South African property developers McCormick Property Development (MPD) is developing a regional and first of its kind Mall of Zimbabwe in Harare.
The Mall of Zimbabwe will be the country’s first fully enclosed regional mall with some of South Africa’s national retailers and brands including Checkers, Pick n Pay, Woolworths, The Foschini Group, Edcon, Pepkor, Truworths, Famous Brands and the Spur Group lining up to trade at the new mall.
Construction of the mall is set to commence this year and is expected to open for trading in 2014.
The Mall of Zimbabwe will be the country’s first fully enclosed regional mall with some of South Africa’s national retailers and brands including Checkers, Pick n Pay, Woolworths, The Foschini Group, Edcon, Pepkor, Truworths, Famous Brands and the Spur Group lining up to trade at the new mall.
MPD managing director Jason McCormick says MPD in a joint venture with Augur Investments, who were the original owners of the site where the mall is being built is the developer of the Mall of Zimbabwe and the mall will be owned by both entities.
McCormick explains that currently in Zimbabwe, retail is characterised by very limited formal retail within the market that MPD is targeting – Borrowdale the highest-income market in the country.
There is currently a single, run-down open-plan shopping centre in the Borrowdale market that has done very little to modernise itself over the past decade, he notes.
It is also based on an archaic design and has developed in an ad-hoc fashion leaving very little scope for it to modernise in a meaningful fashion.
He says given that the market can handle a super-regional mall of the nature that MPD are proposing (92 000 square metre) GLA once complete) and the fact that the site is undoubtedly the best retail site in the country, its owners have gone all out to clean out the market and place most of the available retail demand in a single upmarket development which they believe will be to Harare what Sandton City was and is to Johannesburg.
“The Mall of Zimbabwe will undoubtedly be the most modern shopping facility ever developed in Zimbabwe featuring unique design concepts,” says McCormick.
Zimbabwe as an investment location
With all the economic and political turmoil that country has experienced, Property24 asked if this is the right time to be investing in Zimbabwe.
McCormick explains that the overwhelming response from tenants wanting space in the new mall says a lot about investor confidence returning to that country.
He notes that most of the tenant interest is coming from outside of Zimbabwe.
It is not only retail development pioneers MPD (who effectively built their group on developing where others had yet to see a market) who believe that the time is right, but also a gamut of South African national retailers who have been watching the increasing turnovers and trading densities of Zimbabwean retailers and associated companies with interest, he says.
Harare has sufficient capital and economic activity to justify a mall of this nature while other towns still have a long way to go prior to them having sufficient buying power to justify such a development.
“From a pure retail economics front, many of the chains such as Edgars and Truworths Zimbabwe have been showing over 80 percent growth on turnover year on year.”
Neil Jarvey, Africa executive for JHI Properties and mall leasing agents says when it comes to investing in Zimbabwe, there is not a single answer as to whether it is a good time to invest or not.
“Investments in different businesses in Zimbabwe carry different risks and each company will have a different risk profile,” says Jarvey.
He says the political outlook is still uncertain but the economy has stabilised and they see growing confidence in the market.
“Real estate investment is one of the areas that concerns investors the most but as with most investments, the greatest rewards are accompanied by the greatest risk.”
Once the political situation stabilises further then some of the opportunities that give the most reward will have already been taken, he says.
McCormick points to the recovery of the tobacco and mining industries which have shown pertinent figures.
For example, he says the sale of tobacco on the Zimbabwean auction floors peaked at 260million Kgs in 1998, then following the farm seizures fell to a low of 48m Kgs in 2008.
Already that figure is as high as 131 million Kgs, being grown by 60 000 small-scale black farmers around the country which was responsible for a 34 percent growth in agricultural output last year.
“This is obviously very positive news on the broadening of the incomes in the agricultural industry, and just one indication of an increasing middle-class.”
Zimbabwe also has the world’s second richest platinum reserves (after South Africa) at over 3 billion ounces and Zimplats plans to spend billions on their mines over the next few years.
“We believe that the time to re-invest in the Zimbabwean economy is now, albeit that we will definitely be ahead of the curve, having been founded on and adhering to far more pioneering principles than the average development company.”
Harare – a hub of economic activity
He points out that they are currently seeing demand for sophisticated retail centres in Harare, the capital city of Zimbabwe.
Victoria Falls has also been mentioned for a mixed-use development, including retail, as part of a government initiative to drive tourism, says Neil Jarvey, Africa executive for JHI Properties.
This location has sufficient capital and economic activity to justify a mall of this nature while other towns still have a long way to go prior to them having sufficient buying power to justify such a development.
Ascendant Property Fund an unlisted property fund in Zimbabwe launched this month.
Although it is a closed fund, with no new investment currently sought, it is likely to have future appeal for South African and international investors seeking exposure to African markets with higher yields and rental growth rates than those experienced in home markets.
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Jarvey says that Harare sits head and shoulders above other locations in spending power and attractiveness to mid and high end retailers.
Victoria Falls has also been mentioned for a mixed-use development, including retail, as part of a government initiative to drive tourism.
Bulawayo is currently under-provided for retail but he expects there will be some property developments in the medium term.
The Mall of Zimbabwe will undoubtedly be the most modern shopping facility ever developed in Zimbabwe featuring unique design concepts, says Jason McCormick, managing director of McCormick Property Development.
Ivan Pachonick, director of retail consulting for JHI Properties says the Mall of Zimbabwe is a flagship regional shopping mall and a ground-breaking project which will set a new precedent for lifestyle shopping experience in Zimbabwe.
Pachonick says they are experiencing an oversubscription of space.
Key tenants with whom plans are currently being finalised include supermarket giants Checkers, Pick n Pay and Woolworths, major clothing retailers The Foschini Group, Edcon, Pepkor and Truworths, while food retailers include Famous Brands and the Spur Group.
“Because of the exceptional demand for retail space the size of the shopping centre is being increased and certain tenants being repositioned to best accommodate their requirements,” he says.
Currently they are looking at a regional shopping mall of approximately 50 000 square metres which together with a lifestyle offering, will see the total retail space in phase one comprise approximately 60 000 square metre, points out Pachonick.
Jarvey says rental levels, although having recovered since the economic meltdown of the previous decade rentals are still depressed in relation to Southern Africa benchmarks.
“Economic growth will drive rental levels and kick-start new development, which has been mostly stagnant for over a decade,” he adds. –Denise Mhlanga
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