Woolworths which shares details of how local South African suppliers that form part of the company's enterprise development (ED) programme are benefitting from the company's expansion into Africa. One family-owned business in particular, Stuart's Joinery, has been appointed as the preferred shopfitting supplier for Woolworths' African stores. In addition, they are a strong case study of how enterprise development programmes benefit retail supply chains in the long-run

Global law firm Baker & McKenzie has opened an office in Johannesburg, the business heart of South Africa that is often viewed as the gateway for foreign companies into the rest of the African continent.

The office is Baker & McKenzie’s second in Africa, after one was opened in Cairo 1985, and will focus primarily on mining and infrastructure, project finance, banking and capital markets, securitization, mergers and acquisitions, and private equity

Tuesday, 12 June 2012 00:00

A case of Resillient fishing?

If not in South Africa, where does future expansion lie for the Johannesburg-based real-estate investment company Resilient, which has a local market capitalization of 11 billion Rand?

Despite the World Economic Downturn South Africa has continued to successfully build and fill new shopping centres with both tenants and shoppers. Resilient has been at the forefront zeroing in on non-metropolitan shopping malls outside of the major urban nodes. Towns like Tzaneen, Rustenburg and Klerksdorp come to mind.

Resilient also holds strategic interest in Jabulani Mall in Soweto (55%), Highveld Mall in Emalahleni (60%), 70% of the I'langa Mall in Nelspruit and 60% of the Mall of the North in Polokwane . The firm also owns the Diamond Pavilion in Kimberley and the Tzaneng Mall in Tzaneen. Resilient holds 12.9% of the Capital Property Fund, 22.0% of the Fortress Income Fund – B and 18.6% of New Europe Property Investments plc. It also owns Property Index Tracker Managers, the company that manages the Proptrax exchange traded funds.

Now Resilient is looking to Nigeria for its future. This may have some people worried to see a big player like Resilient apparently ‘abandoning’ the local market. But looking offshore is nothing new to Resilient. Back in 2007 it was involved in the establishment of New European Property Investments, seeing shopping malls being built all over central Europe. The fund was initially listed on the London Stock Exchange, but went on to acquire a secondary listing on the JSE in 2009.

But looking locally, Patrick Cairns for Moneyweb writes: “Resilient's strategy of managing shopping centres outside of the major centres in South Africa has been a very successful one. By focusing on under-serviced areas, the group has tapped into a growth story that has delivered excellent returns.”

Some would say this is due to a variety of reasons: for one, the reduced competitive playing field in small town retail nodes. Secondly shoppers in these towns are less likely to be debt-laden in comparison to their counterparts in urban areas. Increased levels of government social spending have also given more buying power to rural dwellers.This translates into a consumer group with high levels of disposable income available to use at Resilient's shopping centres.

So what’s changed? According to The Citizen’s Micel Schnehage, Resilient’s Director Des de Beer explained that it’s the firm’s struggle with local government. “(Resilient) is hampered by extensive bureaucracy and red tape, resulting in expensive delays.” He went on to state that the era for Resilient to develop non-metro malls was over.

What seems to have been the last straw was the loss of documents pertaining to the Mafikeng Mall by local authorities, 17 times at that! “They’re not accountable to anyone so they don’t really care," said de Beer to the Citizen. It is painfully obvious why some suggest that the facilitation fee (read bribe) was not paid over. Kudos to Resilient if this is indeed the case?

Apparently a partnership with the Sasol pension fund will result in the continuation of the development of malls in Secunda and Bergersfort.

But why Nigeria? Better yields is the short answer. De Beer is expecting returns of greater than 10%, and in dollars too. Resilient believes there is a sincere intention in Nigeria to see the country raised up and that officials are largely positive ‘facilitators’ of that process (excuse the pun). One may wonder if the company is being naive but recent reports of land being donated to developers to ensure development takes place certainly shows intent.

The Financial Mail reports that Resilient Property Income Fund Ltd plans to spend more than 1 billion rand building 10 shopping malls in Nigeria.  The malls, 10,000 square meters and 15,000 square meters in size, will be built over the next three years in the capital, Abuja, and the city of Lagos respectively, the main commercial hubs. Shoprite, Africa’s largest food retailer, will be the major tenant.

Bloomberg reports that Standard Bank Group Ltd, Africa’s biggest lender, and construction company Group Five Ltd. (GRF) are also partners in the deal.

The FM reports that De Beer would like to list the shopping centre fund in Nigeria once it reaches the right critical mass. This would be a similar approach to Resilient’s entry into Romania back in 2007 through New Europe Property.

One can’t help being a little concerned that if a big local player has chosen to go fishing elsewhere what are South Africa’s prospects as far as foreign investment goes? Time will tell.

It seems Africa’s gain is South Africa’s loss. Then again, a rather ingenious strategy of playing reverse psychology with the local property/retail market in order to dissuade competition in SA’s untapped rural markets, could also be at play?

Published in Blog

Africa and other emerging economies are places where property investors should now be looking for real growth in the next decade, but beware the challenges

Thursday, 19 April 2012 02:00

Global retailer interest in Africa piqued

Global retailers had been coming in to South Africa to look at what pushed the world's biggest retailer into spending $2.4 billion for control of South Africa's Massmart

Monday, 16 April 2012 02:00

PIC looks for higher returns beyond SA

The government pension fund could invest as much as $3.8-billion in African private equity as the continent's top public pension manager looks for higher returns beyond its home market

Tuesday, 20 March 2012 02:00

Rand fluctuations hit ELB margins

ELB Group says the 8,3% rise in turnover for the six months to December reflects improved activity across its full range of products and services.

Saturday, 10 March 2012 02:00

Local waste business expands into Africa

Don’t Waste Services (DWS), the largest on-site waste management company in South Africa, has announced plans to open offices in African countries that include Zambia, Swaziland, Botswana, Mauritius and Kenya

Group Five says that the African story has started to stretch beyond mining for the group, while the outlook in SA remains challenging.

Wednesday, 09 November 2011 02:00

Greener pastures up north for PPC

South African cement maker PPC looks north to opportunities in Africa, even as more competition prepares to pile into the local market

Page 21 of 26

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