eBusiness Weekly
The peak December 2023 shopping season produced positive results for most mega mall owners as consumers continued to rely on these centres for their Christmas shopping needs.
Although some shopping centre landlords are still tallying up the true extent of activity seen during December, those who spoke to Moneyweb shared positive sentiment about the period.
Earlier this week, JSE-listed real estate investment trust (Reit) and majority owner of Mall of Africa, Attacq, informed investors that the super-regional mall (centres larger than 100 000m2 in gross lettable area) has recorded 12.7 percent growth in turnover in December 2023 compared to the previous year, while its footfall had risen by 9.6 percent.
On a month-on-month basis, December 2023’s performance across Attacq’s ‘‘retail-experience’’ portfolio rose by 40.3 percent from November 2023.
“This month-on-month growth exceeded the respective periods’ growth in 2022 of 35.6 percent, which could suggest that consumers are returning to more traditional holiday shopping patterns in December from Black Friday shopping during November,” the Reit said.
Typically, during peak shopping seasons, mega malls are forced to duke it out for consumer rands, as shoppers are enticed by the one-stop-shop offering and ‘‘shoppertainment’’ these malls are known for.
The 2023 Christmas season was no different for unlisted retail property group Pareto — the owner of Pretoria mega-mall Menlyn Park shopping centre — which told Moneyweb the centre recorded double-digit growth in turnover and foot count metrics.
“Despite the challenging economic environment, Pareto malls continued to experience meaningful trading density growth throughout the 2023 shopping season,” said Pareto asset management executive Muhammad Paruk.
“[It] showed strong growth compared to the previous year and significantly exceeding pre-pandemic levels,” he added.
Besides Menlyn Park, Pareto owns notable malls like The Pavilion Shopping Centre in KwaZulu-Natal, Cresta Shopping Centre and Southgate Mall in Johannesburg, and Tyger Valley Shopping Centre in Cape Town.
“Notably, the trading densities achieved during the 2023 shopping season have well surpassed the levels seen before the onset of the global pandemic. This signals a strong recovery for both Pareto and the broader retail industry, underscoring the resilience of Pareto’s assets but also the adaptability of the sector,” said Paruk.
“The centres reflected increased foot traffic, longer dwell times, and higher sales across various product categories,” he added.
Tourism boost
For Old Mutual Property CEO Sakina Nosarka, growth during the period was largely supported by the influx of local and international travellers to coastal provinces.
Old Mutual Property owns landmark shopping malls like the super-regional Gateway Theatre of Shopping in Umhlanga, Cavendish Square in Cape Town, and The Zone @ Rosebank in Gauteng.
“The turnover growth has been positive, with a notable increase compared to the previous period. Our coastal malls experienced more robust growth in December, underpinned by increased tourism [both local and international],” said Nosarka.
“Our inland malls showed lower growth but still positive compared to the previous period,” she added.
Apparel stores received most of the consumer’s attention, according to Attacq, which notes a 19.4% growth in turnover year on year for the category in December 2023.
Mall of Africa, which boasts several high-end brands, reported above-average growth in apparel turnover in December 2023 of 27.7 percent.
The health and beauty category was the second-most popular, growing turnover by 15.4 percent, followed by restaurants (8.1 percent) and food takeout (7.4 percent).
A quiet movie schedule in December 2023 resulted in a significant drop in cinema attendance for Attacq-owned malls, while the gaming sections of its shopping centres benefitted from the school holiday, registering 14 percent year-on-year growth.
Outlook
Load shedding, interest rate moves, the election and above-inflationary increases in property rates are just some of the issues top of mind for mall owners as we settle into 2024.
Although the severity of load shedding has eased in recent months and most commercial property owners have invested substantially in backup generation capabilities, Nosarka says the energy crisis will continue to be an issue until it is resolved because of the significant impact it has on the sector and its productivity.
“The retail sector will be influenced by global geopolitical events — and [their] impact on inflation and interest rates, [and] economic policies pre- and post-election — so it’s likely that it will be another year filled with its fair share of ups and downs, carrying over the uncertainty and challenges experienced in 2023 into 2024,” Nosarka adds.
The CEO of retail-focused Reit Hyprop, Morné Wilken, shared similar sentiments and further highlighted concern around property rate hikes, poor service delivery and the deterioration of infrastructure.
These are all issues raised by the South African Property Owners Association (Sapoa), which has challenged some rate decisions taken by the City of Joburg in particular.
“As a business, we remain cautiously optimistic and at the top of the interest rate cycle and believe that Hyprop is sturdily positioned to weather the expected challenging economic outlook in 2024,” Wilken added.
Standard Bank-owned Liberty Two Degrees, which owns and operates super-regional malls like Sandton City and Eastgate Shopping Centre, together with other major mall owners, did not comment on festive season trade due to being in a ‘closed period’ or because these groups are still tallying up the performance for the December season. — Bloomberg
