The government of national unity (GNU), interest rate cuts and a stable power supply have dramatically improved SA’s sentiment towards the real estate sector, says property investor Growthpoint, which delivered an encouraging trading update for the three months to end-September.
Growthpoint reported strong leasing activity at its SA operations during the first quarter of the 2025 financial year, which enabled vacancies to improve to 8.2% from 8.7% in June, it said on Thursday.
Additionally, renewal rental growth rates showed notable improvement across all sectors, approaching positive territory at minus 0.4%, compared to minus 6% in the previous quarter.
“Sentiment towards the real estate sector has improved dramatically, with more than 230 days with no load-shedding, the new GNU and a favourable interest rate outlook all contributing to improved business confidence, which is evident in our operational performance,” said the company.
In the retail sector, Growthpoint reported a slight increase in vacancies to 5.9% from 5.5% in June, mainly due to the sector’s renewal success rate declining to 77% because of nonrenewals at Alberton City and Northgate Mall.
Retail trading density growth was at 5.3% for the year to end-September and, with the retail trading environment now stabilising and emerging from a significant negative cycle, Growthpoint said it expected positive renewal growth for this financial year.
The group’s strategy for this sector involves exiting retail assets in deteriorating central business districts (CBDs) while increasing its portfolio weighting to the Western Cape.
In line with this, Growthpoint sold the Mark Park Shopping Centre in Vereeniging for R253.9m and signed sales agreements for another two CBD properties for R521.3m, a motor dealership for R128m and a small retail asset for R49.3m.
In the office sector, Growthpoint said: “This is the first quarter post-Covid where we haven’t observed tenants reducing space.” The group concluded 48,269m2 in leases and 30,039m2 in renewals, reducing vacancies to 14.2% from 15.1% the previous quarter.
The reduction came primarily from the inland office portfolio, in which vacancies decreased from 19.4% to 18.1% in the period. However, the sector’s lease renewal success rate worsened from 62.1% in June to 54.7%.
In the logistics and industrial sector, vacancies improved to 4.5% from 5.2% in June, with coastal regions reporting “extremely low vacancies”. The KwaZulu-Natal portfolio’s vacancies fell by half to 0.7% and Western Cape ended the period at 1.4%, while vacancies in Gauteng — home to two-thirds of the group’s logistics and industrial portfolio — improved to 6.5% from 7.2% in June.
During the period, Growthpoint’s capital expenditure amounted to R528.6m.
For the year to end-June 2025, the group said it was targeting R2.8bn in asset disposals to reduce its exposure to the office sector, dispose of older industrial assets and sell noncore retail assets in deteriorating CBDs.
In line with this strategy, the Pavilion Office Park in Rivonia was converted and sold for R20.8m during the period under review. The group also approved the disposal of two CBD properties in Bedfordview and Parktown for R230m and signed sale agreements for seven B- and C-grade properties for expected proceeds of R623.8m.
Despite the encouraging operational performance, Growthpoint warned that the ongoing effect of high interest rates remained a challenge for distributable income per share growth in this financial year, which is set to fall to 5%.
“As we assess interest rate expectations across our investment geographies, positive indicators are supporting our outlook for the 2026 financial year,” it said.
“We continue to evaluate long-term sustainable solutions to the ongoing capital requirements of the V&A Waterfront which is predicted to show significant growth in the next three to five years.”
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