ieter Prinsloo, MD of retail-focused property fund Hyprop Investments, says retail spend in first-half 2007 was still up around 11% across Hyprop's R7bn shopping centre portfolio. But by December sales growth had slowed to 3% (year-on-year), down from 13% in December 2006. Retail spend at Hyprop's malls - including Canal Walk at Century City (Cape Town) and Hyde Park, Rosebank Mall and The Glen (Johannesburg) - was up an average 9% for calendar 2007 (11% in 2006).

Interestingly, Prinsloo notes that while fewer shoppers visited its malls in December - foot count was down 3% - the average spend per head increased 8,5%.

The top eight shopping centres owned by life insurer Old Mutual - including Gateway Theatre of Shopping (Umhlanga), Menlyn Park (Pretoria), The Zone @ Rosebank (Johannesburg) and Bayside Shopping Centre (Cape Town) - saw sales turnover rise an average 11,8% in 2007. That compares with growth of 16% in 2006.

Gateway was again the top performer, with 20,2% growth in retail spend in 2007. December sales at some of Old Mutual's centres were still rising in double-digits: Gateway, Bayside and the Rosebank node were the top performers, with growth of 19,6%, 17,2% and 16,3% respectively. Spend per head at Old Mutual's top eight malls was up 11,3% in 2007.

Roger Corlett, MD of Liberty Properties, says though some retailers at their malls are doing better than others, the group's retail portfolio still delivered real growth in sales turnover in 2007. Liberty Properties owns Sandton City and Eastgate (Johannesburg) among others. Corlett expects sales growth to slow in first-half 2008. "There's no question that consumers will continue to curb spending in the first six months of the year."

But neither Hyprop nor Liberty Properties expect any marked increase in shopping centre vacancies this year. Corlett says although new tenants are generally starting to look for smaller stores there's still plenty of demand for space from the larger, national retailers, who are taking a longer-term view.

Shopping centre owners are going ahead with expansion plans at some of their existing malls despite the slowdown in sales growth. Hyprop plans to add 18 000sq m to The Glen and 16 000sq m to Canal Walk this year. Liberty Properties will spend R329m for a major expansion and refurbishment programme at the Liberty Promenade in Mitchells Plain, outside Cape Town.

Both Prinsloo and Corlett maintain that regional shopping centres (malls bigger than 40 000sq m) should be in a better position to weather the sales slump.

Anton de Goede, analyst at Investec Property Investments, agrees that bigger shopping centres generally tend to outperform their smaller counterparts in a softer market. He notes that latest data from Rode & Associates shows capitalisation rates (forward yields) on community and neighbourhood shopping centres, typically sized below 40 000sq m, had already started to rise in third-quarter 2007. That indicates that the values/prices of such centres are falling.

One saving grace for retail property owners and investors could be a sharp decline in the supply of new shopping centre space over the next 12 months. Although Statistics SA says building plans for close to 1m sq m of new retail space were passed between January and November last year, industry players agree that new developments could be placed on hold, as rapidly rising building costs, higher interest rates, a growing shortage of zoned land and electricity supply problems make it less viable to build new malls.