Post on 20-May-2018
1 CentralLondonOfficeMarketReport | Q3 2016
South Africa Retail Market ReportCommunityandneighbourhoodcentresexperiencewelcomegrowthinthequarter.
Q4 2016
Theretailsectorhasseenencouraginggrowthdespitethecurrenteconomicclimate.InQ42016wewitnessedtheriseofsmallershoppingcentres,withcommunityandneighbourhoodcentrescontributingtomuchoftheoverallincreaseintradingdensity,aswellasrecordinganaverage3.4%declineinvacancies.Theperformanceofthesecentreswillhavetobemonitoredtodeterminewhetherthisisalong-termtrend.
Regionalandsuper-regionalshoppingcentreshaveovertheyearsexperiencedexceptionalperformancewiththeabilitytothriveandconsistentlymaintainlowvacanciesdespiteunfavourableeconomicconditions.Itisthereforenotsurprisingthatnewdevelopmentsarebreakingground.However,withtherecentlyopenedMallofAfrica,thenewlyrenovatedMenlynParkShoppingCentre,andthecurrentperformanceofsmallercentres,one
wouldexpectcautioninincreasingregionalshoppingcentresprimarilyintheGautengarea.
2 SouthAfricaRetailMarketReport | Q4 2016
Overview
Innumbers
7.5%6.8%
3.7%
Interestrate
Inflationrate
Averagevacancyrate
SouthAfricaRetailMarketReport | Q4 2016 3
Totaldevelopmentpipeline
328,177m²
4 CentralLondonOfficeMarketReport | Q3 2016
Issue to watch :Cansmallershoppingcentressustaintheir
goodperformanceoverthelongterm?
5 SouthAfricaRetailMarketReport | Q4 2016
-0.5%0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%
50.0
55.0
60.0
65.0
70.0
75.0
80.0
85.0
90.0
95.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
y/y change 2014 2015 2016
November2016markedthesecondyearofBlackFridayinSouthAfrica,givingconsumerstheopportunitytoanticipateit.Themarketingscheme,whichseesretailersofferingmajorpricecuts,wasintroducedin2015withretailsalesreportinga7.8%m/mgrowthrateinthatmonth.ThepopularityofBlackFridaythisyearresultedinlargefootcountsacrossseveralretailstoresonadaywhenmanyemployeesreceivetheirsalaries.Retailsalesgrewbyanotable12.1%m/m(StatisticsSouthAfrica).
Reta
il tra
de sa
les i
n Ra
nds (
000m
²)
% Gr
owth
rat
e
Retailsalestrendatconstantprices
Source: Statistics South Africa
DemandDespiteincreasedfuelpricesandrisinginflationrateswhichinfluenceconsumerspend,theretailmarkethasseenencouraginggrowthinthelastquarterof2016.Retailsalesatconstantpriceswitnesseda3.8%increaseonay/ybasisforthetermendinginNovember–thehighestsalesinthepastsixyears.Necessitystoressuchasgeneraldealers,hardwareandpharmaceuticalstoreswerepositivecontributors.Duetoconstrainedspendingbyconsumers,furniturestoressawacontractionof0.8%y/yinthesametime-frame.
AccordingtoSAPOAdata,tradingdensityincreasedby5.4%y/yincurrentpricesduring2016.Therecordedgrowthismainlydrivenbysmallershoppingcentres,withcommunitycentresshowingagrowthrateof12.05%andneighbourhoodcentres,whichhaveinpreviousyearsbeentheunderperformers,recordingagrowthrateof7.32%attheendofSeptember.Increasedsalespersquaremetreinsmallercentresmaybeasaresultofconsumerspreferringconvenientlocationswithonlythenecessaryshopsratherthanthelargeshoppingexperienceinregionalandsuper-regionalcentres.
AlthoughretailsalesforDecemberhavenotyetbeenreleased,retailerssuchasWoolworthsandMrPricehavereportedpoorperformanceinDecemberonay/ybasiswhichweexpecttodampentheDecembersalesfigures.
6 SouthAfricaRetailMarketReport | Q4 2016
0.05%
3.76% 4.14%
12.05%
7.32%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
Supe
r-reg
iona
l
Smal
l reg
iona
l
Com
mun
ity
Nei
ghbo
urho
od
Regi
onal
3.3%
2.0%
3.9%
3.7%
5.6%
Super-regional
Regional
Small regional
Community
Neighbourhood
Perce
ntage
%
Percentage %
Annualisedtradingdensitygrowth(endSeptember)
Currentvacancies(endSeptember)
Source: SAPOA
Internationalretailerscontinuetopreferoccupyingregionalandsuper-regionalshoppingcentreswithgoodlocations.WhileZaramaintainsfewerlargerstoresinsuper-regionalcentres,CottonOnisrollingoutstoresmoreaggressivelywithmorethan50storesinthecountry.TheexpansionstrategyofH&Mremainsundisclosed,howeversinceitsentryintotheSouthAfricanmarket,H&Mhasopenedapproximatelyeightstoresinitstwo-yearexistence.
