Retail center oversupply impacting industry - CNBC Africa

Retail center oversupply impacting industry

Southern Africa

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“The most important consequence of oversupply is that competition amongst the developers and the property owners is immense. You have this situation where shopping centers are forced into maybe a premature upgrading of their buildings because they are afraid of losing trade to the competitors,” Rode, the CEO of Rode and Associates, told CNBC Africa on Tuesday.

Development commenced on a 3.5 billion rand regional super shopping center in Midrand, located in South Africa’s Gauteng province. It is expected to be the country’s largest single phase shopping mall development.

“I think it is safe to make the statement that generally South Africa is overtraded. We’ve got too many square meters of shop space in this country,” said Rode.

“Evidently it differs from location to location. You could have one area where you’ve got maybe 50,000 square meters too much and just 50 km from that, you may have a shortage of space,” he added.

Statistics South Africa reported that retail trade sales increased by 6.2 per cent year-on-year for May 2013, compared to 1.9 per cent in April. A 12.9 per cent growth rate was seen for textiles, clothing, footwear and leather goods retailers.

“Over the past 10 years or longer, we’ve had such a strong growth in consumer spending that generally because of this spending rush, the developers didn’t oversupply until, of course, a few years ago when the ball game changed,” Rode concluded.

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