Overview of Re­tail Sub-Prop­erty Mar­kets - Lusaka

Zambian Business Times - - REAL ESTATE & PROPERTY DEVELOPMENT -

The short pitch of Great East Road from Ad­dis Ababa to Thabo Mbeki is clearly the prime area for re­tail in Lusaka and at 97,000m2, com­prises al­most 40% of the city’s to­tal shop­ping cen­tre space. The pitch is an­chored by two of South­ern Africa’s best shop­ping cen­tres out­side South Africa, the 44,000m2 Manda Hill and the 34,000m2 East Park, as well as the re­cently ex­panded Ar­cades Mall. East Park also is cur­rently un­der­go­ing an ex­ten­sion, which will in­crease its com­mer­cial and re­tail GLA by a fur­ther 30,000m2. in mul­ti­ple phases. We un­der­stand that Sho­pRite will be the an­chor ten­ant for the first ex­ten­sion.

This area com­prises 18,500m2 of shop­ping cen­tre ac­com­mo­da­tion, with a fur­ther 16,000m2 un­der con­struc­tion at No­vare’s Pin­na­cle Mall and Napoli Group’s Wood­lands Sta­dium Mall. Kab­u­longa and Wood­lands are two of Lusaka’s key res­i­den­tial nodes, par­tic­u­larly in the high-mid end sec­tor. For­mal re­tail in these lo­ca­tions there­fore, has a strong catch­ment, which ex­tends fur­ther down to Leop­ards Hill and Sun­ning­dale.

Mak­eni and the Ka­fue Road have a very strong for­mal re­tail pres­ence in­clud­ing Mak­eni Mall (12,000m2), Cos­mopoli­tan Mall (25,800m2) and Em­bassy Mall (9,000m2) all sit­u­ated within 150 m of each other, on ei­ther side of the T2.

Rents av­er­age $22.00 – 25.00 per m2 in the prime shop­ping cen­tres such as Cos­mopoli­tan, Cen­tro and East Park. Manda Hill as the best as­set in the mar­ket, achieves rents over $32.00 per m2.

Good con­ve­nience cen­tres achieve av­er­age rents in the $15.00-$18.00 per m2 while older, more poorly de­signed or main­tained as­sets av­er­age rents closer to $10.00-$12.00 per m2.

An­chor ten­ant rents dif­fer dra­mat­i­cally whether the devel­oper pro­vides a grey-box (“Shell & Core”) or han­dles the in­stal­la­tion of the fit out. For in­stance, the stan­dard Sho­pRite grey-box rent is $10.00 per m2, while the fit out in­cluded rent is $15.00 per m2 ( it should be noted that Sho­pRite has the most ex­pen­sive fit out in the mar­ket).

In the su­per-prime shop­ping cen­tres there is nor­mally al­most no va­cancy and a long wait­ing list of in­ter­ested tenants. On the other hand, in older, smaller, more run- down cen­tres, we have seen va­can­cies as high as 50%, re­quir­ing a ma­jor in­vest­ment pro­gram and repo­si­tion­ing by the owner to fill this again.

In line shops, fash­ion re­tail­ers are un­der pres­sure. Along with slow­ing dis­cre­tionary in­comes in 2016/17, the line shop rental has been fall­ing and as a re­sult there has been a sig­nif­i­cant de­crease in the open­ing of new stores.

In early 2018, this trend seems to have re­versed slightly, with line shops now se­lec­tively look­ing at open­ing new stores. In re­sponse, rentals seem to have firmed up, al­though not to the ex­tent that they are in­creas­ing.

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