Gaborone retail market most saturated in Africa

Brian Benza | Thursday March 24, 2016 12:15

According to Knight Frank’s Shop Africa 2016 Report, Gaborone has 247,000 square metres of completed shopping centre space, significantly higher than megacities such as Lagos and Kinshasa.

Because of the relatively small size of the city, Gaborone has over 1,067 completed square metres of shopping space per every 1,000 people, a number that is 10 times bigger than cities such as Nairobi, Harare and Kampala.

Namibia’s Windhoek follows second with 730 square metres of shopping centres per 1,000 people and Harare is on third position with 119 squares metres per 1,000 people.

At the bottom of the rung is Kinshasa with just one square metre per 1,000 people and Lagos at 10 square metres per 1,000 residents.

“Given the relatively small size of Gaborone’s population, catchment of retail space is looming.

To date, the retail sector has remained remarkably resilient, with all of Gaborone’s major retail centres experiencing healthy demand for space and low vacancies.

However, the heightened level of development may lead to a saturation of the retail market and put downward pressure on prime rents.

South African chains have a strong presence in the market, but Botswana’s biggest retailer, Choppies seems to be gaining ground,” said Knight Frank in the 2015 Africa Report.

Due to market saturation in South Africa, retailers in that country have been aggressively eyeing the sub-Saharan market for expansion leading to the mushrooming of many malls in Gaborone in a short space of time.

In the past five years, four malls - Sebele, Rail Park and Airport Junction and Northgate - opened shop in Gaborone with South African retailers such as Shoprite, Pick n Pay, Game and Woolworths anchoring many of the most modern malls.

Reflecting the trend towards saturation, retail sector rentals have also softened in the past two years with International Property Database (IPD) estimating returns on the retail space to have declined from 20.1 percent to 16.6 percent last year largely on the back of tenants’ newly found ability to negotiate lower rates.

According to the Shop Africa 2016 Report, sub-Saharan Africa is experiencing a wave of modern mall developments, on the back of the growth of the region’s consumer markets.

This trend is underpinned by Africa’s long-term demographic and economic growth. The African population has more than doubled over the last 30 years to just over 1.1 billion, and it is projected to hit two billion by 2040.

“Given that South Africa alone is estimated to have about 23 million square metres of shopping centre space, more than seven times
as much as the rest of Sub-Saharan Africa, there will appear to be room for considerable further retail development across the region.

However, it is significant that the second and third largest markets by floor space are Windhoek and Gaborone, two small capital cities in Southern Africa, albeit in relatively mature and prosperous economies.

The fact that megacities such as Lagos and Kinshasa have less floor space than these two cities, which are a fraction of their size, illustrates how much further their retail markets have to grow,” read the report.