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Resilient Property eyes Nigeria

Fed up with extensive bureaucracy and red tape Resilient Property Income Fund plans to stop developing shopping centres in South Africa and move to in Nigeria.

Director Des de Beer explained the R11bn market cap company’s local operations are hampered by extensive bureaucracy and red tape, resulting in expensive delays.

Speaking during a tour of its malls in Mafikeng, North West and Kimberley and Kathu in the Northern Cape, De Beer stated: “The state of the local authorities and provincial government departments is of a big concern to us and is one of the reasons we’ve stated publicly that … our model of developing non-metropolitan area malls is drawing to an end.

“We’re building in Burgersfort and in Secunda in partnership with the Sasol pension fund. We’re building in Sterkspruit, but apart from that we are unlikely to build any new malls in South Africa.”
Pointing out an open field earmarked for expansion alongside the Mafikeng Mall in the North West province, De Beer explained that authorities there had lost Resilient’s documents 17 times without explanation how this happened. “They’re not accountable to anyone so they don’t really care”, he says.

De Beer adds regulations in the industry have “exploded” with local authorities and various government departments unable to manage them. “We’re experiencing extensive delays… which costs us money.”

Another drawback is that returns have declined with Nigeria promising better yields. “We’re expecting returns north of 10% in dollars, and they’re in hard currency. You won’t get the escalations you get here. Obviously gearing gives you a positive carry as well, so it enhances that return even further,” De Beer explains.

He adds: “We don’t particularly want to be in Nigeria, there are risks and it’s a tough environment, a new frontier and it’s not without its problems.

“In Nigeria there is a genuine desire to develop and uplift the country which government officials will facilitate in many instances. Obviously you get cases where they don’t. There have been instances in that trying to attract development they have donated land to developers. It is such a different mindset to what we have here where you have this wall of bureaucracy and inefficiency to deal with.”

Last month Resilient announced that it would be partnering with Shoprite and Standard Bank in Nigeria. “We’ve already identified sites and are going to do much smaller open centres with a simple design at around 15 000m². Being with Shoprite and Standard will help us understand the market better because they’ve been there for quite some time,” De Beer said.

Resilient expects to be on the ground with its first centre later this year. The focus will be on smaller malls due to a lack of retailers to fill larger spaces. Truworths, Woolworths and Mr Price only recently came on board with limited brands.

Lagos has a population of 17m out of a national estimate of 150m. Currently the city has two malls covering less than 50 000m². “In the South African context that’s not even one big mall. The potential is staggering,” De Beer says.

Returning to its existing malls, De Beer said they were trading well and extensions were being planned for ten of its developments over the next two years, including those in Witbank, Umtata, Mafikeng and Kathu.

(Moneyweb)



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