South Africa’s retail development market seen as crowded

South Africa’s retail development market seems to have become crowded, forcing developers to look west of the continent for lucrative opportunities. Industry players note that South Africa’s retail landscape, in particular Johannesburg, has become mature making the search for unique developments more difficult in the country. 

Investors in the retail development environment are taking stock of the supply and demand mismatch of markets outside South Africa. One such an investor is the founder and managing partner of development firm RMB Westport, Dale Ramsden, who says there are many opportunities in West African countries such as Nigeria, Ghana and Angola. 

To demonstrate the opportunities available Ramsden, who spoke at the RICS Africa Summit held on the 25th of March, says in Johannesburg alone there are over 18 regional malls servicing a population of about 8m. Regional malls are defined by the International Council of Shopping Centres as having a minimum gross lettable area of 74,000sqm with three or more anchor tenants. 

The dynamics are different in Africa’s most populous country Nigeria, with a population of 170m. Ramsden says in the capital Lagos, there are about 20m people and only three regional malls, which is indicative of a “demand and supply mismatch.” Ramsden adds that in North Africa and Sub-Saharan Africa there are about 1.5m sqm of shopping space available, but in South Africa alone there are about 21m sqm. The opportunities are made clearer when the population of Sub-Saharan Africa (830m) is compared with the 0.5m sqm of shopping mall space available in the region. 

Markets such as Nigeria, Ghana and Angola are showing better economic fundamentals than South Africa in terms of gross domestic product and the growing middle class. RICS vice president Chris Brooke supports this view, saying when the middle class and consumer spending rises “there will be demand for retail space.” 

JSE-listed companies like Delta International, Hyprop Investments and Attacq Limited are already investing in Ghana’s retail market.  

The unprecedented growth in demand for cement, infrastructure, and urban property has been on the back of spectacular growth in urban populations across the continent. SA lags the rest of the continent in growth opportunities and, consistent with our view, local SA companies will continue to explore opportunities across the rest of the continent. Growth in retail development property market should support companies like Dangote Cement which is well established in West Africa.