select
|

Communities support for neighbourhood convenience centres


Moderate sales growth aside, South Africa’s retail sector remains attractive to property investors, including individual buyers seeking niche opportunities such as neighbourhood convenience centres, says Elton Holland, director of Ikon Property Group.


An aerial view of Gordon’s Bay, where the Mountain View Shopping Centre was recently sold for R27.75 million.

“The success of neighbourhood centres is primarily driven by ease of access for consumers living or working in the vicinity, as long as the tenant mix and product offering is geared to suit their needs.”

He says a case in point is Mountain View Shopping Centre in Gordon’s Bay which was bought from a property fund by a local investor for R27.75 million through Mike Dicky, Ikon’s senior investment broker.

“The location of the centre at the entrance to the town from Sir Lowry’s Pass ideally serves local residents. Initially a 7/11 store with a few small shops, then revamped in late 2012 and now best described as a neighbourhood convenience centre, Mountain View has a gross lettable area of 3 208 square meters. It is anchored by an 860 square meters Woolworths store which has plans for expansion in the centre. Other tenants include a gym that occupies 534 square meters, a bottle store, a pet shop, a Crazy store, biltong and clothing shops, a laundromat and a popular local pub as well as two ATMs,” says Holland.

The owner of the centre has subsequently acquired an adjacent 4 600 square meters vacant site with the intention of developing a second major retail anchor for Mountain View, which would also entail reconfiguration of the centre for optimal consumer appeal.

Says Holland: “The buyer has made a sound investment – small neighbourhood centres are sought after – particularly in a comparatively affluent area such as Gordon’s Bay. I believe the Pick n Pay franchise store down the road has the highest trading density in the Western Cape, so there is serious buying power in this node. Set against the Hottentots Holland Mountains, picturesque Gordon’s Bay is just 10 minutes from Strand and Somerset West and 45 minutes from Cape Town.

“Neighbourhood centres anchored by Woolworths Food, Shoprite and Pick n Pay Family are the better performing centres with initial net yields of 9 to 9.5 percent, whereas centres with superette anchors would need to show a net yield of at least 10 percent to attract investor interest, unless there is a possibility to substitute the cafe store for a national retailer.”

Dicky says it’s important to carry out due diligence tests on the line shops in neighbourhood centres as these are often small traders who may easily fall into arrears, unless they offer the neighbourhood community an essential service or commodity.

“Essentially neighbourhood centres are not passive investments and investors would often need to remix the tenancy to ensure the ongoing success of centres and their tenants. As a result, a suitable tenant mix would include, for example, a hair salon, a pool shop, a pet shop, a niche coffee shop or restaurant, an estate agency and so on, to complement the food anchor.”

He says in the current economy, the increases in rates, taxes, electricity and security continues to affect tenancy occupancy costs with gross rental increases overtaking sales growth, and reducing traders’ profits. In protecting capital appreciation of their assets, landlords must likewise bear some of the increased costs rather than passing them all on to the tenants.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 16 Feb 2018
      Whether you own a property in a sectional title complex or are looking to invest in one, the financial standing of the body corporate is the single most important thing that can affect your investment or your buying decision.
    • 15 Feb 2018
      One positive consequence of the financial crash in 2008 was the rise in consumerism, especially in the property market, where buyers have steadily become more knowledgeable and more value conscious.
    • 15 Feb 2018
      While most homeowners will take the agent’s commission into consideration when they are trying to determine what the will get out from the sale of their property, many often forget to factor in the other costs involved in a home sale, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 14 Feb 2018
      The forecast for the national rental market in 2018 remains a mixed bag of good news and bad news. Although rentals are expected to rise slowly as the challenges of home affordability and tighter lending criteria tighten their grip, it’s a double-edged sword as the market also will come under increasing pressure from factors like declining disposable income levels.
    • 14 Feb 2018
      While you may not have intended to place your home on the market, what do you do if you receive an unexpected offer on your home? In areas where demand outweighs the current supply of homes available to buyers, it is not unheard of to have buyers make offers on homes that aren’t on the market, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 14 Feb 2018
      If you are looking to sell your home this year, Debbie Justus-Ferns, divisional manager of Renprop Residential Sales, says that there are five crucial things to do before the ‘for sale’ sign goes up.
    • 01 Feb 2018
      February is the month of love and to celebrate we will be posting about all the things we love this month. Follow the #MyPropertyLoves hashtag to keep up with our favourite things.
    • 01 Feb 2018
      After saving up and months of searching for the right home, applying for a bond and patiently waiting for the keys to the front door, it is finally time to cross the threshold and move into your new home. Now what?
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK