By Pauline Larsen

Retail developers are exploring different markets and regions     
 
South African developers are often lambasted for churning out the same old malls in the same old areas, predictably targeted at suburban, middle-class shoppers. But attitudes are changing and new centres are springing up in areas that were not even on the radar five years ago.  Target areas are the former townships, and projects are under way in Soweto, Mamelodi and Atteridgeville. Why have developers had a change of heart? 

"I'm not sure we've undergone a complete change of direction," says Futuregrowth director Wayne van der Vent. "It's just that we've become more pragmatic." He believes several factors are contributing to this new way of thinking. For one, stereotypes about black shoppers are rapidly falling away. 

"In the early 1990s one national book retailer told me it wouldn't open stores in the townships because blacks did not read," says Van der Vent. "That thinking has been quashed."  Retailers nowadays aren't "afraid" of black shoppers. There was a time when they expected consumers to travel to their stores; now they're taking their stores to shoppers.  Black shoppers, adds Van der Vent, appreciate convenience-shopping and don't automatically write off local centres as second-rate.  "Building shopping centres in new areas is a sign of a normalising society," he says.

Market researchers are discovering that shopping patterns correlate with consumer income levels and not race. And retailers already in the townships don't offer stock that is in any way different from what's in their other stores.  "Consumers with the same income shop similarly, regardless of their population group," confirms Sheny Medani, MD of research house Market Decisions. 

And now that the first wave of retailers has succeeded in "untraditional" areas, the rest are keen to follow, say retail analysts. Banks such as Absa and First National are good examples.  Analysts add that retailers such as Cashbuild and Shoprite deserve credit because they were willing to explore new areas and consumer segments.  "Others, such as John Orr's and Stuttafords, stuck with the old model and suffered as a result," says Van der Vent. 

He believes the middle-class suburban market is saturated.  "After all, there are 20m shoppers who don't live in middle-class suburbs. Where do they shop?"  To illustrate the imbalance, Van der Vent cites the 500 000 m² of shopping facilities available to 2m people living in Cape Town. Compare this with the 20 000 m² of retail space for 800 000 people in Phuthaditjhaba in the Free State, 95 km from Bethlehem. "These ratios just don't stack up," he says.  Futuregrowth is one of the few investors moving into semirural, often far-flung and underdeveloped regions such as Tembisa in Gauteng and Motherwell in the Eastern Cape; successfully, too. 

Van der Vent reports its centres achieve yields of around 14,5% compared with a 9% average for retail.  "Say a 50 000 m² regional suburban mall that cost R500m achieves net rents of R220/m². In contrast, a 10 000 m² mall in a former township that cost R30m would achieve R51/m². This is a more attractive return ," he calculates.  Medani agrees, adding that township supermarkets can generate trading densities of R40 000/m²/year, compared with R18 000-R32 000/m²/year in conventional suburban malls. 

But new developments will happen only where conditions are right, says Dirk Prinsloo, MD of property research house Urban Studies. And dramatic residential growth is a key indicator of future retail demand. Prinsloo believes there is medium-term potential in the northwestern suburbs of Johannesburg; areas such as Soshanguve and Olievenhoutbosch in Pretoria; Durbanville in Cape Town; and KwaZulu Natal's north coast . 

He also identifies opportunities in areas where significant demographic shifts have occurred and in larger towns such as George, Mossel Bay, Ermelo and Newcastle. "Convenience centres with an excellent location and a strong anchor such as a Woolworths food hall are a good bet." 

Medani says CBD retail is likely to boom as social housing projects - Brickfields estate in downtown Johannesburg, for one - get off the ground.  Though Soweto is the location of choice for retail developers right now (Property August 20), Van der Vent says the real opportunities lie further away. Futuregrowth looks for areas with big, unserviced consumer markets and relatively cheap, available land. This includes Umtata and Butterworth in the Eastern Cape. 

Van der Vent is also eyeing the capitals of former homelands such as Thohoyandou in what was Venda . "We won't be going into Soweto," he says. "There's simply too much new supply."