This wave of new shopping centres, supported by retail expansion and by the banks, is creating intense competition among shopping centres.

In a normal year, one or maybe two major shopping centres break ground in South Africa, but last year and this year are proving to be extraordinary, with several large developments planned.

According to Spire Property Management, at least 160 retail centres have been developed nationally in the townships and rural areas between 1962 and 2009, covering about 2-million square metres of retail space and generating about R34bn in sales, while having added about 54,300 permanent jobs to the national economy since the 1980s.

Despite some developers having given up on shopping centres, citing municipal’ inefficiency and corruption, new developments worth billions of rand are planned for the next three years.

Large shopping centres are expected to be built in Port Elizabeth, Midrand, Krugersdorp, Secunda, Cape Town and Pretoria West. But shopping centres are not planned only in urban and metropolitan areas; rural areas and small towns are also getting their fair share.

The emerging black middle class is cited as the reason for the surge in these developments.

But the new centres are likely to cannibalise older ones — unless, of course, the old ones reposition themselves to stay in the game.

South African Council of Shopping Centres CEO Amanda Stops says these centres will be focused on metropolitan areas.

She says the focus o n metropolitan areas makes sense considering South Africa’s latest population statistics, which show that Johannesburg, Cape Town, eThekwini and Tshwane have the highest population growth figures by far.

This affects the need for housing, jobs, schools, and general infrastructure, including retail centres.

What is also propelling new developments is that local authorities have made the land available even though, in most instances, developers face rezoning challenges and delays.

However, local developers can be thankful that conditions are different from those in places such as the UK and Australia, where it is difficult to build a new shopping centre because of council restrictions and land scarcity.

Some of the South African malls that opened last year include the R500m 23,000m² Nicolway Bryanston Shopping Centre owned by the Rodrigues Group and developed by Flanagan & Gerard; the R500m 43,000m² Middelburg Mall in Mpumalanga developed by the Moolman Group and Flanagan & Gerard; and the 38,000m² Newcastle Mall in KwaZulu-Natal developed by Zenprop for R400m.

Shopping centres planned are a 100,000m² centre in Midrand’s Waterfall City by the Atterbury Group, and the 75,000m² Cradlestone Mall in Krugersdorp developed by Sasol and Retail Africa.

There are also the 40,000m² Burgersfort Mall, bordering Limpopo and Mpumalanga, planned by the Resilient Property Income Fund, and the Atlantic Mall in Cape Town, expected to be 78,000m² in size, to be developed by Flanagan & Gerard and Intaprop.

Other new developments include the 68,000m² Forest Hill City Mall in Pretoria West, which is expected to cost about R1,45bn to build, and the 88,000m² Bay West City in Port Elizabeth at an expected cost R1,75bn, to be developed by the Billion Group. The Billion Group is also planning a big shopping centre in Mthatha, in the Eastern Cape.

There is also the 45,000m² Secunda Mall in Mpumalanga, which is expected to cost R700m. It will be owned by the Sasol Pension Fund and Resilient.

Ms Stops says shopping centre development plans under way for this year and next will create some 600,000m² more retail space.

However, this growth rate of 3.8% is subdued compared to recent years.

The total retail space in shopping centres of more than 30,000m² in size increased from 1,8-million square metres in 1993 to more than 7,8-million square metres last year — a growth rate of 7.8% a year.

Most of these larger shopping centres — about 72% — are in South Africa’s five metropolitan areas, with only 3% in rural areas.

"Many suitable rural areas have already gained retail development in recent years, but there are still growth opportunities there," says Ms Stops.

However, " shopping centre development needs sufficient population and income (levels) in a local trade area", explains Ms Stops. " With this in mind, the demand for retail space will keep on increasing in Gauteng and the Western Cape, while this growth will be much lower in other provinces."

Established shopping centres will remain under pressure to stay competitive in the prevailing economic environment, she says.

"Beside our shopping centre owners and managers developing innovative strategies for tenant mix, advancing service levels and investing in an attractive shopping environment, there are other important factors needed to support a healthy shopping centre industry and economy," says Ms Stops.

The key to future growth in South Africa is stability and strong gross domestic product growth, she says.

Also taking place is the redevelopment of The Mall of Rosebank, by Hyprop, which will be extended from about 37,000m² to 62,000m² at a cost of about R920m.

All in all, and in spite of rising electricity tariffs and the effects of high property taxes, opportunities are there to be exploited by the intrepid entrepreneur.

Source: BD