Growth in retail space may slow down

Cape Town - Property analysts said yesterday that they expected demand for retail trading spaces to remain relatively strong but added that the rate of growth in the sector could slow.

Len van Niekerk, Old Mutual Property Group's head of listed properties, said he expected retailers to continue to perform well, underpinned by the strong economy, and that any slowdown in the rate of growth would not be catastrophic.

This followed concern expressed by Pick 'n Pay Stores chief executive Sean Summers that the number of new retail stores opening across the country might not be sustainable when the booming sector finally began to tighten.

Summers expressed the sentiments after announcing Pick 'n Pay's annual results last month. He emphasised yesterday that the company was "very selective" about new store openings, which included plans to open six large-format Pick 'n Pay Hypermarkets as well as 75 family stores over the next three years.

He said the company had grown its retail space by 4 percent over the year, which was below the sector average.

Old Mutual Property Group fund performance manager Gary Hardisty said the company had 75 percent of its direct property fund invested in retail property, a higher proportion than most other property portfolios.

He said retail had outperformed office and industrial property last year.

A continued healthy performance from retail was expected, Hardisty said. But in some locations, local governments were approving too many retail property developments.

Hardisty cited the hinterland around Pretoria's Menlyn Park mall. He said that within a 20km radius of the centre, there were just over 100 retail property types, from medium-sized malls down to neighbourhood shopping centres and stand-alone high street shops.

Old Mutual Property Group owns the Menlyn Park mall.

But Stanlib Asset Management head of properties Mariette Warner said it was very difficult to say scientifically if there was going to be an oversupply of retail space, as the statistics were just not available.

She said the performance of retail property depended to a large extent on the specifics of shopping centres and the demographics around them.

A significant-sized mall situated in a high-density residential area was likely to continue to do well even in a downturn.

Source: Busienss Report - www.busrep.co.za

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