Meridian32: Opportunity in the Development of Shopping Centres

“Real estate is where we started out back in 2000, initially as JHI, which later became REC. This is what really gives me a lot of joy: to build something, drive past it and see something that has been built and standing 15 years on. This is where we began and real estate is still our core business”, says Manuel Vieira, Chairman of Meridian32 Group.

“If we look at real estate, the returns that have been achieved over the past six to eight years are in excess of 50-60%, which is fairly difficult to attain in other places, outside developing geographies. This has been very good for developers. Obviously, there is always an associated risk, but many developers have been successful in mitigating that risk. We have been involved in developments either technically or on the consulting side, by providing advice on business structure, on the market demand/supply side, as well as information and conducting feasibility studies”, he adds.

“The real estate market has cooled down a bit at the moment. One of the segments that still needs to be significantly explored is retail. We are talking about mass retail, rather than catering to the upper end. The high-end are able to travel and tend to do their shopping outside Mozambique, across the border; and they travel significantly, so they are not really an item, but retail for the masses remains grossly ignored at the moment, which I believe is a very attractive opportunity. We are seeing some people come in and starting to look into that now, exploring the possibility of 20-30 shopping centres. This is one of the most promising areas when it comes to real estate”.

“We want to attract developers, people who have a vision of the country and understand that the target market is the low end of the market. Mozambique is made up of 26 million people. If we are all concentrating on the top 1-2 million people, there are 24 million other people who equally have needs. These are more basic needs – not at the high quality, expensive end – but a whole set of daily needs, and they experience many challenges, in that they are not able to keep products over a long period of time, because of limited access to electricity, along with other constraints, such as transport constraints. This means they need to visit outlets very often, so these shopping centres need to be in the community, close to where they live or where they can access them at least twice a week, in order to meet their needs. As such, we are looking for developers who are specifically aiming at that lower end of the market. Basically, I’m referring to developers who are prepared to consider centres with a surface area between 4,000 and 8,000 square metres, including an anchor market of perhaps around 1,500 square metres, along with other basic shops to cover clothing, footwear, a pharmacy and the like, making for a simple strip mall; not a high-end construction, but something that’s robust and able to handle a significant traffic of people”.