South Africa’s major institutionally owned shopping malls showed positive trading performance for the year ending March 2024 (adjusted for inflation).
The MSCI South Africa Quarterly Retail Trading Density Index, based on data from 148 retail centres covering 5.8 million square meters, recorded an annualised trading density of R41 053 per square meter.
Despite economic challenges, including high inflation, elevated interest rates, unemployment, and load shedding, retail trading performance remained relatively stable. Year-on-year growth in annualised trading density increased to 6.2% with the number of shoppers visiting the country’s major malls increasing during the quarter.
However, spend did not keep pace with the increased number of visitors as the overall monthly trading density growth of 3.4% year-on-year comprised a 4.1% growth in foot count and a 0.9% decrease in the amount spent per head.
Vacancy rates declined to 4.% by March 2024 with noticeable improvements in various retail segments.
Retailers’ cost of occupancy decreased during Q1 2024 with sales growth outpacing rental growth. While the overall cost of occupancy is currently at its best level in over ten years, there is a vast spread among the various retail segments and merchandise categories.
Gross rentals constituted 6.7% of sales turnover, the healthiest level since December 2012. The cost of occupancy in smaller format retail centres was significantly lower than large format centres at an aggregate level and at a merchandise category level; only the food category has a cost of occupancy below the weighted average given its high proportion of space usage in these small format centres.
Trading density growth varied across segments and merchandise categories with some experience decline.
Changes in store sizes and tenant composition have influenced the allocation of floor space across the different merchandise categories since 2019.
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