South African shopping malls are growing in size as well as numbers as developers aim to attract a high proportion of tenants in order to improve the centre’s consumer appeal. And in future, they are going to become even bigger. Shopping centres in urban areas are already about 100% bigger than the centres developed in the 2000’s, and this trend will continue, predicts a recent study by Morgan Stanley Capital International (MSCI) Real Estate South Africa on behalf of the South African Council of Shopping Centres (SACSC).
Despite consumer retail spending being under threat, retail stock has grown on average 17.3% per year since 2010, with an average of 32 new centres per year. At the end of 2016, South African retail space comprised 23.4-m square metres.
During the second half of 2017 seventeen new shopping centres were built. According to the researchers, by next year 68 centres, comprising 1.9-m square metres, started after July 2017, would be completed.
In small-town markets retail space is also expected to grow in double-digits between 2017-2020, when compared to 2010-2016. Retail space in small-settlement-type markets in Mpumalanga, Limpopo and the Eastern Cape will grow especially, the study found.
South Africa already has the sixth most shopping centres in the world and is the most saturated retail market in sub-Saharan Africa – representing 88% of the available retail space in the region.
“Given a highly competitive environment for malls in specific nodes, we believe that centre selection within the retail segments will become increasingly important,” says Phil Barttram, Executive Director MSCI. “There are fundamental drivers of mall defensiveness and it will be the malls that best exploit these factors that will prove to be more resilient in the times ahead.”
Older centres are being redeveloped and expanded to become bigger: Menlyn Park in Pretoria is now the largest shopping centre in South Africa after 50 000 square metres was added last year; the Fourways Mall in Johannesburg is being expanded to 175 000 square metres and in KwaZulu Natal The Pavilion and Ballito Junction are being expanded.