SA REIT Association

The FNB Commercial Broker Survey for Q3 2024 identified industrial property stock shortages and a scarcity of smaller spaces as key factors affecting the sector's near-term outlook. REITs with high-quality portfolios that actively invest in their properties are achieving competitive rental rates. Redefine Properties reported that activity in the industrial market is driving improvements in operating metrics. The group focuses on prime industrial assets in desirable locations with easy access to national transport routes. To unlock intrinsic value, Redefine is redeveloping existing properties and developing new ones, including mini- and mid-warehouse units at Brackengate 2 in the Western Cape and S&J Sky Park in Gauteng. #IndustrialRealEstate #LogisticsProperty #WarehouseSpace John Loos

According to JLL, decreasing vacancies, ongoing supply chain optimisation, and the proximity to Durban Port are driving demand for warehousing and logistics in Durban and its surrounding areas. Limited land availability is driving competitive rental rates being achieved. Fortress Real Estate Investments Limited notes that, in response to regional demand for modern logistics, only one development site remains at Clairwood Logistics Park. As of June 30, the company’s South African logistics portfolio recorded a vacancy rate of just 1.8% and a net operating income growth of 7.7%, despite economic challenges. #IndustrialRealEstate #LogisticsProperty #SupplyChain #WarehouseSpace #LogisticsInfrastructure

According to Ian Anderson, Head of Listed Property and Portfolio Manager at Merchant West Investments, who also compiles the monthly SA REIT Chart Book, improving property fundamentals in South Africa have also shifted investor sentiment positively. In September, nearly R14bn worth of shares changed hands, marking the highest monthly trading value in 2024, indicating rising institutional interest in the sector. Visit https://lnkd.in/dZcze3jw to download the SA Reit Chartbook for September #SAREITChartbook #SouthAfricanREITs #PropertyInvestment #PropertyGrowth #InterestRates #PropertyIncome 

According to the Clur Shopping Centre Index, community and smaller shopping centres outperformed in the second quarter of 2024, driven by the increasing focus on community and global wellness trends. While these centres experienced a growth rate of 1.7%—the lowest compared to the 3.9% growth seen in super-regional and regional centres—they were the only segment to show an increase relative to the first quarter’s growth of just 0.1%. Belinda Clur, MD of Clur International commented: “With the growing importance of wellness, community-centric retail is becoming a critical consideration for shopping centre strategies. This community spirit highlights the need for social impact retail.” In its interim results, SA Corporate Real Estate Fund said its retail strategy focuses on convenience-oriented shopping centres that dominate their catchment areas. Neighbourhood and community malls make up 52% and 30% of its portfolio, respectively, while small regional malls account for 18%. Notably, community malls recorded their strongest year-on-year growth in net operating income since the Covid-19 pandemic, and neighbourhood malls achieved an impressive, annualised trading density growth of 10.9% during the reporting period. #RetailRealEstate #RetailInvestment #RetailMarket #RetailTurnover #TradingDensity

Ian Anderson, Head of Listed Property and Portfolio Manager at Merchant West Investments, and compiler of the monthly SA REIT Chart Book, noted that vacancy rates have stabilised and are projected to decline as demand for space rises, with limited new supply anticipated. Additionally, decreasing borrowing costs are expected to further enhance distributable income growth in the short to medium term. For more insights, download the September edition of the SA REIT Chart Book at https://lnkd.in/dZcze3jw

