SA’s largest listed property group, Growthpoint Properties, is doubling down on its presence in the Western Cape and expanding its logistics and industrial portfolio.
“These areas continue to benefit from strong fundamentals, reliable infrastructure and sustained demand,” the group said in its annual report.
The group, with a market capitalisation of about R56bn, said that by moving forward with a streamlined portfolio — referring to the disposal of B- and C-grade offices in weaker areas — enhancing operational performance, and benefiting from declining interest rates, its SA business is well positioned to drive Growthpoint’s recovery and create long-term value.
“Cape Town’s resurgence as a global travel destination has significantly boosted performance. Tourism, conference activity and cruise volumes have returned to pre-Covid-19 levels, supporting strong performance across retail, hospitality, leisure and residential. Tenant demand remains high with zero vacancies in key sectors,” it said.
Growthpoint is also set to develop the Cape Winelands Airport precinct — a multibillion-rand infrastructure project aimed at becoming the Western Cape’s next major aviation, logistics and tourism hub. The development is expected to feed into the V&A Waterfront, which remained Growthpoint’s top performer in bringing income and is expected to produce double-digit earnings in 2026.
It has also announced the launch of a R700m logistics and industrial development, Noka Park, in Gauteng’s Riverfields logistics precinct, near OR Tambo International Airport. The project is a 50/50 joint venture with the Feenstra Group, co-owned and co-developed by both parties, with Growthpoint taking the lead on management.
Core growth platform
The group has repositioned its logistics and industrial portfolio as a core growth platform. Logistics and industrial assets now account for 20% of its total South African portfolio, up from 15%, with nearly half concentrated in modern warehouses located in high-performing nodes.
The intentional focus on expanding industrial properties makes financial sense with the sector remaining the standout performer for the seventh consecutive year. Strong tenant demand, limited new supply and sustained rental growth have underpinned its performance, delivering the highest returns.
However, Growthpoint noted that the broader property sector continued to face stubborn infrastructure challenges, with crumbling electricity networks and erratic water supply placing strain on operations.
The operating environment has been heavily impacted by infrastructure limitations, particularly in the provision of electricity and water, with weaknesses in water infrastructure resulting in widespread disruptions, exacerbated by maintenance backlogs and years of underinvestment
“The operating environment has been heavily impacted by infrastructure limitations, particularly in the provision of electricity and water, with weaknesses in water infrastructure resulting in widespread disruptions, exacerbated by maintenance backlogs and years of underinvestment,” the group said.
Growthpoint said rising occupancy costs are pushing up rentals across all property types, administered charges are climbing above inflation, operational costs continue to mount and property valuations are under pressure.
To counter these headwinds, the group is driving efficiency and sustainability across its portfolio. The group is disposing of energy-inefficient buildings, optimising electricity and water consumption, adopting solar solutions, securing water resources and conducting regular utility audits.
The group is also taking a proactive stance in the industry, engaging in forums to promote transparency in municipal rates and taxes, address infrastructure challenges, maintain effective recovery processes and develop assets where it can control surrounding infrastructure.
Meanwhile, data from the latest SA Property Owners Association Operating Cost report shows that office properties continue to record the highest cost-to-income ratios at 44.6%, with weak income growth of 1.4% against rising costs of 4.2% squeezing profitability. Industrial assets, by contrast, benefit from stronger occupancy and more effective cost recovery.
“Municipal charges remain the largest component of operating costs, encompassing property rates and taxes, electricity, water, other metered utilities and city improvement district levies,” the association said.
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