Global retailers targeting Africa

By AGENCIES

THE search for higher yield and stunted growth in developed economies amid the European debt crisis has global retailers turning their attention to the next big thing, and the often-quoted 1-billion African consumers ripe for the picking are seen as the next hot ticket.

But according to Preston Gaddy, divisional director for retail at Broll Property Group, there is a general lack of understanding of the extent of the African market.

"European retail groups are often surprised at the size of the retail market in SA, especially when it comes to the shopping centre industry and the level of retail spend.

"It’s a concern, for instance, that several European retailers are moving into former Eastern Bloc countries which have small populations of less than 2-million people.

"Compare that with our own population of 50-million, and with Nigeria, which has a population of 20-million in Lagos alone," Mr Gaddy said last week.

As a specialist property management company, Broll Property has operations in Ghana, Malawi, Namibia and Nigeria and provides services in a number of other countries.

One of its challenges is to provide foreign retailers with statistical information on the local market and to assist them with their entry into the country.

According to Mr Gaddy, "major" developers had plans to build at least 30-40 shopping centres over the next three to five years in Africa.

"These cities have 2-million to 4-million people, with no retail facilities, mainly just traditional markets and one or two of the Chinese-type retailers, but no formal shopping centres. The possibilities are limitless," Mr Gaddy said.

Samuel Ogbu, CEO of Liberty Properties, the property arm of JSE-listed Liberty Holdings , says that Africa is replete with opportunity for property development. "The demand for retail and commercial property in Africa is on a steady upward trend and this is despite a slowdown in global economic growth.

"We are in the process of concluding future development and management contracts in other parts of the continent where we have identified that the potential for growth is strong.

"The East and West African regions are particularly attractive due to their consistent economic growth and economic policy reforms, in particular in countries such as Nigeria," he said.

According to Thomas Reilly, CEO of Sanlam Properties, the rationale behind the planned launch of the Sanlam Africa Real Estate Fund was to focus exclusively on commercial real estate across sub-Saharan Africa, which was experiencing higher economic growth than the rest of the world.

Sanlam, which plans to invest $500m in commercial property in sub-Saharan Africa, is active in 14 countries on the continent and seven of these countries — Ghana, Nigeria, Mozambique, Kenya, Tanzania, Zambia and Uganda — are the target countries for commercial property acquisitions.