The Mall of Africa and South Africa’s mall culture

On the 28th of April 2016 the Mall of Africa opened in Midrand. Standing at a staggering 131,000 square meters the building is another jewel in the South African commercial property market. And it comes as no surprise that on the opening of the mall South Africans of all shapes and shades flocked to be the first customers to pay patronage to the stores on offer.

In fact, the amounts of people who decided to shop at the mall on the particular day it opened (being a public holiday) was such a large quantity that social media remained filled with pictures of massive crowds and traffic surrounding the area.

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Shoppers crowd the Mall of Africa on its opening weekend.

With globally recognizable brands such as H&M and Starbucks, it comes as no surprise that trendy South African shoppers had been talking about attending the launch for months.

But, as it has for many, the mall of Africa might come as a surprise to many observers of the South Africa economy. Faced with a low GDP growth rate, stubbornly high unemployment, and credit uncertainty the general perception of the South Africa economy has been cautiously pessimistic to say the least.

So why then would the largest single phase mall on the continent be built in a country that has been dogged by its inability to shake off a potential recession. Well the simple answer is this, South Africans love malls.

This is not to say that South Africa culture has any particular feature that finds malls especially more appealing than any other culture, but in some strange phenomenon, we’e built a lot of them. In fact by retail space per capita, we have the sixth most amount of malls in the world, with an estimation of 2000 shopping centers in the country.

In fact, the Mall of Africa isn’t the only shopping destination under construction. Property investors have pulled out all the stops to remain competitive in this market by revamping and diversifying their malls. An example of such would be the major developments planned by Old Mutual and Pareto Limited for the Menlyn shopping centre in Pretoria. Estimated to cost R2 billion (around $126 million), the new development aims to provide for retail space demand increases, and introduce new experiences to their loyal shoppers through the addition of new entertainment and retail offerings.

Menlyn-Maine-Model
The Menlyn Maine development underway aims to provide brand new shopping destinations, as well as a thriving office space.

So why now?

Since the financial markets crashed in 2008 the South Africa construction market hasn’t had a great ride. Faced with global economic pressures and the declining value of the Rand, construction and property firms have struggled to increase growth. Fortunately, many of these firms have been riding the wave of commercial developments that have boomed in the country since the last decade.

So it comes as no surprise that there is a heightened sense of doomsaying circulating these industries now that South Africa is assumed to have reached a level of shopping centre saturation. With all major retail centre projects already underway, most analysts have only indicated smaller and medium shopping opportunities in poorer communities as a path for firms to generate growth.

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Melrose Arch is also planned to undergo the introduction of new residential apartment buildings, to supplement the underwhelming shopper numbers.

This could also make for a potentially serious problem for government. Having consistently promised the provision of jobs for unskilled citizens, the South African government is now facing the phasing out of one of its major employers in construction.

Without the budget to finance major infrastructure deals, and private investors increasingly skeptical of previously dependable property investments, issues such as housing and employment may take center stage in coming election campaigns.

With Firms such as Grand Parade Investments importing brands such as Burger King and Baskin Robbins, there has been some optimism that retail will still be able to provide some form of relief through the addition of new potential tenants. But this can neither be seen as impact-full or sustainable enough developments to warrant complacency in the industry.

The South African property market is a formidable one. Having survived as much as it has, and with its continuing dominance of the African property market, the industry will surely continue to provide profit for many of its investors. But as the saturated retail industry becomes a canary in the mine of this economic powerhouse, it may be time for reflection and innovation.

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