Africa set for wave of retail property expansion.

Posted On Tuesday, 15 October 2002 10:01 Published by
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A considerable wave of tenant-driven retail property expansion is likely to

A considerable wave of tenant-driven retail property expansion is likely to take place in Africa, says Richard Harman, head of BOE Property Investment Partners.

He told a Catalyst Holdings conference on property trends that, given a limited growth environment, retailers had to expand their markets, increase margins, reduce costs and increase turnovers.

'Retailers must expand their market outside of South Africa. Already we have seen them enter Australia, England, Europe, Poland and Chile.

'But in these markets margins are even thinner than in our own and therefore difficult to penetrate. This leaves Africa and China and the Far East, notably Nigeria, Ghana, Kenya, Tanzania, Mozambique, Namibia and the UAE.

'Exceptional trading densities are available to early adopters. Early adopters are brave and have a higher risk profile', says Harman.

'By working side by side with South African retailers, I believe developers can reduce the risks, taking advantage of the various government incentives currently in place and through appropriate insurance cover.

'This is a large new market but viable projects are still in short supply with the identification and acquisition of suitable land currently being thekey to unlocking the potential. Political instability and a high level of corruption makes this market difficult but there are pockets of sanity which are slowly opening up.

'An interesting implication for our markets is the potential for the US dollar to become the dominant currency of Africa. Will you collect dollar rentals from your South African tenants in your lifetime? Will JSE listed property companies or trusts offer US $/rand hedge potential?'

Harman says convergence of information and data technology will have a major impact on the design and use of retail property in the near future.

'It offers, for the first time a very practical way to merge clicks and bricks. Property is the place where e-commerce and m-commerce will converge - not some virtual shopping mall located in a hypothetical free trade zone.

'We are beginning to see the first signs of extending trading hours (or useful occupation time) of buildings. How long will it be before Woolworths trades 24x7x365? Call centres and internet based companies trading in different time zones?

Harman believes property developers will have to build buildings that are more user friendly, more intelligent, part of a connected community and which share software and networks.

Publisher: DeK&K Communication Consultants
Source: Catalyst Holdings

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