From BDlive

The drive to revamp existing malls and open new ones will continue in 2014, potentially leaving listed property stocks overexposed to retail.

Some analysts have warned that an oversupply of malls could lead to declines in profitability for the listed property sector. However, historically shopping centers have been defensive and delivered solid returns for listed property counters.

“At least 14 malls between 17,500m²-116,000m² will be completed in South Africa this year,” investment management house Sesfikile Capital said on Twitter on Monday.

“Not all 14 will come online this year but mall development is healthy in South Africa. For the past 15 years or so, retail has been defensive for the property sector, which is why we see listed property so overweight towards it. It makes sense for more and more big property groups to get involved in mall development,” said Sesfikile director Mohamed Kalla.

He said the completion of 14 malls in a year was not abnormal for South Africa.

The R260bn listed property sector’s exposure to regional malls exceeding 30,000m² has doubled since 2010, according to Macquarie Research released in 2013.

The research showed that in 2010 as little as 30%-35% of regional malls was owned or part-owned by listed funds. This rose to between 55% and 60%.

As such, by the end of last year, retail represented 51% of the listed property sector’s assets, with offices at 31% and industrial at 18%.

Hyprop Investments has the largest exposure of the listed property groups — to malls exceeding 55,000m². Mr Kalla said the main shift was that more shopping centers were being built outside of big metropolitan areas, closer to the source of many customers.

Written by Alistair Anderson | Read more at BDlive