The return of international tourists and the so-called semigration to Cape Town is fuelling trade at the popular V&A Waterfront (V&A), according to joint-owner of the popular hotspot Growthpoint Properties.
SA’s largest listed real estate company, valued at about R35.1bn on the JSE, said on Wednesday in an update for the three months to end-September that retail sales improved 20% year on year and are up 43% from the same period in 2019, while visitor numbers jumped 49% year on year.
“Hotels have attracted consistent high demand, resulting in significantly increased occupancy and room rates across the precinct. The marine and industrial sector enjoyed strong growth in mooring income. Demand for the office sector was high, with zero vacancies,” the company said about its strong start to the quarter of its 2024 financial year.
As a result, the V&A is “on track to achieve high single-digit growth in distributable income for the year ahead”, with the number of international air passengers into Cape Town increasing 32%.
This comes despite various economic factors affecting consumers and businesses worldwide, such as high inflation and elevated interest rates on top of local issues such as rolling power cuts and high unemployment, tempering earnings growth.
According to its latest annual results, the V&A Waterfront, which is co-owned with the Public Investment Corporation (PIC), generated R1.4bn in net property income in the 2023 financial year, amounting to 14.3% of the group’s total.
Growthpoint’s portfolio comprises properties in Africa, Australia, the UK and Eastern Europe, including other popular local malls such as Woodmead Retail Park, Brooklyn Mall, Golden Acre and Constantia Village.
As for the total portfolio, vacancies were reduced by 0.3 percentage points over the past three months to 9.1%, and the renewal success rate rose 13.3 percentage points to 78.2%.
“We believe the performance of our retail and industrial portfolios has stabilised and is recovering, notwithstanding the challenging SA macroeconomic environment, which is having the most pronounced impact on the office portfolio where oversupply and structural issues are still a factor,” the company said.
More investments are on the cards for the V&A Waterfront after it secured a further R1bn loan, including R750m the form of a green loan.
Growthpoint is also upgrading its Bayside Mall in the Western Cape, and is scheduled for completion in November 2024.
“Interest and letting have exceeded expectations and it will be fully let on opening with a robust tenant mix. Value Co has relocated in the centre and reopened, and the new Checkers Fresh X and Shoprite will welcome customers from April 1.”
Growthpoint owns and manages a portfolio of more than 300 directly owned properties in SA valued at more than R64bn.
Business Day reported three weeks ago that demand for office investments was at a record low, and this is reflected in the low transaction activity in this sector.
This is in contrast to a growing demand for industrial property.
To this end, Growthpoint acquired a well-let industrial property in Hammarsdale, KwaZulu-Natal, which is a hub for national distribution from the Durban Port to Johannesburg.
The group has also acquired a strategic land parcel for a new industrial development.”
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