Festive season trading updates trickling in from shopping centre owners paint a picture of resilient consumer spending. That’s good news for property stocks, given that most of the 20-odd constituents of the JSE all-property index are overweight to the retail sector.
Though improved sales don’t immediately mean more money in mall owners’ pockets, it strengthens landlords’ ability to negotiate higher rentals, paving the way for stronger earnings and, ultimately, more generous dividend payouts to shareholders.
The extent of the turnaround has nowhere been more notable than at Fourways Mall north of Sandton, South Africa’s largest shopping centre at a sprawling 182,000m², which is 50% owned by Accelerate Property Fund. The mall represents more than half of Accelerate’s R6.48bn portfolio value.
It arguably comes off a low base, but foot count was up 20% in December year on year, while turnover rose 14%. Importantly, the vacancy rate has shrunk to a manageable 5.4% (excluding KidZania), down from 24% in December 2024.
A wave of new tenants opened up shop last year, including Walmart, ANTA, Birkenstock, Burnt Studios, Old School, Popsicle, RocoMamas and RPM Fitness, alongside new entertainment-led offerings such as Shooters, the Urban Playground, Bloc 11, Total Ninja Interactive and an expanded Fun Company arcade. The Ster-Kinekor cinema was also revamped.
Fourways Mall’s revival comes on the back of a R400m capital expenditure programme to reposition the struggling centre after an ill-timed redevelopment nearly tripled its size. The four-year construction project was completed in September 2019, shortly before Covid hit.
Last week’s release of festive trading numbers for the R7.8bn centre has no doubt buoyed investor sentiment in Accelerate and should go some way towards helping management to reinstate dividends, which were suspended 2½ years ago. Accelerate’s share price has rallied 11% since February 9, bringing the stock’s six-month recovery to 62%.
Cape Town’s V&A Waterfront, co-owned by Growthpoint Properties and the Government Employees Pension Fund, experienced an equally robust festive trading period. The mixed-use landmark, one of South Africa’s most-visited shopping and leisure destinations, notched up R1.4bn in retail sales in December, bringing the total tally for 2025 to R11bn, up 7% year on year. That’s despite the closure of the Victoria Wharf’s luxury retail wing for a R208m redevelopment.
V&A Waterfront CEO Graham Wood says the precinct lured 200,000 people on New Year’s Eve alone, bringing the total visitor number for 2025 to 25-million
V&A Waterfront CEO Graham Wood says the precinct lured 200,000 people on New Year’s Eve alone, bringing the total visitor number for 2025 to 25-million. That’s in line with 2024, which he says is impressive given significant development, construction and infrastructure upgrades at the precinct last year.
Wood adds that retail sales at the V&A Waterfront were supported by continued growth in hard-currency tourists. Latest numbers from Wesgro show a 10% year-on-year rise in passengers at Cape Town airport’s international terminal in December, bringing offshore visitor numbers to the Mother City for 2025 to a record high of 3.3-million, up 7% on 2024 and well above 2019’s pre-Covid 2.6-million.
Trading updates from Vukile Property Fund and Dipula Properties show equally upbeat numbers for malls catering to low‑ and middle‑income shoppers. The two real estate investment trusts (Reits) together own more than 100 shopping centres across South Africa, mostly in townships, rural areas and CBDs. Sales turnover in Vukile’s retail portfolio rose 2.4% year on year in November, off an already high base set in 2024 when sales jumped 10%. The recently acquired Chatsworth Centre in Durban notched up 10.5% in November.
In December, Vukile’s portfolio of 35 malls achieved 4.5% growth in trading density (sales/m²). Commuter centres, those typically frequented by shoppers who use taxis and other public transport, achieved an impressive 11.1% increase, while trading density at its value centre segment was up 8%. Foot count remained stable in November year on year and rose 3% in December.
Vukile CEO Laurence Rapp singled out women’s wear and footwear (up 12.7%), fast food (12.5%), cellphones (9.9%), electronics (8.7%) and sports utilities/gyms and health & beauty (7.9%) as the retail categories that outperformed over the festive season.
Dipula recorded a 5% increase in turnover at its malls in the fourth quarter, which CEO Izak Petersen says was driven by a particularly strong November. He adds that customers appear to be doing earlier festive season shopping than before, a trend no doubt supported by Black Friday deals. Dipula’s best-performing retail category was cellular and electronics (up 11%), while the services sector (nonproduct related, including banking, postal, clinics, salons and other) was the worst (down 2%).
On a provincial basis, KwaZulu-Natal and the Eastern Cape achieved the highest turnover growth of 10% and 8% respectively. Limpopo recorded 6%, North-West was up 4%, while Gauteng and the Free State both reported 3% growth. Mpumalanga saw a marginal decline of 1.5%.
Ian Anderson, head of listed property and portfolio manager at Merchant West Investments, says resilient turnover and foot count numbers have helped investor sentiment and boosted share prices of local mall owners. South African Reit Association numbers show that most of the JSE’s top-performing local Reits over the past 12 months have sizeable exposure to the retail sector. These include Growthpoint, Fairvest (B), Heriot, Redefine, Resilient and Vukile, all of which notched up 50%-60% total returns in the 12 months to end-January.
Investors will no doubt keep a close watch on the extent to which improving operational metrics have translated into higher rental reversions on lease renewals when JSE-listed mall owners report December results in the next few weeks.
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