File picture: James White
Pretoria - Listed intu Properties expects to commence construction on its £470million (R7.98billion) intu Costa del Sol shopping resort near Malaga in Spain, one of its largest ever developments, in the second half of next year.

This development forms part of intu Properties’ £514m near-term development pipeline to 2020 in Spain.

Its equivalent UK development pipeline amounts to £679m, but it has a further £1.3bn of opportunities over the next 10 years in the UK that will complement the company’s total current property portfolio of £10bn.

The total cost of the planned 230 000m² intu Costa del Sol shopping resort is expected to be about 750m, which includes the 82m already incurred by intu Properties.

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David Fischel, the chief executive of intu Properties, said yesterday that the commencement of the Costa del Sol project had been delayed by various required third party approvals, including final planning approval.

“But it's not wasted time, because it gives you more time to refine the design and talk to potential tenants about coming in. It's irritating (the delays), but inevitable with an asset of this size,” he said.

Fischel said their Spanish strategy was to create a business of scale through acquisitions and its pipeline of development projects.

He said they were concentrating on the top 10 key catchment centres in Spain, which accounted for more than 80percent of consumer spending in the country.

Fischel said they believed they would have achieved their strategy and established a business of scale in Spain when intu Properties owned the best centres in five or six of the 10 regions, which it expected to achieve over the next five to seven years.

“We already have three of the top 10 centres and got the big development in Malaga, the Costa del Sol, which will mean we will have four of the top top 10 centres.

“We have three development sites in Valencia, Vigo and Majorca. The most advanced of these is Valencia, which is the third biggest city in Spain,” he said.

intu Properties in March increased its presence in Spain and strengthened its super prime portfolio through the acquisition of Madrid Xanadu for £453.5m.

In May, the company announced the formation of a joint venture with TH Real Estate in terms of which it would take ownership of 50 percent of Madrid Xanadu based on the original purchase price.

Fischel said: “We’re fortunate in the UK that we have got just under £7bn of assets that are 100 percent owned. But that is likely to change over time as we bring partners into assets to stretch our capital resources.”intu Properties yesterday reported a 1.5 percent decrease in like-for-like rental in the six months to June. Net rental income increased by 3 percent to £226.2m from £219.4m.

A total of 103 long-term leases were signed in the period, 80 in the UK and 23 in Spain, delivering £18m of annual rent at an average of 7 percent above the previous passing rent.

Occupancy was stable at 95.9 percent compared to 96 percent in December.

Underlying earnings a share declined by 2.6 percent to 7.3p from 7.5p.

An unchanged dividend a share of 4.6p was proposed.