Rosebank Mall owner Hyprop is fast-tracking the repositioning of its SA and Eastern European portfolios to capitalise on consumer spend in growing retail nodes.
The strategy is aimed at cementing Hyprop’s dominance in top retail markets, capturing greater market share and ensuring its assets are strategically aligned with evolving consumer behaviour and the shifting dynamics of regional growth, the group said in its annual report.
Building on this approach it is focused on expanding and upgrading some of its Western Cape malls while continuing to pursue growth opportunities in Eastern Europe, including securing development and extension rights for key assets, the real estate investment trust (Reit) said.
The acquisition of Table Bay Mall in the 2024 financial year strengthened its position in the Western Cape and performed in line with expectations.
Its particular focus on the Western Cape, one of the country’s fastest-growing provinces in terms of consumer spending and property demand, is expected to pay off, especially since the group owns some of the region’s top shopping centres, such as Canal Walk, while it leans on the steady economic growth of Eastern Europe.
“The group’s strong performance across both our SA and Eastern Europe portfolios affirms the effectiveness of the strategic decisions we have made over the past six years. These decisions have positioned our centres to remain competitive, sustainable and relevant,” the group said.
The vacancy rate in SA remains below the broader market, with most vacancies stemming from the rightsizing of Edgars and Pick n Pay, though it is slightly higher than in previous years, it said.
Consumer spending trend
The group highlighted that consumer spending picked up slightly towards the end of 2024, helped by withdrawals from the two-pot retirement system, the holiday season and lower inflation and interest rates. Still, shoppers are feeling the pinch and are sticking to value over luxury.
The operating environment, which by extension includes consumer spend, is affected by SA’s subdued economic growth. The overall environment is affected by persistent structural issues such as infrastructure bottlenecks, low investment and logistical challenges.
The SA Property Owners’ Association second-quarter retail trends report revealed that affordability risks are mounting, with rental growth overtaking sales growth. That creates pressure on tenants, particularly in discretionary segments.
In its Eastern Europe portfolio the group experienced continued growth, highlighting the centres’ dominant market positions and relevance in the countries. Tenants’ turnover and trading density increased 6.6% and 6.1%, respectively, despite the marginal decline in foot count.
Mazi Asset management portfolio manager Kopano Makhu said strong earnings growth in Central and Eastern Europe had been supported by a favourable currency rate. A reversal in foreign exchange trends could weigh on the group’s financial year 2026 results, even though the earnings outlook for the region remains solid.
Makhu said he would not be surprised if Hyprop pursued further inorganic growth opportunities, given the improving economic backdrop.
“Hyprop has very limited options for domestic investment. While there is some runway for solar expansion, where they are currently behind peers and yields could be attractive, paying down debt remains a go-to strategy for Reits. At this point in the cycle we don’t expect them to invest in another super-regional asset like Table Bay Mall,” Makhu said.
The group, which owns four retail assets in the Western Cape and five in Gauteng, sold off a 50% share of its Hyde Park Corner retail property this year to Millennium Equity Partners and entered into an agreement to sell the remaining 50% within the next two years.
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