South Africa has more formal retail market space than the rest of Africa put together.
A large portion of this is shopping centre space. During 2017, the retail sales figures in South Africa exceeded R1 trillion for the first time. Based on current values, retail sales increased from R939 billion in 2016 to just over R1 trillion in 2017. This represents an increase of 7.3%. It is estimated that shopping centre sales represent 65% of this total. This reflects a total shopping centre turnover of R650 billion, and based on the current national retail space, a trading density of R27,000 per square metre per annum.
New shopping centres continue to open in under-serviced areas, such as Vryburg, which until now have relied on a traditional high street model. According to MSCI, SA’s retail property sector has been one of the top performers in terms of total return. For the 10 year period ending December 2017, the SA retail sector delivered the highest annualised total return among the 23 measured markets – coming in at 13.2%. The SA retail total return was also listed as the most attractive return ratio among the markets measured.
Despite a challenging economy and disruptions, townships have become hubs for big developments in retail and brands. What drives profitability within the township market is a balance between a sought-after tenant mix as well as entertainment. Previously, you wouldn’t find high-end stores such as Woolworths Food in the township, however, these markets are seeing an increased demand for such stores. This is also driven by the fact that the township market is very socio-economically diverse. The township retail market is a force of its own and should not be overlooked or underestimated.