Nonetheless,demandforretailaccommodationfromretailersisontheriseincommunitycentres,witha3.7%decreaseinvacancyrates,from8.8%inQ32015to3.7%inQ32016.Neighbourhoodcentreshavealsoseena3.3%declineinvacanciesattheendofSeptemberwithfigurescurrentlysittingat5.6%.GoodtenantsoccupyingvacantspaceinthesecentresisessentiallythereasonfortheincreasedtradingdensitiesreleasedbySAPOA.
Source: SAPOA
7 SouthAfricaRetailMarketReport | Q4 2016
Supply
Theperformanceofretailcentreshassparkeddeveloperconfidencenationally,withseveralnewdevelopmentsanticipatedtoincreaseretailsupplyinCapeTown,PortElizabethandtheUmhlangaregions.SeveralregionalcentresarecurrentlybeingbuiltwiththelikesofSkyMall(77,000m²)closetoORTamboInternationalAirportinJohannesburg,aswellasCornubiaShoppingMall(85,000m²)nearUmhlangaRidgeandMountEdgecombeinKwaZulu-Natalexpectedtoincreasesupplyinthenextthreeyears.
Market outlook
Despiteescapingjunkstatusbycreditratingagenciesin2016,SouthAfrica’soutlookremainsnegativeduetopoliticalriskandloweconomicgrowth.Withthisandtheincreasedinflationrate(currentlyat6.8%),SouthAfrica’seconomyisexpectedtoremainunderpressurein2017.Althoughsomeretailersperformedwellin2016,constrainedconsumerspendinthecurrenteconomicclimatemaydampengrowthintheNewYear.Thiswillprimarilybeinthecaseofsmallercentresthataremoresensitivetochangesinconsumerspending,withsteepervacancyratechangesthanlargercentres.
Development pipelineKyalamiCorner
TheFallsLifestyleCentre
NewtownBMW/Ford
HobartGrovephase2
WestridgeShoppingCentre
SkyMall
TableBayMall
CornubiaShoppingMall
CorkwoodSquare
Midrand
Roodepoort
Newtown,Johannesburg
Bryanston
Ferndale
Johannesburg
CapeTown
KwaZulu-Natal
PortElizabeth,Uitenhage
28,000
19,000
9,177
15,000
TBA
72,000
60,000
85,000
40,000
RetailAfrica
Atterbury
Atterbury
SableHoldings
SableHoldings
Zenprop
Zenprop
Investec
KeystoneDevelopments
Development DeveloperApproximate size (m²) Size (m²)
Gautenghasthelargestnumberofnewdevelopments,withapipelineamountingtoapproximately128,177m²,includingtherecentcompletionoftheMallofAfricaandrefurbishmentstoothersuper-regionalcentressuchasMenlynandEastgateShoppingCentre.Despitethegreatperformanceoftheretailmarket,withlargermallsgenerallywitnessinglowervacancyratesandhigherreturns,thequestionofoversupply,primarilyinGauteng,remainsaconcern.
8 SouthAfricaRetailMarketReport | Q4 2016
Super-regionalshoppingcentre
Regionalshoppingcentre
Smallregionalshoppingcentre
Communityshoppingcentre
Neighbourhoodshoppingcentre
Tracking development by size
Morethan100,000m²
50,000-100,000m²
25,000-50,000m²
12,000-25,000m²
5,000-12,000m²
Shopping centre type*
*shopping centre description by size
Table Bay MallCape Town
60,000m²
Kwa-Zulu Natal developments
Gauteng developments
Eastern Cape developments
Corkwood SquarePort Elizabeth
40,000m²
Western Cape developments
85,000m²Cornubia Shopping Mall
Cornubia
19,000m²The Falls Lifestyle Centre,
Roodepoort
28,000m²Kyalami Corner,
Midrand
Hobart Grove phase 2,Bryanston
15,000m²
Newtown BMW/Ford, Newtown JHB
9,177m²Sky Mall, Ekurhuleni
72,000m²Westridge Shopping Centre,
Ferndale
TBA
Development map
9 CentralLondonOfficeMarketReport | Q3 2016
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Tom MundyHead: Research, Sub-Saharan Africatom.mundy@eu.jll.com
Zandile MakhobaHead: Research, South Africazandile.makhoba@eu.jll.com
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