Weak Christmas sales have not dampened analysts' enthusiasm for the retail property sector in the medium term. They reckon that although the sector will remain under pressure in the short term, shopping centres will in time deliver better yields than industrial property and offices.
During an economic recovery retail property has always been inclined to perform better than the other sub-segments of the commercial property sector.
This, however, applies only to dominant shopping centres of over 60 000m&2sup;, which have proved defensive in the economic downturn.
A new research report from Old Mutual Investment Group Property Investments (Omigpi), which owns the Gateway Theatre of Shopping in Umhlanga and Menlyn Park in Pretoria, among others, shows that sales turnover for December last year remained unchanged in nominal terms.
This amounts to a real decline of almost 6%, reflecting the pressure consumers are under.
Because the retail sector is largely dependent on consumers' ability to spend, shopping-centre owners will compete furiously this year for a larger slice of the shrinking consumer spend.
Smaller shopping centres that attract fewer shoppers are therefore in danger of losing some of their tenants, as tenants prefer exposure in larger centres, according to Omigpi.
Coronation property portfolio manager Anton de Goede said that the salvation of the large centres is their tenant profile, 70% to 90% of which comprises national tenants.
He said that vacancy rates in the super-regional, regional and small regional shopping centres have consequently not suffered too much in the downturn.
