Provide African fanatasy, developers urged.

Posted On Wednesday, 12 February 2003 10:01 Published by
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SA's shopping centres must shed their eurocentric pretensions and begin reflecting local style and reality.
The SA retail fraternity needs to change its approach away from 'flashy overseas-styled retail centres' towards demand-driven projects providing services in areas where they are needed.

This statement comes from the portfolio manager of Futuregrowth Community Property Fund, Wayne van der Vent, amid concern that much of the recently added retail space in the major centres across the country is not supported by sound business principles.

This is reflected in the struggle for tenants seen in a number of new shopping centres introduced in the past few months.

Property economist Francois Viruly says the architecture behind commercial property development is about fantasy.

'The problem is that our architectural fantasy is Eurocentric as reflected in many shopping centres,' says Viruly.

'It is high time developers provided African fantasy.'

Van der Vent says investors who stick to the urban-bound developments on offer from developers are robbing themselves of significant investment gains as well as strong and sustainable yields.

He says the dominant trend of urban retail developments is an indication of the failure of developers to deal with some of the realities in South Africa.

Van der Vent says Cape Town boasts about 10m² of retail space for every economically active person while Phuthadichaba in the Free State stands at about 0,02m² per economically active person. He says that almost all debate about the state of the property market ignores the vast opportunities which exists outside the fashionable areas.

'The challenge is to change the sectorial mind sets that have driven the situation where urban office buildings stand empty, retail space continues to come on line despite high and climbing vacancies in existing space, and where investor yields are compromised,' says Van der Vent.

He says financial institutions will have to move away from pumping money into nonperforming urban developments while redlining many townships where their services are needed.

'Retailers must revert to the basics by providing services and goods in areas where there is greatest demand,' he says.

He says change will be difficult because role-players protecting their comfort zones will resist.

'The secret is in simplicity,' says Van der Vent. Smaller centres offer shopping to high volumes of consumers who want to buy baskets full of groceries instead of using elaborate trolleys.

Futuregrowth owns 13 such centres spread across eight provinces countrywide.

Van der Vent says the entire portfolio is slightly larger than Canal Walk in trading square meters. 'The development costs are just a quarter of the cost of Canal Walk, but the portfolio serves more than 10 times the number of consumers,' he says.

Viruly says many regional shopping centres fail to integrate into local communities and their socioeconomic environment.

He points to the fact that many retail developments are providing retail outlets with trading space of about 1000m², which is only suitable for national retailers.

When the national retailer moves out that space becomes obsolete because it cannot be occupied by a small local entrepreneur, says Viruly.

He says that the new Metro Mall retail development in the centre of Johannesburg next to the taxi rank in Bree Street represents a paradigm shift.

It has been designed to cater for small and informal traders to national retailers.

Business Day

Publisher: Business Day
Source: Business Day

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