Hyprop Investments is seeing renewed optimism within South Africa’s economy post the May 29 elections and the subsequent consummation of a government of national unity (GNU), with retail vacancies at its properties narrowing, and rental collections going up.
Earlier this year, analysts warned that SA Real Estate Investment Trusts (REITs) were in for a bumpy ride from retailers facing headwinds.
However, with the elections passing without much negative incidences, prospects for the SA retailers, especially value grocers and clothing and apparel retailers have brightened.
For Hyprop, the post-election period is ushering in renewed optimism despite logistical constraints that industry players nonetheless are hopeful will be resolved under expected policy reforms.
“In South Africa, despite the power and water-supply concerns, and the challenges of the tough economic conditions, there is renewed optimism following the elections in May 2024 and the formation of a government of national unity,” Hyprop said yesterday.
The property company said its repositioning strategy for its South Africa operations, a good tenant-mix and increased footfall across its local and Eastern Europe markets had boosted its operations for the first five months of this year.
Foot count for Hyprop’s SA portfolio increased 5.7% in the five-month period to the end of May, while tenant turnover also increased by 2.1% compared to the same period a year earlier.
The vacancy rate for Hyprop in SA also trended down from 1.9% in 2023 to 1.7% in the current period under review.
“There were several refurbishments, relocations and new store openings across the portfolio,” it said.
Nonetheless, despite some improvements in load shedding over the past few months, power outages remain a concern for Hyprop, as does the security of the supply of potable-water supplies, especially at the group’s Gauteng centres, with a marked deterioration in municipal infrastructure in the province noted.
“All of our centres continued to trade during load shedding with full back-up power at all our sites, except at Table Bay Mall which will complete installation of new generators in September,” the company said.
“Initiatives to maintain four days’ supply of potable water for the Gauteng malls are under way.”
In Nigeria, Hyprop is being affected by further devaluation of the country’s naira currency.
The naira exchange rate depreciated from N950/$1 in January 2024 to its weakest-level of N1 620/$1, before closing at around N1 200/$1 at the end of May 2024.
At the same time, fuel prices soared to a new record at the end of April due to currency weakness and shortages following the removal of fuel subsidies by the government last year.
All this was exerting pressure on Nigerian retailers and consumers.
With rentals at Ikeja City Mall indexed to the US dollar, which places pressure on tenants’ affordability, the impact has been marked.
“To alleviate some of the financial pressures, Ikeja City Mall provided assistance in January, February and March to tenants in good standing,” said Hyprop.
In Eastern Europe, Hyprop recorded an 8.7% increase in tenant turnover and a 0.5% improvement in foot count as it enhanced the tenant-mix and the food and entertainment offerings in the centres.
The foot count consequently was impacted by the limitation on Sunday trading in Croatia, while the vacancy rate remained stable at 0.2% as at April 30, this year.
BUSINESS REPORT