Life returns to shopping malls
Consumers recovering
Namibia's economic prospects have certainly brightened in comparison to previous years, potentially allowing for a positive outlook on retail sales in the near future and consequently, better returns on investment for commercial properties.
Namibian shoppers are returning to shopping malls in numbers reminiscent of the pre-Covid era, and certain industry pundits are optimistic that the current increase in retail sales is rooted in a more sustainable foundation, as the country's economic rebound is not primarily reliant on government expenditure.
Research released by Simonis Storm (SS) recently stated that commercial property management companies indicate an average shop vacancy rate of 4.5% to 5.0% - a figure that has remained relatively stable post the lockdown.
Oryx Properties Ltd, the only property company listed on the Local Index of the Namibian Stock Exchange (NSX), last week released its annual financial results, reporting a vacancy rate of 6.8% of its commercial lettable area. In 2020, the rate was 10.8%.
The latest data released by the Namibia Statistics Agency (NSA), showed the wholesale and retail sector contributed about N$3.3 billion to the country’s gross domestic product (GDP) in real terms in the first quarter of this year. Compared to the same three months last year, this represents an increase of 5.7%.
The first quarter performance of the sector was marred by negative growth from 2017 to 2021, fuelled by the recession and the impact of the pandemic.
Positive sentiment
SS indicated that it would substantiate a rather pessimistic outlook for the retail property market in the foreseeable future, drawing on macroeconomic indicators such as elevated interest rates, the burden of expensive living expenses, and elevated unemployment levels, all of which collectively erode consumer spending capacity.
However, the analysts added: “When engaging with some retailers and commercial property management companies, there seems to be positive sentiment for retail sales.”
Oryx Properties reported that foot traffic at their retail properties has returned to 2019 levels, but the turnover of their tenants has not. In contrast, several other property management firms suggest that sales turnover, when measured in nominal terms, is on the rise, SS said.
Additionally, due to higher oil prices in 2022, some have noted the return of numerous Angolan citizens who are contributing to increased spending within Namibia's retail sector, they added.
Rising demand
“There is a general rise in demand for retail space and is mainly driven by South African franchises (roughly 80% to 90% of demand at the moment) seeking to open new shops,” SS said in its “Namibia’s Property and Housing Market Overview” last month.
As a result of rising demand for retail space, rent has increased, the analysts added.
“Engagements with various property management companies indicate that cap rates (ratio of net operating income from properties to property values) are going up, implying that rental incomes are increasing and commercial property valuations are stagnant or declining.
“Indeed, Oryx Properties and other property management companies indicate that leasing activity has increased in recent months and rental yields are increasing,” SS elaborated.
According to SS: “Some industry experts believe that the current trend of rising retail sales is more sustainable because the economic recovery is not being driven by government spending and this makes commercial property investment somewhat attractive for some local investors.”
Namibia's economic prospects have certainly brightened in comparison to previous years, potentially allowing for a positive outlook on retail sales in the near future and consequently, better returns on investment for commercial properties. This could bolster commercial property valuations or prices in the medium-term, SS said.
However, the analysts anticipate that commercial property prices will remain relatively stable or even experience slight declines in the immediate short-term, given that Namibia is still in the nascent stages of the economic recovery.
Investment
Despite higher demand for rentals, demand is quite low to invest in new commercial developments or properties, SS said.
The analysts are aware of upcoming developments in Namibia's retail sector, including a planned 14 000m² mall in the Goreangab Waterfront development in Windhoek. Additionally, there are plans for new malls in Rundu (5 000m²), Lüderitz and Oshakati, along with refurbishments planned for the existing mall in Oranjemund.
“These projects are expected to be completed between 2025 and 2026, which would provide some support to construction activity in the near future,” SS said.
Furthermore, SS said, a substantial parcel of land adjacent to M&Z in Swakopmund is earmarked for a forthcoming shopping centre project. Rundu is offering substantial business plots for sale, ranging from N$3 million to N$11 million.
Additionally, there is a N$6 million commercial property plot available for purchase in Katutura. Notable commercial property listings currently include the Old Power Station building in Windhoek, the Platz am Meer shopping centre in Swakopmund and the Grove Mall in Windhoek.
Oryx Properties
Oryx acquired the Dunes Mall in Walvis Bay for N$628.25 million in the beginning of August this year.
The group’s retail property portfolio also includes Maerua Mall, Gustav Voigts Centre and Baines Retail Centre – all in Windhoek – as well as Urban Village Retail Centre at Elisenheim.
The acquisition of Dunes Mall was the first step towards Oryx’s growth strategy, which aims to grow the total asset base to N$4.5 billion over a three-year period ending 2025.
“Management is driven to fully on-board Dunes Mall into the Oryx stable and is seeing a lot of potential for growth at the coastal region of Namibia. We are also investigating various other acquisition opportunities within Namibia and are excited about the many opportunities out there,” the group’s CEO, Ben Jooste, said when the latest annual results were released.
“We are intentionally looking at assets outside Windhoek and changing our sector perspective. For example, rather than looking only at large malls like Maerua again in Namibia’s capital, we are increasingly looking at smaller regional malls, and the unlisted sector. Diversification, we believe, is key to scalability,” Jooste said in the group’s Integrated Annual Report (IAR) last year.
