Construction of shopping malls in Nigeria, Africa’s largest economy, is on the rise, while in South Africa development of new malls has tremendously declined.
Despite its large economy and high population – over 170 million people – the West African oil producing nation has lagged behind on the shopping mall construction craze that hit the continent over the last decade.
Nigeria has just a handful of formal shopping centers each with more than 10,000 square meters of leasable space. But that’s changing as several large malls are under construction.
The country has more than 100,000 square meters of leasable area in modern-format shopping centers and will be adding another 180,000 square meters of retail space by the end of 2016, according to a Broll Property Report.
By the end of last year, Nigeria had about a dozen Western-style shopping malls catering for people living in urban areas, The New York times reported.
Just last week a $50 million shopping mall was commissioned in Ikeja, Lagos, after the local government settled a dispute with residents of the area over the relocation of an open air market, Construction Review Online reported.
The emergence of malls — and mall culture — in Nigeria and other African nations like Kenya reflects broad trends on the continent, including a growing middle class with spending power.
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But as Nigerian malls come online, in South Africa – the continents second largest economy and the most industrialized – the sector is facing an oversupply.
With over 2,000 malls and counting, the country has the seventh highest number of shopping centers in the world, covering over 23 million square meters — more than all the countries in Europe, according to Bloomberg.
South Africa has 60 percent of shops in the country in formal retail supermarkets, compared to just two percent of Nigeria’s, according to Ventures Africa.
Newer mall in South Africa, like the recently opened Mall of Africa, are now diverting consumers from existing one and retailer are following them there. High street shops are also losing their clients as brand new shopping malls in smaller towns draw retail spending from street shops.
As a sub-sector, the retail segment of listed property in South Africa has outperformed all other asset classes over the last 10 years. But this could be could be coming to an end, according to Andrew Costa, the chief operating officer at Accelerate.
Costa told Construction Review Online that in 2015 South Africa’s retail sector adapted to lackluster consumption expenditure with retailers consolidating stores.
He explained that the longer-term retail sector in the country was also adapting to changing the retail patterns by introducing online shopping and a stronger emphasis by shoppers on better and convenient shopping.