Foreign
PROPERTY developers and retailers in South Africa say they remain committed to the fast-growing consumer market of its predominantly Black townships amid unrest in the country.
Riots broke out in July after former President Jacob Zuma handed himself in to start a 15-month jail term for contempt of court.
CEO Jason McCormick told Reuters that exemplar REITail (EXPJ.J) had five of its 27 malls damaged, including three which are expected to take up to four months to return to normal operations.
McCormick said the company remained committed to not only repairs but the development of another 30 malls in the pipeline.
“What happened was tantamount to a black swan event.
“I don’t think anyone ever foresaw the extent of this ever happening,” McCormick said at one of the group’s malls in Johannesburg.
McCormick’s views reflected those expressed by six other CEOs and executives of listed property companies and two retailers interviewed by Reuters.
CEO Laurence Rapp said Vukile Property Fund (VKEJ.J), for example, would repair its damaged Daveyton Mall in Johannesburg, one of the first township malls, and would forge ahead with a 90 million rand ($6.1 million) upgrade of the site.
“It’s one of our most successful malls in the portfolio in terms of all its trading densities and trading statistics,” Rapp said, adding that the current book value of the six damaged properties stood at around 2.8 to 3 billion rand.
Real estate developers and retailers have spent the last two decades targeting rising consumer spending by the Black middle class in areas that were disadvantaged for decades under white minority rule.
For such communities, the benefits include jobs and the convenience of having shops nearby, eliminating the cost of traveling to other towns, and these developments in turn attract other retailers and services such as banks.
Fraym, a U.S.-based company that analyses data on communities across the world, in 2019 identified South Africa’s townships as the biggest and fastest-growing retail market over the previous 10 years.
Leon Kok, chief operating officer at Redefine Properties (RDFJ.J), the second-biggest listed property firm in South Africa, said the company was committed to maintaining its presence but opening new shopping centres at this point was unlikely, not due to the unrest but rather to the pandemic’s impact on the economy.
The companies said where security and risk mitigation measures are not strong enough to fight lawlessness, they ensure that they have adequate insurance cover to manage the risk.
More than 300 people died and about 3,000 stores were looted, over half of them belonging to major retailers and fast food brands.
At least 161 shopping malls, 11 warehouses, and eight factories suffered heavy damage, sites that include tenants such as grocery chain Shoprite (SHPJ.J) and Walmart (WMT.N) majority-owned Massmart (MSMJ.J).
The hardest-hit areas included Durban’s uMlazi and Johannesburg’s Soweto and Alexandra townships in KwaZulu-Natal and the economic heartland of Gauteng. (Reuters/NAN)
– July 29, 2021 @ 13:59 GMT |
Tags: retail firms bet on townships amid unrest South African property
