Commercial News

Is African formal retail development dream still alive?

JOHANNESBURG, 17 AUGUST 2016 – The formal retail market on the African continent has been hit by a number of headwinds this past year. Currency risk together with the acute shortage of dollar liquidity and the implementation of strict capital controls has weighed on retail developers and investors alike.  This years’ Africa Property Investment (API) Summit, taking place from18-19 August 2016 at the Sandton Convention Centre in Johannesburg, will take an in-depth look into the current state of the African retail market and how all stakeholders are facing up to the opportunities and challenges.

Despite the current unfavorable environment, there is still considerable growth with over 25 new retail developments in the pipeline in Nigeria alone.  Kenya has also seen a considerable increase in retail space with Two Rivers Mall, The Hub & Garden City Mall all coming to market within 18 months of each other. Ivory Coast has seen its first high-end regional mall PlaYce Marcory and countries such as Gambia and Uganda are making their mark with their first large scale retail developments coming online.

Broll Property Group, Director and Head of Africa Operations Leonard Michau comments: “In Nigeria for example, investors have typically taken a long-term view and we are seeing retail developers, both local and foreign, seemingly willing to look beyond the current economic challenges and rather adapt their business models in line with the current economic climate. We are likely to see smaller retail developments being built with a phased approach and a focus on existing Nigerian retailers as new international entrants in the retail space put their expansion plans on hold.  While the retail development pipeline looks promising on paper we don’t expect all of these projects to come to fruition, partly due to the challenging trading conditions affected by the slowdown in economy and forex challenges.”

Kevin Teeroovengadum, CEO of AttAfrica, says: “The retail market is still growing albeit slower despite the significant slowdown in the economic GDP growth rate of Sub-Saharan Africa. After a good ten years of consistent growth in the retail market and optimism by retailers, the market is at a cross road with some of the branded retailers re-assessing their expansion strategy in Africa. For example, we’ve seen the closure of two South African retailers in West Africa, while international retailers are taking more time to undertake their due diligence prior to entering and expanding in selected countries.”

“The retail discussion at API Summit will feature Sub-Saharan Africa’s leading retail developers and experts who will address topical issues namely the affordability of USD rentals, tenant renegotiation, accurately assessing consumer trends and how to handle increased competition amongst developers,” says Kfir Rusin, General Manager, API Events.

One of the key themes to be highlighted at the summit is the shift in focus towards East & Southern Africa. There has been a considerable uptick in retail development throughout these regions and whilst Ghana & Nigeria were typically the go-to mass markets, the trend over the past 6 months has seen considerable growth in retail development activity in Zambia, Mozambique, Rwanda, Uganda and even Zimbabwe.

Commenting on the changing strategies retail developers are adopting, Tim White, Managing Director of Profica, says: “We are seeing retail developers implement smarter strategies in order to combat the difficult market conditions and improve their feasibilities. We have been working with these developers to help them understand the local market and deliver projects on time and below budget.”

The API Summit is a two-day conference which will be held from 18-19 August 2016 at the Sandton Convention Centre in Johannesburg and will feature speakers from Broll, Mara Delta, Knight Frank, Actis, Old Mutual, Standard Bank, Novare, RMB Westport, JLL, CDC Group, ALN, ITL, CBRE, Growthpoint, UPDC, Britam, and Heriot Properties to name a few.