Retail property ‘in demand’ for low-income market

PROPERTY loan stock firm Synergy Income Fund, which specialises in shopping centres catering to lower living standards measure (LSM) sectors, estimated yesterday that it would take SA’s property industry at least five years to catch up with the demand for retail property by lower-income consumers.

CEO William Brooks said while SA’s lower-income market was showing the highest growth in retail demand, formal retail property in many rural towns and township markets lagged behind demand, owing to a shortage of quality shopping centres. To unlock this compelling growth, sites in high-growth areas were vital for shopping centres serving lower LSM shoppers, he said.

Synergy is a specialised retail property fund investing in commutercentres of10 000m to 25 000m in rural and township nodes, in an operating partnership with retailer Spar.

Shopping centre developments in townships across the country are gaining momentum.

Malls are popping up in both metropolitan areas and townships in Limpopo, Mpumalanga, KwaZulu-Natal, North West and the Western Cape as developers tap into the mass market.

In recent months, there have been a number of major retail investments in previously disadvantaged areas by the likes of Old Mutual, Vukile, Advent Asset Management, Dipula and the Public Investment Corporation.

Keillen Ndlovu, head of Property Funds at Stanlib, said when it came to retail property investment, the lower-income market was still the place to be.

“It is where the population is and where the growth is. This reflects in the listed property sector where almost all retail properties exposed to this market are doing especially well, some at staggering levels,” he said.

Providing the right products from the right size shopping centre was fundamental to a strong performance in this market. Spar was an undisputed master achieving this, he said.

For small town and township retail, Mr Ndlovu said food and fashion were basic ingredients. Proximity to public transport was a further need. Banking facilities and ATMs also contributed, given the low internet penetration and a preference for cash transactions, he said.