SA’s largest property company, Growthpoint, says that with rising demand for industrial properties, it is experiencing good leasing activity in KwaZulu-Natal and the Western Cape.
Driven by growth in online retail and demand for warehousing and logistics facilities for the year to end-June 2022, overall vacancies reduced from 9.4% in June 2021 to 5.7%, with the two provinces recording vacancies of about 2%. Gauteng recorded 7.8% excluding structural vacancies.
“Compared to Gauteng, KwaZulu-Natal and the Western Cape are seeing good demand for industrial space with limited supply of available stock,” said Estienne de Klerk, CEO of Growthpoint Properties SA.
De Klerk said the two provinces do not have an oversupply of industrial properties, hence the rising demand.
Growthpoint is a JSE-listed real estate investment trust (Reit) which owns a diversified property portfolio across Africa, Australia, the UK and Eastern Europe. It also has a 50% stake in the V&A Waterfront in Cape Town. Group assets are valued at R160.8bn.
The SA industrial portfolio is made up of 187 properties valued at R12.1bn. These include Montague Business Park in Cape Town, Growthpoint Business Park in Johannesburg and Trade Park in Durban.
For the financial year, values rose 1.8% or R208m and like-for-like net property income 3.7%.
De Klerk said the renewal success rate has risen from 62.2% in June 2021 to 86.3%. He said that this rate is at the expense of negative reversions, although these are starting to show improvement.
In-force rental escalations fell to 7.6% from 8.1% in June 2021, with tenants still negotiating negotiate lower rental escalations of 6.8% on lease renewals compared with 7.4% last year.
Arrears including rental deferrals reduced from R59m in 2021 to R45.1m, with 17.4% of this achieved in collections in the reporting period.
Growthpoint sold 22 noncore assets for R695.9m, four properties valued at R37.6m were held for sale at year-end, and another 15 worth R700m are in various stages of disposal after the 2022 financial year.
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