Whatshot
Property Talk
Property Talk
Author: Andreas Wassenaar
Date: 2016-10-07
Date: 2016-10-07
With the construction of the new Ballito regional shopping mall furiously underway and looking like it will be complete before we know it, I found the recently published Financial Mail article investigating the current trends on the returns on shopping malls of particular interest.
According to this article shopping centres traditionally make more money for property investors than any other sector of the SA real estate market, be it offices, industrial buildings, hotels or housing. I bet many of you were not aware of that! Over the past ten years to the end of 2015, retail property delivered an annualized total return (income and capital growth) of a substantial 16% as measured by MSCI's Independent Property Databank (IPD) index.
This is impressive. Think in terms of R100,000 invested in 2006 in a listed property fund specializing in the retail sector, with all returns re-invested annually, this would imply an investment value of R441,143.51 by the end of 2015, and that through a major financial crisis from 2007. Recent reported trends are of interest however, especially to the owners of our soon to be completed regional Ballito mall.
A metric used by mall owners to measure performance is the growth in trading densities - the turnover/sqm. The larger malls such as our beloved Gateway have traditionally outperformed their smaller counterparts such as the La Lucia Mall or the Buxtons Mall in Umhlanga.
The latest IPD SA Retail Trading Density Index indicates that trading densities for the larger malls have slowed while the smaller malls have seen the opposite happen. This seems to simply be a result of growing supply of new super-regional and regional malls. The demand in the larger malls has been supported by the entry of international retailers to SA over the past two to three years such as ZARA's in Gateway. However the increase in supply of more and more retail space has to put pressure on sales turnover and visitor numbers to the larger malls. This seems logical as living in Ballito we all know that as soon as our regional mall is open for business there is every reason to shop there rather than driving through to Gateway.
For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.
