Tough times for retail property

SOUTH Africa’s retail property sector is in for tough months ahead as economic strength continues to weaken and consumer confidence declines.

This is despite the sector performing better last year than in 2017.

GDP growth dropped to 1.4% in the last quarter of 2018, and this means that retail property is facing an uphill climb, says FNB property economist John Loos.

“Looking into the sectors that are key to the strength of property, we find weak fundamentals relating to the retail property sector. The ‘retail and wholesale trade, catering and accommodation’ sector, of which a key component is retail, saw its Q4 quarter year-on-year rate slowing, from a 1.1% peak in Q3 to a meagre 0.25%.”

On the whole, though, Loos says 2018 turned out to be slightly stronger for this sector compared to 2017, growing by 0.6% after the previous year’s 0.3% contraction.

However, the slowing of the renewed growth over the final three months of last year combined with slowing consumer confidence, “does not point to any sustainable strengthening in this sector’s growth in the near term”.

Community shopping centres, though, could have more to look forward to if they are repurposed as lifestyle centres, says Gregg Huntingford of Spire Property Management.

“Community centres near large regional centres must remain relevant by changing the way they do things.” | property360.co.za