Fairvest is ramping up its focus on community retail as it advances its shift into a retail-only real estate investment trust (Reit).
The group, which merged with Arrowhead Properties in 2022, is streamlining its portfolio to concentrate on high-performing, convenience-based shopping centres that serve everyday consumer needs, it said in a statement on Friday.
“Fairvest is reshaping its broad property portfolio by improving quality, selling off noncore assets — mainly offices and industrial properties — and reinvesting the proceeds into retail," the group said.
The group’s market capitalisation has surged 59% over the past year — from R8.3bn to R13.2bn — while its B-share price climbed 27.5% over the same period. Vacancies are expected to drop below 5%. More than 70% of its revenue is generated from its retail portfolio.
According to the latest SA Property Owners Association (Sapoa) retail trends report, compiled by MSCI, the retail property sector in SA showed signs of resilience in the second quarter. Average trading density growth rose to 4.1% from 3.5% in the first quarter.
Meanwhile, smaller malls outpaced their larger counterparts and benefited from their proximity and convenience. Despite several merchandise categories showing signs of weakness, food remained the main anchor.
“The macroeconomic environment remains tough, with high interest rates, poor municipal service delivery and ongoing infrastructure challenges weighing on businesses across SA. Pressure on consumers in value-focused communities continues to limit discretionary spending,” the group said.
Fairvest has invested R486m in Onepath Investments, which owns digital infrastructure leased to fibertime™ — a provider of pay-as-you-go fibre services to SA’s townships.
“The days of building massive regional malls are over — the market is well served. The real opportunities now lie in community and neighbourhood centres, especially in growing residential areas, rural towns and townships, where shoppers still travel long distances just to meet basic needs," said independent property analyst Keillen Ndlovu.
The group said it would continue to recycle out of noncore assets and acquire retail properties in line with its acquisition strategy.
“We will continue to focus on nonmetropolitan retail assets located near high-traffic nodes and transport interchanges anchored by strong national tenants that serve underserviced markets across SA,” Fairvest said.
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