SA’s Retail Boom and Corporate Real Estate
By Justin Thom, Director at Galetti Corporate Real Estate
South African food inflation has been at its lowest level in 14 years, bringing relief to cash-strapped consumers.
For the first time since 2010, consumers are able to spend more on everyday items like groceries and personal care products, and the positive effects are being felt by the commercial property sector.
SA’s Retail Sector Performance
The retail property sector has experienced notable growth over the past decade. There are currently around 2,000 shopping centres located in South Africa, with ample plans for further expansion in the pipeline.
Interestingly, retail sector has remained somewhat immune to economic uncertainty and rising costs, recent financial consumer relief will accelerate growth and investment in the retail property sector.
With inflation lowering and borrowing costs easing, confidence is returning to consumers. This positive shift is further supported by the improved domestic political outlook as a result of the GNU, comparatively stable power supply from the national grid and three repo rate cuts since September.
Some of the recovery can also be attributed to the adoption of South Africa’s two-pot retirement system in September 2024.
V&A Waterfront Expansion is Huge for the Sector
One standout example of the trajectory of South African retail growth is the R20 billion expansion of Cape Town’s V&A Waterfront. This iconic site has become a beacon of investment potential.
The V&A Waterfront, co-owned by Growthpoint Properties and the Government Employees Pension Fund, has seen its value skyrocket from R9.6 billion in 2011 to R23 billion in 2024. The planned development will involve reclaiming land from the sea and integrating landmarks – Oranjezicht City Farm Market and Oceana Power Boat Club – to enhance the overall retail experience.
A New Frontier for Township Retail
Retail growth isn’t just limited to urban hotspots like Cape Town. Vukile Property Fund, a leader in the retail REIT space, reported a 6.1% increase in trading density at its South African retail sites, driven largely by the informal cash economy in townships. Vukile’s properties like Phoenix Plaza and Gugulethu Square are thriving, achieving an impressive 9.6% growth in trading density compared with 2023.
Exemplar, a REIT organisation focused entirely on township retail, has also noted robust growth with properties like Diepkloof Mall, Alex Mall, Maake Mall, Katale Square, and Bizana Mall, reporting vacancies below 3%, and 5% rental growth on renewals.
Recently listed on the JSE, Boxer has grown in sales by 16.1% compared with the previous four quarters and has established itself as an anchor store alongside Shoprite in the low-income sector, outperforming competitors like Spar and Pick n Pay.
Keen to get in on the action? Chat to our team!
