If you’re looking for a real estate stock that consistently pips the pack, Vukile Property Fund ticks the boxes.
The mall owner, whose R51bn portfolio is split roughly 65/35 between Iberia and South Africa, ranks among the top five South Africa-based real estate investment trusts (Reits) year to date in terms of total returns — and also features in the top five over three, five and 10 years, according to the SA Reit Association.
Vukile’s winning streak has been supported by above-market earnings and dividend growth. In last week’s pre-close update, management confirmed it’s on track to deliver “at least” 8% dividend growth for the year to end-March 2026 — well ahead of the sector average of 3%-5%.
Earnings growth has been driven by Vukile’s aggressive acquisition trail in Spain and Portugal via its 99.5%-held Spanish-listed subsidiary, Castellana Properties.
Since September last year, the company has splurged more than R12bn on six retail acquisitions in the region. That brings its Iberian portfolio to 21 malls since entering the market in 2018 and makes it one of Southern Europe’s largest retail landlords.
CEO Laurence Rapp says the newly acquired centres are now fully embedded in the Iberian portfolio, with more deals in the pipeline. But he’s quick to stress that Vukile won’t overpay.
Referring to a recent Spanish acquisition that didn’t materialise because Vukile was outbid, he notes: “Sometimes coming second is not a bad thing. It just means we’re disciplined in our capital allocation.” He adds: “We’ll only pursue opportunities that are financially accretive.”
The Iberian portfolio has delivered impressive trading metrics in the first five months of Vukile’s 2026 financial year. From April to August, rentals on lease renewals rose 3.4% year on year — 2.8% in Spain and 6.17% in Portugal. Trading densities grew 5.7% in Spain and 4.1% in Portugal, while foot count was up 3% across the board.
Retail sales have been buoyed by robust GDP and tourism growth. Spain is one of Europe’s fastest-growing economies, with GDP expected to reach 2.4% in 2025 and 2% in 2026. Tourism receipts continue to break records, with July showing 7.2% year-on-year growth.
Rapp attributes Iberia’s retail resilience to cultural and behavioural factors: “In Spain and Portugal, people shop in person. The sunny climate, strong tourism flows and the preference for social outdoor interaction all contribute to a vibrant retail environment.”
He notes that online retail penetration in Southern Europe remains significantly lower than in markets such as Germany and the UK. Tourism adds further appeal. Spain welcomed 94-million visitors and generated €126bn in tourism revenue in 2024, while Portugal recorded over 80-million overnight stays.
“Tourists are staying longer, spending more and travelling more broadly across regions — boosting noncore retail hubs,” says Rapp.
He adds that Iberian consumers have emerged from the pandemic more financially sound, with Spanish household savings rates now above long-term averages at 13.6%.
Vukile’s strategy of acquiring undermanaged assets is also paying off, unlocking upside through improved tenant mix, layout and operations, stronger tenant relationships, and community-focused marketing, says Rapp.
But it’s not just Iberia driving growth. Vukile’s South African portfolio delivered equally strong results in the five months to end-August.
The domestic portfolio comprises 33 retail centres, many focused on essential, needs-based shopping, including township malls such as Dobsonville Mall in Soweto, Gugulethu Square in Cape Town, Daveyton Mall on the East Rand and Mall of Mthatha in the Eastern Cape.
Net operating income rose 10.1%, ahead of the budgeted 9.1%. Vacancies remained below 2%, while trading density increased 5.3%. The township portfolio was the top performer, up 7.6%. Domestic malls also achieved positive rental reversions for the fourth consecutive year, now growing at about 1.6%.
High occupancy has been underpinned by strong tenant demand, particularly among grocers, says Itumeleng Mothibeli, MD of Vukile Southern Africa. That’s led to “ a bit of rejigging” of grocery anchors — changes to tenant mix and store allocations — to ensure Vukile has the “best of breed” in its centres.
Mothibeli believes Walmart’s planned entry into South Africa later this year will intensify competition in the lower-income retail sector. He notes that grocers are increasingly willing to take up smaller footprints — a trend led by Boxer and Spar.
At Gugulethu Square, for example, Spar has signed a lease for a Savemor store (its value-focused brand) of about 800m². “Traditionally, grocers wouldn’t consider stores under 2,500m²-3,000m².” He adds that Game’s performance has also improved significantly, thanks to format and strategy shifts.
So, have investors missed the boat? Not quite. Analysts continue to place a strong buy recommendation on the stock. Despite trading at close to R22 earlier this week, up 28% since early April and a level last seen during the 2018 peaks, Curwin Rittles, investment analyst at Metope Group, sees further upside.
“We still like Vukile,” he says. “The stock trades at a 7% discount to NAV and offers attractive dividend growth of at least 8% for FY2026, with scope for an upward revision after last week’s solid pre-close update.”
Vukile’s combination of higher-yielding South African assets and hard-currency European retail gives investors both cyclical recovery exposure in South Africa and structural growth in Europe
— Curwin Rittles
Rittles points to Iberia’s supportive fundamentals: resilient private consumption, real wage growth, and record-high tourism underpinning retail spend.
The stock offers investors the best of both worlds. “Vukile’s combination of higher-yielding South African assets and hard currency European retail gives investors both cyclical recovery exposure in South Africa and structural growth in Europe.”
He adds that the company’s dividend payout ratio of about 83% is below the sector average, “creating scope for potentially higher cash flow yields going forward”.
Garreth Elston, MD of equity research firm Golden Section Capital, highlights Vukile’s balance sheet strength as a key differentiator. Referring to the R500m corporate bond issuance in August, he notes: “It was six times oversubscribed at Vukile’s tightest spreads since 2012 — underlining just how strong credit support is.”
Still, short-term share price growth will depend largely on interest rate movements. Elston says the Reserve Bank’s decision not to cut rates last month has already dented sentiment. He believes a further rally in property stocks will hinge on whether rates are cut at the next monetary policy committee meeting in November.
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