Property firms told to tackle retail question

Property Reporter

LIBERTY Properties said yesterday the proliferation of smaller outlets by large retailers in neighbourhood centres, in competition to their own regional stores, was of growing concern.

This was particularly relevant in a context where one of the challenges facing the retail market, which is the best performing property sector, was the question of oversupply.

Speaking at the first annual Investment Property DatabankSouth African Property Owners Association property investment conference in Sandton yesterday, Jim McLean, MD of Liberty Properties, said this was made worse by all the other smaller retail outlets, such as shops at petrol stations, being open daily,

McLean said unless retail property owners and retailers became more responsible, the industry would suffer as a whole.

He said retail property investments had outperformed all other sectors, averaging returns of 14,96% against 8,94% for offices and 10,26% for industrial property. But in order to sustain this, the number one challenge would be the question of oversupply.

"Notwithstanding the large capital commitment made in developing a new retail centre , a number of new centres have been created recently in an inappropriate manner relative to their market share," said McLean.

Another challenge was the question of rentals, he said.

"Today, as with other types of property, retail suffers from the problem of rent levels at expiry of leases often being above the current level of the market," he said.

Nov 05 2003 07:15:13:000AM Nick Wilson Business Day 1st Edition