African retail market anticipates 223 new malls by 2018

Despite the economic challenges sweeping through Africa, especially in the two largest economies on the continent, Nigeria and South Africa, whose local currencies have lost considerable value, the continent’s retail market is still upbeat in some countries with 223 new shopping centres expected in the next 24 months.

By 2018, the market will be taking delivery of this staggering number of malls, which together will be providing 10 million square metres. A recent report by Sagaci Research shows that 40 malls are billed for Egypt, 25 in Nigeria, 20 in Kenya, 15 in Ghana, 14 in Angola, and 13 in Morocco.

Nairobi, the Kenyan capital, is today the leading shopping mall developer in sub-Saharan Africa (SSA) and, according to a survey by real estate consultancy firm, Knight Frank, Nigeria is ranked third, while Angola was second, followed by Tanzania and Mozambique.

While Nigeria currently has over 100,000 square metres of leasable area in modern format shopping centres and will be adding another 180,000 square metres of retail space by 2016, Nairobi alone has a mall space of 391,000 square metres.

The Nigerian market, before now, had witnessed what many saw as a revolution as there was a phenomenal growth of the market with many local and international investors deploying funds, which Hakeem Oguniran, managing director, UPDC, estimated at $3 billion for developing retail centres.

The growth of the market at the time, according to experts, was driven by strong demographics, the emerging middle class with strong spending power, and change in shopping culture among many Nigerians who wanted comfort and convenience in their shopping experience.

Today, due to the country’s challenging macro-economic environment, the market is struggling with some developers holding back investment, some scaling down their project size while retailers are either trading below capacity or closing down shops altogether.

In a report it released recently, Real Estate Information Centre (REIC), which is powered by Pison Housing Company, Roland Igbinoba, Pison Housing’s president/CEO, names top five retail cities as Luanda in Angola as second after Nairobi, Lagos in Nigeria has the third largest mall pipeline, and then Dar es Salaam in Tanzania, and finally Maputo in Mozambique, describing them as the top five hotspots for mall space development in SSA.

REIC notes however that “private investors have adopted wait and see position in Nigeria due to unclear policy direction,” adding that clamp down on corruption and money laundering means new money going into real estate would reduce.

Broll Property in its recent report reveals that in Nigeria, construction of shopping malls has increased tremendously while there is a decrease in mall construction in South Africa, noting that “the West African oil producing country has more than 100,000 square metres of leasable area in modern-format shopping centres with a population of over 170 million people, stressing that another 180,000 square meters of retail space by the end of this year”.