17 October 2014
The new Mall of Africa is set to change the face of Johannesburg. (Photo: Atterbury)
Despite the sluggish economic growth in South Africa, new shopping malls are rising in many parts of the country, with the latest addition being Newtown Junction in Johannesburg.
The growth of shopping centres is on the upsurge and current figures show that there are 1 785 malls in South Africa, with 44% of the shopping centre space being in Gauteng, reports the Mail & Guardian.
Located in the Newtown precinct (where the Market Theatre is located) the R1.4- billion Newtown Junction opened on 25 September and boasts 82 000m² of retail space. The mall was six years in the making and aims to play a major role in the rejuvenation of inner-city Johannesburg.
The mall is targeted at the lower income groups and features retailers like Truworths, Foschini, Jet and Mr Price, and a Pick n Pay. It is expected that the mixed use character of the mall, which includes 39 000m² of office space, will later attract people in the higher income groups.
Growth of South African malls
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 reveals the following:
- 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.
Mall development continues to rise
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.
Growth in urbanisation
According to his research, South Africa is experiencing “unprecedented growth in urbanisation’, and is now 63% urbanised. That is expected to reach 68% by 2030, warranting up to two million square metres of additional retail floor space by 2025.
“As far as your convenience and neighbourhood centres are concerned, in some areas there is a certain level of saturation,’ Prinsloo said. “But where you see most of your growth is in your regional centres and super-regional centres.’
Liberty Properties manages a handful of major malls, including Eastgate in Johannesburg, the Midlands Mall in KwaZulu-Natal, the Promenade in Cape Town and one of the largest shopping centres on the continent, Sandton City.
Liberty Properties managing director, Maurice Mdlolo, said: “Most international retailers who want to come to the continent have identified South Africa as the gateway and Sandton as the first port of call.
“There is growth which is happening. In our observation, this growth is very much driven by the retailers. It’s very much a retailers’ market at the moment and they can dictate better rentals and expand into some of the spaces,’ said Mdlolo.
New Mall of Africa Mall
Mall development in Johannesburg continues. Property development company Atterbury is currently developing a 120 000m² Mall of Africa for R3.5 billion – South Africa’s largest single-phase shopping mall development to date – financed by Nedbank Corporate Property Finance. The new super-regional Mall of Africa will be the heart of the ambitious Waterfall, a city superbly situated between Johannesburg and Pretoria.
The two-level mall forms the hub of Waterfall Business Estate, a 1.6 million square metre mixed-use commercial development. Commercial property commentators punt the development as the most ambitious commercial development yet undertaken in southern Africa.
SAinfo reporter
