Major pain for shopping malls in South Africa

 ·24 Jun 2024

Trading density for prime retail space in South Africa has dropped, even if the Western Cape has been relatively unscathed.

According to the Clur Shopping Centre Index, trading density levels dropped further in Q1 2024, even if the rate of contraction was more muted than the final half of 2023.

The industry-standard index interprets performance at over 100 centres and 140 merchandising categories across South Africa and Nambia.

“The Q1 2024 national Clur Index for all centres closed at 4.4% y/y growth. This represents a contraction of 0.6% relative to 2023’s 5% y/y growth,” said Belinda Clur, MD of Clur International.

The national index has underperformed the inflation rate since November 2023.

Overall, super-regional centres—100,000+ sqm plus—showed the highest trading density for Q1 2024 at R49,066/sqm, followed by community and smaller centres—those below 25,000 sqm—at R42,386/sqm.

“This reflects top strength at the two size extremes of shopping centres and may be linked to identity,” said Clur.

“It is much easier to have a specific identity when one is very large or very small. Super regionals have a natural gravitas and identity defined by destination shopping and entertainment. Whereas the smaller centres have the strength of a natural intimacy and convenience appeal.”

“Mid-sized centres should capitalise on the current consumer position by embracing a lifestyle stance, with a focus on balance, health, wellness and zen-seeking.”

In Q1 2024, larger super regional and regional centres had the highest growth rates of 5.4% and 4.7%, respectively, with the former bettering March 2024’s CPI by 0.1%.

Regional centres were resilient over the period, registering a minor contraction in trading density levels compared to 2023.

Small regional centres expanded over the quarter from 3% to 3.5% y/y growth.

According to the Q1 2024 provincial indexes, the Western Cape and KwaZulu Natal showed the highest annualised trading densities of R45,460/sqm and R42,676/sqm, respectively.

Both outperformed the national Clur All Centres Index, which closed at R41,163/sqm.

Gauteng, on the other hand, underperformed the national Clur Index at R40,348/sqm.

“Growth rates for the first quarter tell a different story, with the Western Cape showing the highest y/y growth of 8.2% and Gauteng at 5.9%, both outperforming CPI by 2.9% and 0.6%, respectively,” said Clur.

“KwaZulu Natal, though, shows negative y/y growth of -2.4%, under-performing CPI by 7.7%.”

Shopping season

Clur said that the provincial indices give a granular understanding of provincial performance given their differing personalities and dynamics, including their seasonality, semigration, stay-cations, civil unrest and other economic issues.

Notably, all three provinces saw a stronger December 2023 trading month than November 2023, aligning with the broader national picture.

The highest December 2023 trading density was in KwaZulu Natal at R72,748/sqm, even if its growth rate of 1.5% under-performed CPI by 3.6%. The province, however, has consistently been the top performer for the December period.

“This illustrates the economic importance of the December summer holiday season to KwaZulu Natal and its impact on retail trade there,” said Clur.

The Western Cape’s and Gauteng’s December 2023 trading densities were R72,601/sqm and R62,148/sqm respectively. Both provinces had a 9.4% y/y growth rate, outperforming that month’s CPI by 4.3%.

“KwaZulu Natal and Gauteng are most aligned to the overall national trend, which saw a 2023 shift away from a combined November and December festive season toward a December-only defined festive season.

“In contrast, the Western Cape still shows resilience in its November trading position and a stronger pattern supporting a combined November and December festive season.”

Read: Dark clouds for middle-class and rich South Africans

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