WORDS: MARANA BRAND :: IMAGES: SUPPLIED & SOURCED
In a harsh economic climate, one might expect consumers to curtail their spending – especially on luxury items. However, South Africa is experiencing a boom in luxury shopping as luxury brand retailers thrive, says Theresa Terblanche, divisional executive property management and retail leasing at Broll Property Management.
South Africa has the largest luxury brand market in Africa. Its expansion is fuelled by the weak rand, a significant spike in the cost of international travel and the growth in online markets.
Luxury-goods buyers in South Africa have been found to primarily belong to the fast-growing, affluent and influential black community, the emerging middle class, and women in urban areas with a high disposable income.
Strongly influenced by social media, these consumers acquire luxury brands as a status symbol and find the end-to-end experience – from envisioning and browsing to owning these items – gratifying.
Malls woo luxury brands, reap rental returns
South Africa has been recognised as offering boundless opportunities for luxury brand growth. This has given newly planned or existing malls the opportunity to entice these brands, which in turn leads to higher turnover rentals, as well as an exclusive tenant mix.
In some South African centres, these brands lease 18% to 20% of lettable area, but contribute 38% to 40% to turnover. This underlines the gearing, or financial leverage that is achieved through luxury brand tenants.
Centres that have existing luxury brand tenants continuously aspire to increase these brands’ representation, but can lose these tenants to nearby shopping centres if they have insufficient lettable area to support brand expansion. To secure a higher turnover, landlords are willing to invest higher tenant installation allowances to secure luxury brands. The upmarket image these tenants create leads to higher tenancy rates overall, and may even improve surrounding residential property values.
Luxury brands will not compromise on identity
Cape Town is still the front runner in luxury retail, thanks to tourism and affluent markets; Gauteng has a significant luxury brands retail market, especially in more affluent areas. KwaZulu-Natal is certainly not trailing behind, with 16 new luxury brand stores opening in Oceans Mall in the last year, with another five to follow, together with Gateway Theatre of Shopping, which offers several luxury brand stores.
Luxury brands have extremely high expectations, so they will not accept tenancy in a mall or node that does not align with their identity. Therefore, urban development should be a high priority for areas wishing to attract luxury brand retailers, which in turn will further uplift the area and raise property values.