The prospects of oil along the coast of Namibia, and the surge in green energy initiatives being investigated in the country, are promising for the medium to longer term. “The renewed interest in the coastal areas prompted management to review our coastal assets and investigate new opportunities at the coast across all sectors,” Jooste said.
Research released by Simonis Storm (SS) recently stated that commercial property management companies indicate an average shop vacancy rate of 4.5% to 5.0% - a figure that has remained relatively stable post the lockdown.
Oryx Properties Ltd, the only property company listed on the Local Index of the Namibian Stock Exchange (NSX), last week released its annual financial results, reporting a vacancy rate of 6.8% of its commercial lettable area. In 2020, the rate was 10.8%.
The latest data released by the Namibia Statistics Agency (NSA), showed the wholesale and retail sector contributed about N$3.3 billion to the country’s gross domestic product (GDP) in real terms in the first quarter of this year. Compared to the same three months last year, this represents an increase of 5.7%.
The first quarter performance of the sector was marred by negative growth from 2017 to 2021, fuelled by the recession and the impact of the pandemic.
Positive sentiment
SS indicated that it would substantiate a rather pessimistic outlook for the retail property market in the foreseeable future, drawing on macroeconomic indicators such as elevated interest rates, the burden of expensive living expenses, and elevated unemployment levels, all of which collectively erode consumer spending capacity.
However, the analysts added: “When engaging with some retailers and commercial property management companies, there seems to be positive sentiment for retail sales.”
Oryx Properties reported that foot traffic at their retail properties has returned to 2019 levels, but the turnover of their tenants has not. In contrast, several other property management firms suggest that sales turnover, when measured in nominal terms, is on the rise, SS said.
Additionally, due to higher oil prices in 2022, some have noted the return of numerous Angolan citizens who are contributing to increased spending within Namibia's retail sector, they added.
Rising demand
“There is a general rise in demand for retail space and is mainly driven by South African franchises (roughly 80% to 90% of demand at the moment) seeking to open new shops,” SS said in its “Namibia’s Property and Housing Market Overview” last month.
As a result of rising demand for retail space, rent has increased, the analysts added.
“Engagements with various property management companies indicate that cap rates (ratio of net operating income from properties to property values) are going up, implying that rental incomes are increasing and commercial property valuations are stagnant or declining.
“Indeed, Oryx Properties and other property management companies indicate that leasing activity has increased in recent months and rental yields are increasing,” SS elaborated.
According to SS: “Some industry experts believe that the current trend of rising retail sales is more sustainable because the economic recovery is not being driven by government spending and this makes commercial property investment somewhat attractive for some local investors.”
Namibia's economic prospects have certainly brightened in comparison to previous years, potentially allowing for a positive outlook on retail sales in the near future and consequently, better returns on investment for commercial properties. This could bolster commercial property valuations or prices in the medium-term, SS said.
However, the analysts anticipate that commercial property prices will remain relatively stable or even experience slight declines in the immediate short-term, given that Namibia is still in the nascent stages of the economic recovery.
Investment
Despite higher demand for rentals, demand is quite low to invest in new commercial developments or properties, SS said.
The analysts are aware of upcoming developments in Namibia's retail sector, including a planned 14 000m² mall in the Goreangab Waterfront development in Windhoek. Additionally, there are plans for new malls in Rundu (5 000m²), Lüderitz and Oshakati, along with refurbishments planned for the existing mall in Oranjemund.
“These projects are expected to be completed between 2025 and 2026, which would provide some support to construction activity in the near future,” SS said.
Furthermore, SS said, a substantial parcel of land adjacent to M&Z in Swakopmund is earmarked for a forthcoming shopping centre project. Rundu is offering substantial business plots for sale, ranging from N$3 million to N$11 million.
Additionally, there is a N$6 million commercial property plot available for purchase in Katutura. Notable commercial property listings currently include the Old Power Station building in Windhoek, the Platz am Meer shopping centre in Swakopmund and the Grove Mall in Windhoek.
Oryx Properties
Oryx acquired the Dunes Mall in Walvis Bay for N$628.25 million in the beginning of August this year.
The group’s retail property portfolio also includes Maerua Mall, Gustav Voigts Centre and Baines Retail Centre – all in Windhoek – as well as Urban Village Retail Centre at Elisenheim.
The acquisition of Dunes Mall was the first step towards Oryx’s growth strategy, which aims to grow the total asset base to N$4.5 billion over a three-year period ending 2025.
“Management is driven to fully on-board Dunes Mall into the Oryx stable and is seeing a lot of potential for growth at the coastal region of Namibia. We are also investigating various other acquisition opportunities within Namibia and are excited about the many opportunities out there,” the group’s CEO, Ben Jooste, said when the latest annual results were released.
“We are intentionally looking at assets outside Windhoek and changing our sector perspective. For example, rather than looking only at large malls like Maerua again in Namibia’s capital, we are increasingly looking at smaller regional malls, and the unlisted sector. Diversification, we believe, is key to scalability,” Jooste said in the group’s Integrated Annual Report (IAR) last year.
The prospects of oil along the coast of Namibia, and the surge in green energy initiatives being investigated in the country, are promising for the medium to longer term. “The renewed interest in the coastal areas prompted management to review our coastal assets and investigate new opportunities at the coast across all sectors,” Jooste said.
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