There will be 17 new shopping centres open in South Africa….within three weeks
A new study published by Morgan Stanley Capital International (MSCI) Real Estate South Africa on behalf of the South African Council of Shopping Centres (SACSC), says malls are getting bigger.
The data indicates that the average size of centres developed have steadily increased in size since the 1990s, with centres slated for completion between 2017 and 2020 being significantly larger than those developed during the 1990s and 2000s.
This trend towards larger centres may be explained by developers opting for larger formats in order to dominate its immediate catchment area and attract a higher proportion of national tenants, thus strengthening the centre’s position within its catchment area, the report said.
The data also indicates that proposed centres planned in the country’s city regions, local towns and service towns are all now twice the size of those developed during the 2000s.
As of July 2017, the South African retail development pipeline measures 1.9 million square metres across 68 centres – the bulk of which is planned for completion in 2018. Currently, there are 17 shopping centres slated for completion in the remaining weeks of 2017.
Looking at the square meterage of retail space, South Africa ranks as sub-Saharan Africa’s most saturated retail market, representing 88% of the available space in the region. According to the SA Shopping Council, South Africa has the sixth most shopping centres in the world.
Phil Barttram Executive Director MSCI said that there is a unique perspective of the link between retail space, economic activity and population density.
“MSCI’s latest research, based on SACSC’s shopping centre directory, provides a unique perspective of the linkage between expected retail mall space, economic activity and population densities. Given a highly competitive environment for malls in specific nodes, we believe that centre selection within the retail segments will become increasingly important,” he said.
“There are fundamental drivers of mall defensiveness and it will be the malls that best exploit these factors that will prove to be more resilient in the times ahead,” he added.
The Mpumalanga, Limpopo and Eastern Cape provinces combined contribute 82% of the overall retail pipeline in the small settlement-type markets.
The study conducted by MSCI also notes that despite the slowing of retail development, the South African retail market has expanded significantly over the past few decades, increasing to 23.4 million square metres at the end of 2016.
Since 2010, retail stock has grown by an average of 17.3 per cent with 32 new centres per year.
Last year, Menlyn Park in Pretoria, now the largest shopping centre in South Africa, embarked on a R2 billion redevelopment that added 50,000 square metres of additional retail space to its already massive footprint, making it one of the largest malls in Africa.
In February this year, the Fourways Mall expansion project in Johannesburg broke ground. This project, costing R23.7 million, will see the mall become a retail behemoth of 175,000 square metres.
The Pavilion as well as Ballito Junction, both in KwaZulu-Natal have also undergone expansion projects.
Another possible reason for the increase in mall size including redevelopment of malls may be globalisation. Globalisation has brought many international brands into the country that were once considered unattainable.