Broll Group CEO Malcolm Horne

Over the past few years, we have seen and continue to see the changing retail landscape in Sub-Saharan Africa.

However, all these changes require patience, hard work and innovation on the part of the property investor, developer and retailer entering any of the retail markets in Sub-Saharan Africa, says Group CEO, Malcolm Horne of Broll Property Group, one of Africa´s leading commercial property services company and winner of 6 international awards from Euromoney Real Estate Awards 2014 including best Property Services Provider across Africa.

Speaking ahead of the 4th Annual Africa Property Investment Summit (API) 2014 which takes place on 13 and 14 October at the Sandton Convention Centre in Johannesburg South Africa, Horne says Africa has got great potential and opportunities for real estate investments.

Horne explains that a lot of international brands are finding the Sub-Saharan African retail market appealing because the African consumer has become sophisticated in what they want and at what price they want it at.

However, notes Horne, South African retailers especially looking to expand into Africa need to understand the consumer market first because the copy and paste of what works in South Africa does not work in other African countries.

Africa retail projects

Broll has over 1,099,748m2 of retail projects in various stages of completion within the next 24 months in East Africa, SADC region and West Africa with an additional 500, 000m2 of retail projects under investigation bringing the total of retail projects to 53 (geographic spread of these projects is 28% in East Africa, 44% in SADC and 28% in West Africa).

“In East Africa for example, we have 11 projects (301,000m2) and retailers who have shown interest include established local retailers, master franchise, retailers from the Middle East and South African retailers,” says Horne.

The GLA of a shopping mall in East Africa projects can vary between 13,000m2 to 68,000m2.

“We are proud that the East African market has embraced our business and awarded us property management contracts of assets worth in the region of R7 billion in a space of 12 months.”

The SADC region has 19 projects and measuring about 482,748m2 with GLA ranging between 8,000m2 to 130, 000m2. Horne notes that average line shop rentals are between $55 -$65/m2 in Angola and $35-$55/m2 in a regional mall in South Africa compared to $25-$50/m2 in East Africa.

Retail interest in the SADC region include master franchise, Middle East retailers in Angola (limited interest in SA), global luxury brands and strong SA local retail expansion into the region.

In West Africa, 23 projects (316,000m2) with GLA of between 8,000m2-27,000m2 have average line shop rentals of between $55-$65/m2.

“The West Africa market is seeing a lot master franchise as well as emerging Middle East retail interest, European brands and a strengthening of the local retail market.”

Horne notes that Broll manages at total of 291 malls 9 retail centres in West Africa, 275 in the SADC region and 7 in East Africa. Broll manages the largest malls in seven Sub-Saharan African countries.

In South Africa, Broll has been awarded the exclusive leasing mandate of the Mall of Africa in Johannesburg, the largest single retail first phase ever constructed in Sub-Saharan Africa.

Broll also leased and will manage West Hill Shopping Centre in Ghana set to open at the end of October and in Kenya, Broll has been awarded management and is involved with leasing of Two Rivers in Nairobi, the largest mixed-use development under construction in East Africa (68,000m2 of retail, 18,000m2 and residential).

The future of retail

From what we see, points out Horne, the growth of retail in Sub-Saharan Africa is good news, however, it has a down side for other retailers.

Some retail store concepts face risks of oversupply, struggling retail centres are being converted into Chinese-owned mall and furniture stores are under increasing pressure and banks are rationalising.

On the positive side, he says for those with a sweet tooth, there has been an increase in enquiries from frozen yoghurt and ice cream stores, increased use of technology in retail centres as many shopping centres provide Wi-Fi for shoppers as well as growing online retail market.

Furthermore, Horne says education brands such as Kumon and Master Maths are moving into previously difficult to let retail space while no-frills gyms and home improvement centres have been active in acquisition of sites.

“Large national tenants prefer standalone retail stores to avoid high common area and utility costs.

“In SA, we are seeing increased emergence of convenience retail with forecourt offerings from retailers such as Woolworths, Pick n Pay and other niche brands like Thrupps.”

Africa dialogue

Horne is one of the panellists at the API Summit on a topic entitled: “Understanding Retailers’ Strategy” scheduled for Tuesday 14 October.

For the third time running, Broll Property Group has been a Gold Sponsor for API, something which Horne says due to the company’s presence in Sub-Saharan Africa, they see value in partnering with API as it gives Broll exposure to the Sub-Saharan African market.

“Broll encourages the creation of sustainable property investment and development opportunities across Africa.

“This is very much in line with the API Summit objectives and therefore, we are delighted to have the continued support of Broll as a leading sponsor,” says Raeesa Rajah, API Conference Coordinator.

Rajah says they believe the collaboration and team work is the key driver behind real estate projects in Africa noting that research such as the Broll Tenant Handbook to be launched at the API Summit and the Broll Retail Consumer Survey 2014 launched in August is pertinent in capturing the opportunities and challenges facing real estate investors in the region.