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Retail leasing activity poised for growth

Retail leasing activity poised for growth

The retail leasing environment in certain countries in the SADC region and East Africa seems poised for growth with increased interest from international retailers wanting to enter those markets.

Leasing activity is notable in Namibia with some retail brands such as Dischem opening stores in more than one mall. In Zambia, Pick ’n Pay continue with its store roll out in the country while Choppies opened last year in Lusaka and in Tete Mozambique. In Angola, Zippy, Mo, Sportszone and Worten opened recently under franchise with a local group. Other brands have also committed to open in these markets.

“This activity confirms the growing interest in investments into the retail sector in these countries with SA and international retailers being represented in these markets as well,” says Vicus Bouwer, Divisional Director for Retail Leasing Africa: Broll Property Group.

Bouwer explains that in countries such as Angola, Mozambique and Zambia, the number of formal shopping centres that opened in the last three years and are scheduled to open make it easier for new entrants in the market to open up to five stores in a short period of time. Retailers no longer have to wait for years to open a second store.

He says despite an economic slowdown in Angola, Botswana, Mozambique and Zambia, interest and development in the region’s retail sectors continues to grow.

“Interest is coming from master franchises entering and expanding and continued South African local retailer and developer expansion into the regions,” he explains.

Angola has an estimated ±150,000m²  of formal retail with ± 120,000m²  scheduled to be added to the market in the next 24 months while Mozambique has  ± 60,000m² of existing retail and expects to add 80,000m² in the next 24 months.  This year alone, Mozambique will add 100,000m² including the Mall of Tete which opened in December 2016. The Baia Mall is scheduled for opening in October 2017 while City Mall will open its first phase in the fourth quarter of this year.

He explains that the retail market in Mozambique has seen good growth over the last few years on the back of the rising middle class and growing consumer base.

Good economic growth over recent years has increased the demand for formal retail, which is expected to continue growing, prompting a number of South African retailers to enter the market or to expand their existing footprint, which include brands such as Shoprite, Woolworths, Game and Food Lovers Market. Recently, the market has also received retailers from other countries such as Choppies from Botswana and Sonae Group from Portugal.

Meanwhile in East Africa, retail developments are mainly found in major cities such as Nairobi Kenya and Kampala Uganda, explains Robert Broll, Lease Consultant for Retail Leasing East Africa.

“We continue to see keen interest from South African and international retailers into Kenya and Uganda,” he says.

In both Kenya and Uganda, we continue to see strong economic growth as well as a rise in middle class income households. Both countries present an ease of doing business in comparison to others on the continent. They also have well diversified economies and are not as exposed to commodity cycles as other parts of Sub-Saharan Africa. The result has been steady growth with stable currencies, notes Broll.

Furthermore, he says they are witnessing a decrease in the asking rental rates as landlords become competitive to secure deals with retailers.

Carrefour remains a very attractive alternative to Nakumatt whose difficulties are widely publicised and many landlords are trying to reconfigure their malls to accommodate this new entrant who have already enjoyed success at The Hub Karen. The largest Turkish retailer – LC Waikiki have also made a good impact in Nairobi offering quality fashion at affordable prices and the market has really responded well to this, he says.

In Kampala future development is somewhat slow due to the difficulty of acquiring suitable land, however, there is keen interest from retailers for expansion due to the fact that current supply of quality retail space is limited. Broll is busy with two retail schemes in Kampala with a total GLA of 50,000m²  and one of these is the redevelopment and expansion of Oasis Mall.

While there is certainly potential for future retail developments in some East African cities, the high cost and availability of land remain a major challenge, says Broll.

Retail development remains limited in Dar es Salaam Tanzania. The best shopping centre in operation remains Mlimani City which has recently undergone expansion. Besides from Aura Shopping Centre, no new retail developments have managed to get off the ground. While there is demand for quality retail space, supply remains limited.

Broll has been mandated to lease a number of shopping centres across Sub-Saharan Africa including the Muxima Mall in Angola, Spring Valley in Nairobi, Baia Mall in Mozambique and the expansion of Wernhill Park Shopping Centre in Namibia among others. Our Broll Retail Leasing Opportunities Across Sub-Saharan Africa is available for free download. 

Author

Broll Property Group

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info@broll.com

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