South Africa’s shopping centre market size has been ranked eighth out of 43 countries, with 23.4million square metres of gross lettable area across 1959 individual shopping centres.
A study conducted by MSCI on behalf of the SA Council of Shopping Centres (SACSC) also indicates around 69% of the aggregate shopping centre floor space can be attributed to multi-tenanted centres with gross lettable areas of 5000m2 to 49000m2.
Regional and super regional account for 22% of total shopping centre gross lettable area while other retail types account for about 9%. These include big-box retailers, airport retail and smaller free-standing and local convenience centres.
The data indicates South Africa’s ranking is just behind Australia and France. The top three countries in shopping centre supply - the US, China and Canada - contribute a combined 77% to the overall figure.
Phil Barttram, executive director of MSCI, says 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 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 link between expected retail mall space, economic activity and population densities. Our intention with this research is to provide an ongoing update on expected supply to the domestic market
“Key take-outs of the analysis are finding centres being developed are substantially larger today than they were in the 1990s and 2000s, and that much of this space is coming into the larger metropoles and thereby competing with existing centres.”
The study also found that Africa ranked 13th out of the 43 measured markets.
For the 2016 to 2017 measurement period, the South African market had 418m2 of the shopping centre lettable area for every 1000 people, placing it below the weighted average of 485m2 per 1000 capita measured across the 43 markets.
The US is rated as having the most shopping centre gross lettable area relative to its population with 2196m2/1000 capita.
South Africa, Canada and the US have the highest level of shopping centre supply expressed relative to household consumption expenditure. However, these three countries also have a higher level of demand.
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 the Global Shopping Center Development report, seven of the top 10 cities with the highest number of new shopping centre areas in 2016 were in China.
Barttram says South Africa’s shopping centre development pipeline suggests a slowdown in new mall completions 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 total returns.
"For the 10-year period 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 showed the most attractive return ratio among the markets measured.
Barttram says when reviewing the discussion on whether South Africa is over or under-spaced, the space per capita is an important indicator, particularly when comparing to more developed countries.
“However, addition of retail space should be considered alongside population growth, nominal economic growth rates and consumer spending growth. Retail is dependent on consumer spending and it is important to build the supply picture within a framework that recognises population count and economic activity.”
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