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Modern shopping malls gaining momentum in Nigeria:cheers::cheers::cheers:

Thu, 28 May 2009 06:58

The Palms shopping mall in Lagos was one of the first modern shopping centres in Nigeria.

The Palms mall in Lagos was one of the first modern shopping centres in Nigeria and is home to foreign brands such as Shoprite, Game and Nando’s. This world-class project was first conceived by Persianas Properties Limited which recently announced plans to expand the mall. Jaco Maritz talked to Prakash Pantham, a director of the company, about the planned expansion and the future of modern shopping centres in Nigeria.

Give us a brief history of The Palms shopping mall.

The Persianas Group consists of various businesses, of which Persianas Properties Limited is the largest. The Palms project was first conceived in 1999 by our chairman and managing director, Tayo Amusan. He was able to put together the team of architects, engineers and investors. Persianas launched this ground-breaking retail project in partnership with Actis in 2003 and it is now the premier shopping destination for all Nigerians. In 2007, Persianas bought out Actis’ stake, thus gaining 100% ownership of the project.

Are we going to see a significant increase in the construction of modern shopping centres in Nigeria over the coming years?

The resounding success of The Palms has demonstrated to everybody – including retailers and investors – the pressing need for modern shopping malls, operated along international standards:cheers:. This ensures a clean, safe and quality shopping experience, as compared to the dirty environment offered by the unorganised markets. The Persianas Group has embarked on the development of six new malls in various locations in Nigeria and these are expected to be completed by 2011.:banana::banana::banana: By 2014 Persianas expects to own and operate 15 shopping malls across Nigeria. The various state governments have been displaying keen interest in partnering with us to develop modern shopping malls in their states, and we have been evaluating various options on how to partner with them.

Do you think traditional markets will eventually make way for modern shopping centres, or will they continue to attract customers?

Internationally, in both developed and developing countries, traditional markets continue to co-exist with the modern shopping malls. Each offers its own unique proposition to the consumer. In any emerging market around 10-20% of the retail business is accounted for by the organised sector, while in Nigeria the organised sector is just emerging. The absence of modern shopping malls has been hampering the growth of the organised sector, and it is this need that we propose to meet by developing the infrastructure required. The banks in Nigeria have also recognised the emergence of the organised retail sector and are aggressively supporting the development of more shopping malls. In the last couple of years, quite a few retailers have tasted success. This has shown them the power of organised retailing, and they have been putting in place systems and funds to expand across Nigeria. The recent turmoil in the international financial sector has however dampened the real estate sector in Nigeria but we expect the situation to improve in the near future.

Why do you think has The Palms shopping mall been so successful?

First of all, the absence of any modern shopping malls in Nigeria has led to a great demand for such a development. Secondly, and most importantly, we have managed to maintain the international standards of operations and maintenance at The Palms consistently through the years, providing the retailers an opportunity to invest and grow their businesses over a longer period of time. We have been very particular about the product/category mix at The Palms, ensuring that all categories are well represented. This was achieved by a smart mix of positioning and tariffing for the various segments. For instance, the lease rentals would vary across segments and would also be determined by the profitability of each business. For us at The Palms, our success is determined by the success of our tenants.

Is there a big demand from retailers to have a space in shopping malls like The Palms?

Absolutely. For each shop in the Palms, we have at least three to four prospective new retailers demanding the space. However as stated earlier, we have decided to ensure that the mall has the right product/category mix, and do not necessarily rent space to the highest-paying bidder. Our selection of the tenant/retailer is decided by the products being sold and the capability of the retailer to run the most efficient and profitable business.

Tell us more about Persianas’ planned expansion of The Palms.

Persianas has embarked on the expansion of The Palms largely because of the great demand for retail and office space in Lagos. Land has been acquired adjacent to The Palms and we have put together an international consortium of consultants and engineers to work on this project. The expansion will add approx 40,000 m² to the retail section, and we plan to add two office towers with a total of 30,000 m² and a small hotel with 100 rooms to the project. The necessary parking space will be created by a multi-level car park with space for an additional 2,300 cars. The entire project will be self-reliant in respect of power back-up, water and sewage treatment, security, etc. We expect the construction to start in the 1st quarter of 2010 and to be completed by 2014, though the retail component will be ready by 2012.

What are the biggest challenges Persianas face in property development in Nigeria?

The biggest challenge we face is getting financing at competitive rates and the severely fluctuating exchange rates, especially now with the turmoil in the financial sector. There are other challenges too such as capacity in the construction industry and the availability of building materials and specialised skills; however these are manageable given our experience in the Nigerian environment.

What is your message to foreign property developers looking to invest in Nigeria?

With a population of 150 million and growing, Nigeria offers an excellent opportunity for investors to cash in on the growth expected to occur in the next decade or two. The success of the telecom industry in Nigeria, which today is the largest market in Africa, is testimony to this. Those operators who came in early and took the risk are laughing all the way to the bank. Those who shied away in those days are ready to pay a fortune to enter this market now.

Many state governments have actively started developing their states by creating a friendly environment for investment. The consumers in this country are very sophisticated and are capable of paying for quality products and services. All that it requires is for somebody to offer them the quality consistently. There are two ways to look at Nigeria’s absence of infrastructure – either viewing it as an opportunity to develop it, or waiting till somebody does it.

The Nigerian economy is growing, and this is leading to a demand for quality housing, office space and other related real estate infrastructure. Currently the rentals in certain areas of Lagos are probably the highest in the world, mainly because of the shortage of quality property. There is a huge gap in demand and supply, and the market is open to developers to fill the gap.

Finally , hopefully Nigeria will now usher in the long awaited mall boom era like what Egypt has done from the early 1990´s onwards and Thailand from the 1980´s onwards...the shopping demand is huuuggee, and Nigerians want good quality shopping!!!:banana::cheers:
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