Smaller shopping centres in South Africa have proven to be a standout segment in the retail market.
The latest Clur Shopping Centre Index reveals that trading densities at community and smaller shopping centres showed positive performance in the second quarter of 2024.
This Index helps property funds, both listed and unlisted, assess asset health and optimize returns across over 4.1 million square metres of premium retail space in South Africa and Namibia, with plans to expand to over 5.4 million square metres.
Belinda Clur, managing director of Clur International, emphasized the growing significance of community-focused retail.
“With the emerging importance of the move to make the world well, community-focused retail, as a new frontier, is a critical consideration for shopping centre strategy. This community spirit is signalling the need for social impact retail,” she stated.
The Clur Index for All Centres closed Q2 2024 with an annualized trading density of R41,343 per square metre, reflecting a 3.6% year-on-year increase.
However, this represents a slight contraction of 0.9% from Q1 2024 and a 1.5% decline compared to the 2023 calendar year. The growth rate also fell short of June 2024’s Consumer Price Index (CPI) by 1.5%.
The Index showed that super-regional centres (over 100,000 sqm) and community and smaller centres (under 25,000 sqm) achieved the highest trading densities, at R49,177 and R42,497 per square metre, respectively. Super-regional and regional centres experienced the highest year-on-year growth at 3.9%.
Community and smaller centres, despite showing the lowest growth rate of 1.7% in Q2 2024, were the only segment to exhibit an increase from the first quarter, up by 0.1%.
Conversely, super-regional centres faced the largest contraction, decreasing by 1.5% compared to Q1 2024.
The All Centres Index experienced a 0.9% contraction over the two quarters.
Among South Africa’s three largest provinces, the Western Cape led with a trading density of R45,638 per square metre and a year-on-year growth of 5.8%, outperforming June 2024’s CPI by 0.7%.
KwaZulu-Natal followed with a trading density of R42,417 per square metre, though it recorded a negative year-on-year growth of -2.2%.
Despite this, KwaZulu-Natal saw a growth expansion of 0.4% from Q1 2024. Gauteng had the lowest trading density of R40,632 per square metre but the second highest year-on-year growth rate of 4.9%.
Clur noted that comparing growth rates over a split-year period—Q2 against the remaining nine months of the rolling 12-month period—shows higher trading densities across all segments, likely due to the festive season.
“However, while the year-on-year growth is also higher in most instances, community and smaller centres and the KwaZulu-Natal province defy this trend, showing higher growth rates for the three months of Q2 compared to the prior nine-month period,” she said.
“This counter-trend boost for these segments in the last quarter suggests that even better prospects are emerging there.”
The rise of smaller, mainly rural centres is evident across South Africa. For instance, a new 9,200 sqm centre near Louis Trichardt in Limpopo is set to fill a gap in the market by providing essential services to the local community.
Jason McCormick of McCormick Property Development highlighted the lack of formal retail options in the area, noting that the new Madombidzha Mall will significantly enhance access to vital services.
Retail trends also indicate a growing focus on personal wellness, with increased demand for athleisure, fitness, health, and beauty products. Social impact retail is gaining traction, with consumers seeking products that enhance quality of life and uphold ethical standards for people, animals, technology, and the environment.
Community retail continues to be crucial, as it brings shopping options closer to consumers, reducing transportation costs and allowing more spending on essential groceries and other necessary products.
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