Johannesburg - The announcement of new shopping centre developments in South Africa had declined and should assist in ensuring this market remained in equilibrium, according to property fund Accelerate.
Andrew Costa, the chief operating officer at Accelerate, said yesterday the retail sector adapted last year to lacklustre consumption expenditure, with retailers consolidating stores.
Costa said the longer-term retail sector was also adapting to changing retail patterns, including online shopping and a stronger emphasis by shoppers on convenience shopping.
South Africa had the sixth-highest number of shopping centres of any country in the world, according to the SA Council of Shopping Centres.
Accelerate commenced last year on construction on the expansion of Fourways Mall to increase it to 170 000m² of retail space on completion in 2018, which will classify it as a super regional shopping centre.
The fund said Fourways Mall complimented plans to position Fourways as a new central business district, which was underpinned by the surrounding residential areas such as Fourways Gardens, Dainfern and Steyn City.
Vacancies
Costa said densification in the Fourways area kept rising, with increasing residential developments within the node increasing retail demand despite economic circumstances.
Costa said vacancies in the office sector were under pressure last year and this was expected to be repeated this year.
However, he said the performance of the office sector varied considerably between geographic nodes, resulting in rental escalations remaining under pressure. The sector was seeing low levels of building activity, which should assist in bringing vacancy rates back to the South African natural vacancy rate of about 8 percent.
He said the strong performance of the industrial sector weakened during the course of last year and reflected the subdued performance of the manufacturing sector.
Accelerate yesterday reported a 9 percent growth in distributions a share to 53.67c in the year to March from 49.21c in the previous year.
Gross rental income rose 17 percent to R818.7 million from R699.7m. Net property expenses increased by 37 percent to R47.6m from R34.7m.
The cost-to-income ratio remained stable at 13.4 percent.
The number of properties in the portfolio increased to 61 from 52 and the value of the portfolio grew year on year by 24 percent to R8.4 billion from R6.77bn, largely because of the acquisition of the R850m KPMG portfolio.
Vacancies, excluding structural vacancies, declined marginally to 7.13 percent from 7.52 percent. Lease escalations deteriorated to 8.04 percent from 8.46 percent.
Costa said Accelerate was focussed on maximising rental income and tenant recoveries, reducing vacancies, effectively managing cost, increasing the quality of its property portfolio and creating value through selective acquisitions.
The fund also announced its strategy to establish a subsidiary that would focus on the acquisition, management and development of single-tenant net leased properties that were strategic to blue-chip multinational or large regional tenants in central and eastern Europe.
Shares dropped 5 percent yesterday to close at R6.15.
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