Growthpoint, SA’s largest commercial property sector is seeing a spike in rental renewals, with the office segment showing signs of resurgence, particularly in Cape Town, with Johannesburg still in the doldrums.
Growthpoint SA CEO Estienne de Klerk said despite remaining the most challenging asset class to trade, the office sector has strong upside potential.
He believes it is well positioned to outperform other commercial property sectors going forward in terms of valuation.
“The biggest pain is in the B- and C-grade segment. But if you look at the markets we play in — Cape Town and Durban — they’re incredibly strong,” De Klerk said.
“Our Durban portfolio is full, the market there has normalised, and in Cape Town, there simply isn’t stock available. If you’re looking for a decent-sized office, you’re going to struggle.”
However, vacancy levels in Sandton are still sticky, according to De Klerk.
The group, which owns properties worth R155bn, has over the past few years embarked on a massive programme to optimise the quality of its SA portfolio.
To this end, the group has sold about 186 properties for R14.9bn since 1 July 2016.
This includes 40 office properties sold for R5.5bn, mainly made up of B- and C-grade office assets and properties deemed high risk or in deteriorating business nodes.
“Our strategy to improve the quality of the SA portfolio is focused on decreasing the portfolio weighting of the office sector and exiting deteriorating nodes and central business districts (CBDs) across all three sectors [retail, industrial and office],” De Klerk said.
“We continue to dispose of noncore assets including assets that are high risk and do not possess the future growth prospects that we desire.”
The value of the SA portfolio stood at R66.7bn at the end of June.
The group, which also has a sizeable portfolio overseas, said its international expansion had met headwinds.
“International expansion is constrained by our high cost of capital, both domestically and offshore, and our commitment to maintaining balance sheet strength,” it said.
The group reported a 3.1% increase in distributable income due to an improved contribution from the three SA sectors.
Distributable income for the year to end-June rose to R5bn, or 146.3c per share.
The group attributed the increase to like-for-like net property income (NPI) growth, improved negative rent reversions in the office and retail sectors, positive renewal growth in the logistics and industrial sector, reduced vacancies and improved expense efficiencies and recoveries.
Group revenue, excluding Capital & Regional, increased by 2.2% to R13.3bn and operating profit rose 5.5% to R8.7bn. The dividend per share increased 6.1% to 124.3c. SA NPI increased 5% to R5.7bn.
The V&A’s performance exceeded expectations in 2025, driven by increased domestic and international tourism. This momentum is expected to continue in the 2026 financial year. The V&A expects double-digit earnings growth.
Growthpoint: Key Highlights
- Office sector in Cape Town showing growth, while Johannesburg remains challenged.
- Focus on optimising portfolio by selling underperforming properties.
- Disposing of B- and C-grade office assets, especially in deteriorating areas.
- Increased distributable income by 3.1%, with a 6.1% rise in dividends.
- Positive performance from the logistics sector with reduced vacancies.
- Continued investment in solar energy, increasing installed capacity to 61.2 MWp.
- V&A Waterfront sees strong growth driven by tourism, expecting double-digit earnings in 2026.
Five office properties were sold in the 2025 financial year for R432.3m. The group focused on selling properties that were below optimum size or were in deteriorating CBDs.
All shopping centres that are deemed a long-term hold have either undergone an extensive refurbishment or are scheduled for strategic intervention over the next three years.
The group also continued to prioritise the growth of its investments in and exposure to the better-performing logistics sector. In 2025, R322m was spent on developing new high-quality, modern logistics warehouses.
Vacancies in the logistics and industrial portfolio reduced to 4.1% from 5.2% a year ago, while the group reported positive renewal growth of 0.4% and NPI like-for-like growth of 5.5%.
The group’s strategy is to reduce reliance on the national grid and address water supply and security and it increased total installed solar capacity to 61.2MWp (megawatt peak), from 40.7MWp in 2024.
During the year, the group completed solar installations for R146.7m and to date has spent a cumulative R1bn on 80 solar plants.
Update: September 11 2025
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