The default by one of Nigerian malls maybe a harbinger of trouble nationwide as a wave of debt from last decade borrowing binge comes due for shopping centre.
A Federal High court has sealed off Abia shopping mall over failure to honour obligation to Ecobank, leaving customers bewilderedly stranded, that the most frequented stores was under lock and keys.
A notice on the front security room read, “Possession taken by receiver manager of Ecobank over Abia Retail Co Limited by order of court dated 17/12/19, FHC/L/LC/19”.
Abia Mall, located at Uwalaka Street by Old Garki Road, Umuahia, Abia State, was opened in 2016, the year that the country slipped into its first recession.
While workers of the mall refused to comment on the development, a lot of experts said failure to honour obligation is responsible for the barricade.
The income level within a locality will spur consumer demand. Abia people are civil servant and the state has been in difficult situation due to poor governance, according to Johnson Chukwu, managing director and CEO of Cowry Assets Management Corporation Limited.
“A lot of people are unable to pay rents to landlord, which is why it is difficult to pay service charge in malls” said Chukwu.
Analysts said that malls across the globe are struggling, as high rents, heavy competition and defection of shoppers to online outlets are responsible for record pace in bankruptcies.
In 2017, over 14 chains in the United States said they would seek court protection as retailers such as Apparel Retail, The Limited Wet Seal, BCBG Max Azria, and Vanity Shop of Grand Forks seek protection.
Fleetwood Industries Inc., one of the biggest retailers in the United States, joined retail apocalypse when it as much as $50 million each in assets and liabilities in its bankruptcy petition.
Abiola Gbemisola, consumer goods analyst with Chapel Hill Limited said Abia malls could be facing visibility problems as people may not be taking up shops. The economic spending power of the people could be seasonal.
“You need a good location matters a lot in this business. For instance, Ikeja mall is in the heart of the city where people can easily access it at will,” said Gbemisola.
Analysts say the overall economy is in a weak circle and that the inflation and hike in fuel price have eroded the purchasing power of consumers.That means tenants are grappling with low patronage as cash flows continue to shrink.
The country hasn’t recovered from the precipitous drop in crude oil price off mid 2014 that stoked a severe dollar scarcity, depleted the external and paralyzed business activities.
While Nigeria’s economy expanded by 2.38 percent in the third quarter of 2019, it is still below the 6.28 percent growth in the corresponding period of 6.28 percent.
Unemployment rate has risen to 23.10 percent while over 50 percent of a population of 200 million live on less than $1.90 a day as the country overtook India to become the poverty capital of the world.
As a result of the above myriad of challenges, Nigerian mall tenants are groaning under huge service charge as vacancy rates are mounting.
A total of 9 stores at the Shoprite malls in Surulere- a commercial city in Lagos centre- are empty while 3 are sealed, some of them the vacant spaces are large enough to take 2 offices. The stores are on the same floor with KFC Foods, but the 26 stores at Leisure mall have tenants.
A visit to the Apapa Malls shows a total of 19 stores are without tenants, even the cinema hall has been sealed. Some of the top brands that have evacuated include: Ruff and Tumble, the seller of kid clothes, Samsung Phones, and Cash and Carry.
Experts attribute the vacancies in Apapa to the menacing gridlock in the town as a lot of high end earners have relocated to other parts of the state, while those that stay very close to the city rather go shopping in other malls or conventional markets.
According to a report by Northcourt Retail Estate, Novare Mall came has a vancency rate of 28 percent, down from 47 percent at the end of 2017.Artee’s Port Harcourt Mall, Big Treat and Genesis Centre had 8 percent, 15 percent and 25 percent respectively.
The report further stated that Ceddi Plaza and Gateway Mall in Abuja recorded 21 percent and 38 percent respectively. Abuja’s largest mall – Jabi Lake (20,000sqm) recorded the highest vacancy rate in city – 40 percent due to a number of stores that closed down in Q1 and high rentals.
BALA AUGIE
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