By Joan Muller

Senior writer

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THOUGH Johannesburg already has a glut of shopping centres, consumers will soon have an even wider choice than before. In Greater Johannesburg alone at least eight new shopping malls are currently under construction or in different planning stages (see table).

If all these projects go ahead, about 500 000sq m of new retail space – nearly four times the total floor space of Sandton City – will be added to the market over the next few years.

These figures exclude three smaller centres planned for Soweto. The new Gift Acres centre (8 800sq m) in Lynn-wood Ridge in Pretoria and the Vaal Mall (45 000sq m) in Vanderbijlpark are also not included.

Analysts say the enthusiasm with which new retail developments are now being tackled is a natural reaction by developers, property owners and retailers who want to cash in on SA’s ongoing retail spending boom and consumers’ growing disposable income.

The question arises whether Joburg has enough consumers (and will have in the future) with sufficient disposable income to support all these new shops.

JHI Real Estate retail director Ivan Pachonick says people do not fully comprehend what’s happening to this city in terms of rising population densities and growing spending power. He says that urban Gauteng now has a population of 9m and that this figure is expected to reach 20m by 2020. This implies there’s lots of room for retail expansion and that new projects will be viable.

But some analysts feel that the addition of more malls does not necessarily increase total spend, but merely dilutes existing expenditure.

Pace Property Group MD David Green says that’s particularly true for Joburg’s upper-middle and higher income areas, where there’s already an oversupply of retail space. He feels that new centres in these areas simply take customers away from existing ones. Retailers who open an outlet in every centre are therefore diluting their income, not increasing it.

Green says that it’s worrying that many of the new projects are in fact again aimed at the upper end of the market instead of areas where there’s still demand for new retail space. He believes that the greatest need is for smaller neighbourhood and convenience centres in lower- and middle-income areas, especially those areas serving a growing black middle-class.

Property research group Urban Studies CEO Dirk Prinsloo says that the addition of new retail space in itself is not necessarily a problem, since higher disposable income and population densities could justify it. However, what’s of concern is the scale of the new projects.

He believes the new centres generally appear to be 40% to 60% larger than can be justified by their particular catchment areas. But he says that as long as shopping centres remain profitable, investors will continue to pour money into new developments.

The latest figures from the IPD/Sapix SA Property Index confirm that retail offers more favourable returns than any other property sector. Shopping centres have achieved an average total return of 15%/year since 1994. Over the same period, office and industrial buildings achieved total returns of only 9,1% and 10,9%/year respectively.