{UAH} Pojim/WBK: City malls feel the pinch as shoppers move to the suburbs - report

http://www.observer.ug/business/38-business/40151-city-malls-feel-the-pinch-as-shoppers-move-to-the-suburbs-report

City malls feel the pinch as shoppers move to the suburbs

Written by Alon Mwesigwa

Last Updated: 30 September 2015

Shopping malls in suburban areas are attracting more customers than those located in the city centre, a new sector update by the real estate agency Knight Frank, has shown.

"The trend of consumers moving to suburban retail nodes has continued and the suburban malls are starting to cement themselves as leisure shopping outings, and changing the landscape of consumer movement and behaviour in and around," said the report, detailing the sector's performance of the first half of this year.

The agency says the malls it manages in the suburbs have seen average growth of 14 per cent in motor vehicle traffic and nine per cent average growth of foot traffic.

"This has had a negative impact on trading densities in the central business district (CBD) environment of Kampala, which in turn has meant that CBD retailers are starting to consider taking up space in suburban Kampala and are either expanding or relocating their existing business operations," the report says.

It adds that trading in suburban malls has been robust in all leisure categories. In April, The Observer reported that a number of businesses had closed shop at Garden City because of low business at the mall. The traders there said people preferred new shopping centres outside the city centre.

Most people are attracted to suburbs because they are perhaps close to where they live and sometimes they spend less time in the traffic jam than when they come to the city centre.

Knight Frank says the development of shopping centres in greater Kampala is seeing a huge uptake in planning partly as a result of "the changing shopping patterns of the local consumer."

East Africa has been earmarked as a large potential growth market due to the ever-expanding middle-class and the relatively unstructured retail environment.
SLOWDOWN

Knight Frank says the first quarter of 2015 saw a noticeable slowdown in the residential letting market with limited demand for accommodation from the expatriate community and corporate companies. This, the agency says, is as a result of a slowdown in activity within the oil and gas sector "whilst other affiliated service providers and downstream support companies closed down operations completely."

The firm says the residential sales are also experiencing less activity compared to last year.

"This is as a result of increased mortgage interest rates that have risen to [between] 21 per cent and 23 per cent per annum… There is also increased activity within the auctioned properties market; this may well continue into the long term if the shilling continues to depreciate and interest rates continue to rise."

The shilling has depreciated by more than 25 per cent since the start of 2015. Most of the building materials used here are imported, which means they are much more expensive than they used to be.

Lamudi, an online property market, earlier on said the effect of a weak shilling would lead to an increase in the prices of finished properties.

"The prices of rentals in the country are also bound to become unstable. Many rental prices are set in dollars [especially in Kampala] and when converted into the local currency, these prices are unstable," Lamudi says.

Lamudi added that there was a lot of anxiety and uncertainty over the forthcoming general elections in 2016, with some investors holding back investments.

"This is a typical behavioural pattern of the African property markets, which take on a particularly cautious attitude towards elections," it says.

Knight Frank, however, says the prime residential property pipeline is active and more, however, are likely to be erected in the next two years. It says there are "approximately 850 planned apartments in the pipeline scheduled to be completed over the next one to two years in Kololo alone." Kololo is an upmarket suburb.

"Greater Kampala metropolitan area is seeing increased growth in development of apartments and middle-income housing in gated communities," it adds.

There are three satellite towns planned in Garuga, Mukono, and Bukerere - all of them at least 20 kilometres away from the city centre - and these will have different types of houses.
amwesigwa@observer.ug

City malls feel the pinch as shoppers move to the suburbs - report

http://www.observer.ug/business/38-business/40151-city-malls-feel-the-pinch-as-shoppers-move-to-the-suburbs-report

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