Sunday World (South Africa)

Kasi economy the lifeblood of the property sector

- By Bongani Mdakane bongani@sundayworl­

The growing appetite by township dwellers for formal shopping within easy reach has opened a big opportunit­y for property owners as larger retail chains battle for share in saturated higher-income markets, according to asset management giant Stanlib.

Stanlib, which is owned by Standard Bank, has about R600billio­n assets under its care which it manages on behalf of its clients, including pensioners.

It said to penetrate the township environmen­t successful­ly, retailers will need to learn new skills and overcome many challenges.

“But the potential dividend for the local community is significan­t: an influx of formal retail will create employment and offer consumers greater choice and lower prices,” said Nesi Chetty, head of property at Stanlib.

“This shift in economic and demographi­c boundaries is one of the factors that has benefited formal retail trade performanc­es in urban areas, where upper and middle-income consumer groups tend to reside.”

Vukile, Resilient, Fairvest, Fortress and Exemplar are some of the listed companies with the greatest exposure to retail assets in townships and rural areas.

Resilient, worth R16.3-billion on the JSE has a vast property portfolio, which includes Tzaneen Crossing in Limpopo, Circus Triangle in the Eastern Cape, Mahikeng Mall in the North West, Galleria Mall in Kwazulu-natal and Mams Mall in Gauteng.

For its part, Fairvest owns township assets such as Sebokeng Plaza, Orange Farm, Bara Precinct, Mpitshane Shopping Complex, Masingita Shopping Centre and Sibilo Shopping Centre.

Its largest tenant by revenue is Shoprite Checkers, followed by Pick n Pay, Boxer and Pep.

Examplar, which has a bias for rural and township malls, owns assets such as Diepkloof Mall in Soweto, Alex Mall in Alexandra, Maake Mall in Limpopo, Katale Square in Mpumalanga and Bizana Mall in the Eastern Cape.

Vukile’s township malls include Phoenix Plaza, Gugulethu Square, Dobsonvill­e Mall, Daveyton Shopping Centre and Atlantis City Shopping Centre.

Chetty said Examplar’s business model is a prototype for the industry.

“The stereotype of a ‘township’ as a community of low-income residents content to be served by informal retail is out of date. The spending power of the residents of SA’S townships can no longer be ignored by formal retailers, and the performanc­e of the listed REITS (real estate investment trust) with exposure to these areas confirms the opportunit­y, particular­ly for the supermarke­t operators,” Chetty said.

“As a careful deployer of capital, the property sector’s growing activity in this space further corroborat­es the underlying demand for better quality retail delivered in a variety of physical formats. Exemplar’s township centres are a particular­ly good example.”

Newspapers in English

Newspapers from South Africa