Real Estate Investor Magazine South Africa July 2013 | Page 44

RETAIL

BY ANGELIQUE REDMOND

Embracing New Trends
Rural retail on the rise

T

he basic ingredients for life are food
and clothing, and for small towns
and townships, rural retail stores
are meeting this need more predominantly.
Townships and smaller towns generally do not
have great transportation systems and are not
in close proximity to large shopping centres,
further increasing the preference for rural retail
stores and malls.
Keillen Ndlovu, head of Property Funds for
Stanlib says, “When it comes to retail property
investment, the lower income market is still

the place to be. It is where the population is and
where the growth is. There are still opportunities
for smaller retail centres with a convenience
element”. South African townships have
undergone a series of transformations since the
1990’s, and public and private sector investment
has increased, with townships becoming an everpresent part of the urban landscape in South
Africa. The residential elements of a township
are old township houses, hostels, RDP houses,
informal settlements and vacant land suited for
residential purposes, as well as houses which
double as informal shops and homes.

Some towns have up to 600 000 people,
and consumer demand for convenience as
well as steady population growth offers major
prospects for retailers. In South Africa,
people living in rural areas and townships (or
second economy locations) spend more than
R308 billion annually, representing 41 percent
of total consumer spending. “Townships and
rural areas in SA have emerged as a new market
for national retailers as we see an upward
movement amongst township communities in
terms of expendable income”. Says Ndlovu.
Pronounced spikes in shopping at month
ends and early stages match payments of
government social grants and salaries for the
growing working middle-class, less reliant
on discretionar y spend, providing more
stable trading densities in rural retail. With
approximately 16 million people currently
on social grants in South Africa, the market
for rural retail has a large base from which to
draw its customers and has created a strong
demand for more retail centres in areas where
previously there were none. Clearly social
grants paid by the state are encouraging
growth in rural retail and are helping retailers
in township shopping centres weather the
current economic conditions.
“This movement has resulted in a considerable
increase in shopping mall development in these
previously untapped areas.” Says Marc Edwards
of Spire Property Management.

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July 2013 SA Real Estate Investor

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