Old Mutual Properties has added its voice to growing concern about unchecked retail property growth.

The group's retail property executive, Brent Wiltshire, says a real risk to the sustainability of retail developments is evident in some centres.

"The recent oversupply and dismal returns in the office market stemmed from ill-disciplined rezonings and overzealous development. The retail sector has been an investment darling but it is in danger of going the same way as the office market with injudicious granting of rights," says Wiltshire.

He says municipal authorities are missing opportunities to insist on residential components linked to new retail developments and to create more integrated, commercial and residential mixed-use precincts. "In some markets, retail centres are being developed or proposed that are clearly a response to an under-supply of facilities.

"In other areas, where there is already a substantial supply, the balance between demand and supply needs to be determined. Unfortunately, in some areas we are seeing planners encouraging developers who have not yet sought rights for their proposed site to build in competition with owners who already have retail zoning."

In March other property commentators expressed concern about the retailer-led development of new shopping centres in Gauteng, Western Cape and, to a lesser degree, KwaZulu-Natal.

Ian Anderson, investment director of The Income Specialists, a division of Marriott, said at the time that massive retail sales growth was prompting retailers to look for space to expand. Since space was not available in existing shopping centres, as these did not have land on which to expand their premises, national retailers were asking developers to build new shopping centres.

He said this acceptable while retail sales growth was strong, but if the economy slowed, the risk lay with the landlords. Anderson said the strong growth in rentals and returns was sustainable as long as SA experienced low inflation, low interest rates and accelerating economic growth. Although this was the situation today, he said, it may not be the situation in three year?s time.

Business Day