Cold Link Africa Cold Link AfricaOctober 2018_digital | Page 7

NEWS
INCORPORATING COLD CHAIN
23.4 million m of
retail space for SA
A
South Africa’s shopping centre market size is estimated at 23.4 million m 2 , ranking it 8th in the 43 countries forming part of this analysis. Pictured –
Table Bay Mall in Cape Town.
an ongoing update on expected supply to
the domestic market,” says Barttram.
Africa ranks 13th out of 43 measured
markets. For the 2016 to 2017
measurement period, the South African
market had 418m 2 of the shopping centre
lettable area for every 1 000 people. This
places South Africa below the weighted
average of 485m 2 per 1 000 capita
measured across the 43 markets forming
part of the analysis. The US is rated as
having the most shopping centre GLA
relative to its population with 2 196m 2 /1 000
capita, followed by Canada, Australia,
and Norway. South Africa’s retail supply
relative to population is in line with that of
the UK, Japan, and Finland.
South Africa, Canada, and the US
have the highest level of shopping centre
supply expressed relative to household
ccording to a recent study
conducted by MSCI on behalf of the
South African Council of Shopping
Centres (SACSC), the current size of the
South African retail market is estimated
at around 23.4 million square metres (m 2 )
of gross lettable area (GLA) across 1 959
individual shopping centres (as of July 2017).
New data indicates that around 69% of
the aggregate shopping centre floor space
can be attributed to multi-tenanted centres
with GLAs of 5 000–49 000m 2 , while regional
and super-regional malls (those larger than
50 000m 2 ) account for 22% of total shopping
centre GLA.
Other retail types account for the balance
of around 9%. These include big-box retailers,
airport retail, as well as smaller freestanding
and local convenience centres.
The data also indicates that the South
African shopping centre market size of 23.4
million m 2 ranks it in 8th position among the
43 countries forming part of this analysis —
just behind Australia and France.
The top three countries in terms of
shopping centre supply — the US, China,
and Canada — contribute a combined
77% to the overall figure. Phil Barttram,
executive director of MSCI, said that while
the overall level of shopping centre supply
per country was interesting, it would make
sense analysing it relative to the size of their
respective populations and economies.
South Africa ranks as sub-Saharan Africa’s
most saturated retail market, representing
88% of the available space in the region. This
also places South Africa as having the sixth-
most shopping centre space in the world.
“MSCI’s latest research, based on
SACSC’s shopping centre directory, provides
a unique perspective of the linkage
between expected retail mall space,
economic activity, and population densities.
Our intention with this research is to provide
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South Africa ranks as sub-Saharan Africa’s most saturated retail market, representing 88% of
the available space in the region. Pictured – BT Ngebs City in Mthatha.
consumption expenditure. However, these
three countries also have a higher level of
demand, suggesting more room for supply
to be absorbed. Relative to the US and
South Africa, China (including Hong Kong)
appears to be relatively oversupplied
given its lower level of household
consumption expenditure relative to its
gross domestic product.
According to CBRE’s Global Shopping
Centre Development report, seven of
the top 10 global cities with the highest
number of new shopping centre area
in 2016 are in China, with Shanghai and
Beijing in the first and second spots,
respectively. The Chinese shopping mall
building boom is part of their government’s
desire to transform their economy into one
driven by consumption. However, China’s
current supply-to-demand ratio suggests
that household consumption has some
catching up to do given existing supply.
South Africa’s current shopping centre
development pipeline suggests a slowdown
in new mall completions for the period 2018
to 2020, which, combined with a predicted
improvement in economic growth, may see
South Africa’s shopping centre segment
move lower and closer to the global
average.
While South Africa ranks high on the
shopping centre supply, its retail property
sector has been one of the top performers in
terms of total return. For the 10-year period
COLD LINK AFRICA • October 2018
ending December 2017, the South African
retail sector delivered the highest annualised
total return among the 23 measured markets
— coming in at 13.2%. The South African
retail total return also came at the most
attractive return ratio among the markets
measured.
According to Barttram, when reviewing
the discussion on whether South Africa is
over- or under-spaced as a country, the
space per capita is an important indicator,
particularly when comparing to the more
developed countries.
“However, it is essential to recognise
that the addition of retail space should be
considered alongside the macro factors
of population growth, nominal economic
growth rates, and consumer spending
growth. Retail, by definition, is dependent
on consumer spending and we felt it
was important to build the supply picture
within a framework that recognises both
population count and economic activity.
Once again, adding space to existing
high-spend / high population areas
highlights the increasing competition,
resultant battle for market share, and
what we believe will be a dislocation in
performance between the prime centres
and the rest. All said and done, it is
encouraging to see the market forces at
work, with the next three years showing a
measured slowdown relative to previous
periods,” concludes Barttram. CLA
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