to increasingly attract people with more spending power. This will be helped by the centre’s mixed use areas, with 39 000m2 of four-star green-star office space, which houses 3 800 Nedbank staff.

Newtown Junction is one of many new shopping centres in South Africa – a fact that seems at odds with sluggish economic growth, rising costs and overburdened consumers.

The data says that malls are on the march and, at last count, there were 1 785 in South Africa, with 44% of the shopping centre space being in Gauteng.

A report by Dirk Prinsloo, the managing director of Urban Studies, which conducts feasibility studies for shopping centres, shows that the number of malls in South Africa is far higher than its emerging market peers, some of which have four times its population, and even outdoes that of some developed economies. The report, Benchmarking the South African Shopping Centre Industry: International and Local Trends, was commissioned by the South African Council of Shopping Centres in 2013.

In Brazil, with a population of 200-million, the number of shopping centres is near the 400 mark and, in Mexico (population 122-million), it is closer to 500.

Portugal (population 10.5-million), New Zealand (population 4.5-million) and Argentina (population 41.5-million) have fewer than 200 centres each.

Germany (population 80-million) has 600 and Australia (population 23-million) come closest to South Africa (population 54-million) by having slightly more than 1?400 shopping centres.

South Africa has about one million square metres of shopping centre space currently under planning. On the rest of the continent it is 900 000m2.

Prinsloo’s research shows that, last year, shopping centre sales per capita in South Africa amounted to R8 900 (up from R5 255 in 2007) with sales amounting to R392-billion (up from R245-billion in 2007).

According to Statistics South Africa, total retail trade sales last year amounted to almost R698-billion, compared with R577-billion in 2008.

The South African retail space market is so developed that, according to an AT Kearney 2012 Global Retail Development Index, it can no longer be listed as one of “the 30 developing countries” – the report concluded that the window of growth had closed.

Concerns about shopping centre space reaching saturation have abounded for decades but the growth continues.

“We are seeing more and more shopping centres in rural areas and towns – and in Johannesburg it is not stopping,” said Elaine Wilson, the divisional director of research at the commercial property management company Broll.

Urban Studies is conducting new feasibility studies on shopping centres. “We are busy here and that is indicating two things,” Prinsloo said. “People are dusting off old plans that were put on the shelves in 2008 when the recession started … and there are other new opportunities where people move into the rural areas.”

The driver of retail space growth, experts agree, is the emerging middle class and urbanisation.

“The cake in South Africa is getting bigger,” Prinsloo said.

Read Further: Mail & Guardian



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