South African consumers still have plenty of appetite for retail therapy despite higher living costs and debt repayments eating into household budgets, judging by recent results released by listed mall owners.
Real estate investment trusts (Reits) that generate the bulk of their income from shopping centres top the sector’s earnings growth leaderboard. These include Fairvest, Vukile Property Fund, Heriot Reit, Resilient Reit, Exemplar REITail, Dipula Properties and Hyprop Investments, most of which are expecting double-digit growth for their 2026/2027 reporting periods.
Hyprop, which owns a portfolio of landmark urban malls including Rosebank Mall and Hyde Park Corner in Joburg and Canal Walk and Table Bay Mall in Cape Town, hiked its dividend for the year to June by a juicy 14.4%. The Reit owns a R44bn retail portfolio split 70/30 between South Africa and Eastern Europe. Hyprop’s local portfolio recorded a decent 5.5% year-on-year increase in trading density (sales per square metre). At Hyde Park Corner, tenant turnover was up an impressive 12.9%, while foot count rose 5.5%.
That comes on the back of several new store openings, among them Checkers FreshX and Maison Deux, which has a Marc’s by Marc Jacobs Café, the designer’s first café in Africa. Charles Greig also completed a major upgrade of its flagship jewellery store, which includes a Rolex shop-in-shop. Clearwater Mall on the West Rand also attracted several new tenants, including the first Walmart store in Africa.
Last week Fairvest reported robust performance metrics in its retail portfolio of 79 mostly mid-sized township and rural malls with its pre-close update. CEO Darren Wilder said Fairvest is on track to achieve the upper end of its 11%–13% earnings growth guidance for the year to September. Its flagship assets include Masingita Shopping Centre in Giyani, Thembalethu Square in George and the recently acquired Tugela Ferry Mall in Msinga.
Fairvest’s retail vacancy remains at a comfortable 4.3%, while rental reversions on lease renewals clocked 4.9% (for the 11 months to August 31). Wilder said the company hasn’t seen any effect of inflationary pressures and rising transport costs on sales in its centres, which he ascribed to Fairvest’s focus on centres that cater for daily essentials shopping.
While mall owners are still reporting inflation-beating earnings growth amid decent trading numbers, the days of retailers rolling out new stores and expanding others simply because their competitors are doing so appear to be numbered. That’s clear at TFG, which has closed 185 stores since April last year. Its brands include Jet, Markham, Fabiani, Sportscene, American Swiss, @home and Coricraft.
In a recent trading update, TFG said leases for about 80 more stores expiring in the next six months won’t be renewed and another 200 stores will likely be closed over the next two years, which management said should “enhance both profitability and return on capital”. That comes amid strong growth in online shopping: in the 21 weeks to August 22, TFG’s overall group sales grew by just 0.2% year on year, while online sales were up 15.3%. However, despite culling underperformers, TFG also opened 25 new stores in the past five months.
TFG is the only major retailer that has publicly announced plans to close some stores. But as independent property analyst Keillen Ndlovu points out, there’s always the risk that more retailers could announce store rationalisation, especially in the apparel segment, given the competition from Chinese online platforms Shein and Temu.
Most listed mall owners appear unfazed by TFG’s store closures. Fairvest COO Riaz Kader says new tenants have been signed up for TFG stores in its malls where leases haven’t been renewed. He says there’s “more than enough” tenant demand to replace any space TFG is still likely to give up in Fairvest’s portfolio.
Referring to the new KwaMakhi brand, a smaller-format convenience store carrying everyday essentials, groceries and private-label products that Clicks is rolling out in townships, Kader says several retailers are keen to expand their footprints in underserved areas. But he concedes that the retail sector has become more selective and strategic: “Location and market share are now key considerations."
It’s a sentiment shared by Vuso Majija, retail executive at Fortress Real Estate Investments, which owns 40 shopping centres, mostly in townships, CBDs and commuter areas and anchored by grocers and value fashion tenants. Speaking at Fortress’s recent results presentation, where the company declared a 10.1% increase in dividends for the year to June, he said: “We’re not too concerned by TFG’s store closures. We have waiting lists of tenants at many of our centres.” Majija said Fortress has zero vacancies in its township centres. Sales turnover in this portfolio grew by 5.6% in the year to June.
Attacq, which declared a hefty 17.2% year-on-year increase in dividends for its June year-end reporting period, posted similarly upbeat trading figures at its malls. Most of Attacq’s centres, including Mall of Africa — which anchors Waterfall City in Midrand — Lynnwood Bridge in Pretoria, Eikestad Mall in Stellenbosch and Mooirivier Mall in Potchefstroom, boast a vacancy rate below 1%. Rental reversions came in at an average of 4.6%.
At the 130,000m² Mall of Africa, the largest mall in South Africa built from scratch, several new tenants have set up shop this year. These include a first South African store for US fashion house Kate Spade, a concept store by sneaker brand New Balance, a Lacoste flagship store, Orlando Pirates’ first official store, local fashion brand Tshepo and jewellery brand Harli + Harpa.
Michael Clampett, asset and property management executive at Attacq, says that given tougher times for consumers, retail landlords increasingly have to consider how to keep the retail experience relevant to ensure people return to malls. He cites Sook, essentially a pop-up concept where smaller and new brands trade on a short-term basis, and the Halaal Goods Market, which offers a curated food and beverage experience, both at Mall of Africa, as examples of how Attacq has moved beyond conventional leasing to boost sales and foot count.
While the tills continue to ring at large, dominant urban malls and convenience centres in townships and rural areas supported by social grant and remittance recipients, mid-sized shopping centres are starting to feel the pain. As Ndlovu puts it: “You must either be a regional or super-regional mall that offers one-stop shopping with flagship stores that have a full range of merchandise as well as an extensive food, beverage and entertainment offering, or be small and niche and serve local communities’ daily shopping with a supermarket and grocery anchor complemented by health and beauty, restaurants, coffee shops and pharmacy offerings. You cannot really be in-between any more, unless you bring a very creative and innovative retail experience to the market.”
That much is clear from the latest retail vacancy figures from the South African Property Owners Association, which show that mid-sized regional shopping centres posted the largest vacancy in the second quarter at 7.1%. That compares to vacancy rates of 4% at small neighbourhood centres and 4.2% at large regional malls.
The Clur Shopping Centre Index, an industry benchmark that tracks more than 5-million square metres of retail space across South Africa and Namibia, shows that trading density growth slowed across all shopping centre categories in the second quarter to 4.6%, down from a peak of nearly 11% in 2022. But the dip was most pronounced in mid-sized centres. Super-regional centres larger than 100,000m² were the only format to outperform June’s 5% CPI, albeit by less than 1%. On a provincial level, the Western Cape dominates in terms of rand per square metre sales, followed by KwaZulu-Natal and Gauteng (see graph).
MD Belinda Clur reckons the slowdown in sales growth comes on the back of cash-strapped consumers taking to “value engineering” as South Africans find clever ways to cut costs. “A high level of lipstick-index behaviour and nostalgia-desire is in play as consumers seek the emotional lift associated with purchases of small luxuries.”