According to the September SA REIT Chartbook, the expectation of lower official interest rates in both the United States and South Africa has bolstered the recovery of many South African Real Estate Investment Trusts (REITs) during September. The U.S. Federal Reserve surprised markets by cutting interest rates by 50 basis points after its September policy meeting, while the South African Reserve Bank’s Monetary Policy Committee lowered rates by 25 basis points, aligning with market expectations. “Lower interest rates benefit listed property companies, as they typically lead to reduced bond yields and discount rates, increased property values, and, given that the average gearing level among South African REITs is around 38% - higher future profits due to declining debt costs,” said Ian Anderson, Head of Listed Property and Portfolio Manager at Merchant West Investments. Anderson, who compiles the monthly SA REIT Chartbook, said the impact on profitability will unfold over time, as most REITs hedge their interest rate risk by fixing rates for periods averaging two to three years. Since the formation of the Government of National Unity (GNU), SA REITs have outperformed other South African asset classes, returning 34% year-to-date compared to 15.9% for the broader equity market and 16.7% for South African bonds. Growthpoint Properties disappointed the market with its results for the year ending 30 June 2024. Despite reporting improved operations in South Africa, particularly at the V&A Waterfront, higher funding costs in Europe and a lower dividend from Growthpoint Australia impacted results, leading to a 10.3% decline in distributable income year-on-year. The company also projected a 2% to 5% decline in distributable income per share for 2025. Attacq Limited and Hyprop Investments Limited completed the sale of their Sub-Saharan Africa portfolios, with both companies reporting results that exceeded market expectations, underscoring improved operating metrics in South Africa. Hyprop's share price surged over 20% in September, while Attacq’s increased by 12.8%. Other notable performers included Burstone (+16.2%) and SA Corporate Real Estate Fund(+12.0%), both delivering double-digit capital growth. Vukile Property Fund successfully raised R1.5bn in new equity through a well-supported accelerated bookbuild, while Spear secured R458m through a vendor consideration placement. These transactions reflect the growing appetite for SA REITs among institutional investors and the expansion aspirations of both companies, according to the September Chartbook. Visit https://lnkd.in/dZcze3jw to download the SA Reit Chartbook for September #SAREITChartbook #SouthAfricanREITs #PropertyInvestment #PropertyGrowth #InterestRates #PropertyIncome 

As retail property fundamentals continue to strengthen, Sesfikile Capital anticipates further declines in vacancies due to limited supply, with like-for-like rents projected to grow by 3% to 4% over the next two years. REITs are reporting reduced vacancies, increased trading densities, and higher tenant turnover, as more shoppers visit their malls. Data from MSCI indicates an 8.3% year-on-year increase in foot traffic at major malls, with footfall consistently rising each month since December 2021. For the period ending June 30, Hyprop Investments Limited noted improvements in average reversions, decreasing vacancies, and growth in turnover and trading density, alongside a 6.4% increase in average foot count. In its pre-close update, Vukile Property Fund highlighted growth in turnover and trading density across key retail categories, including pharmacies, health and beauty, bottle stores, and sports utilities/gyms. Notably, township malls saw a 5.3% increase in trade, while rural malls recorded a 3.5% rise. #RetailRealEstate #RetailInvestment #RetailMarket #RetailTurnover

Over the past four years, tenants worldwide have been consolidating and downsizing their office spaces to reduce occupancy costs and enhance portfolio efficiency. Local REITs focused on the office sector are witnessing declining vacancies, longer lease terms, and strong demand in specific locations and buildings. To attract tenants and maximise asset value, these REITs are actively refurbishing their properties. For instance, Fairvest Limited is transforming large spaces into flexible offices and storage solutions. As preferences shift toward high-quality office environments, REITs like Attacq Limited are seeing increases in gross rentals and escalation rates at prime locations such as the Collaboration Hub in Waterfall City. Growthpoint Properties is strategically reducing its exposure to underperforming office areas while redeveloping and repurposing its buildings, leading to noticeable vacancy reductions across its portfolio. #OfficeTenants #OccupationalCosts #OfficeMarket

Our members are reporting an improvement in property fundamentals – declining vacancy rates, rental increases – albeit off a low base, and demand for space. We expect property fundamentals and earnings to continue to improve, said Joanne Solomon, CEO of SA REIT Association.

Office property fundamentals are showing notable improvement, with vacancies declining to 13.6% and landlords benefiting from a 2% increase in asking rents by the end of the third quarter, according to the SAPOA (South African Property Owners Association) Office Vacancy Report. This positive trend is largely driven by a limited number of new office developments. While Johannesburg’s vacancy rate stands at 16.3%, Cape Town is performing exceptionally well with a much lower rate of 6.7%, as demand for space outstrips supply in key areas. Additionally, REITs focused on the office sector are reporting decreasing vacancies and a robust uptake of space as employees return to the office. #OfficeREITs #VacancyRate #OfficeRentals #OfficeDevelopments