Township and rural retail remain the top performers in South Africa’s retail property market, with township centres delivering returns of 17.8% in 2025 and extending a three-year run of above-average growth.
Suburban retail, while stable, continues to lag all other subsectors, constrained by slower footfall growth, higher operating costs and a more saturated supply pipeline in established nodes.
According to the latest MSCI South Africa real estate index the performance gap has widened since 2022, driven by strong demand and limited supply in township markets, which has supported rental growth and higher returns.
“Nonsuburban retail vacancy ticked up a little, but rental growth is similar across various locations. Net income is up for township and rural retail. The cost efficiency ratio is higher in suburban and township retail sector,” the index report reads.
The outperformance of township and rural convenience retail over suburban superregional malls persisted through most of 2025, though momentum moderated towards year-end. November trading was driven by strong festive trading activity, lifting sales across centres. Superregional malls recorded year-on-year growth of 6.2%, compared with 4% for regional malls, according to the Clur international index.
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However, December trading in South African shopping centres subsequently softened.
Meanwhile, the recent fuel price increase — linked to supply pressures stemming from renewed tensions in the Middle East — could further tilt momentum in favour of township retail.
“There has been an increase in taxi fares, either already implemented or being discussed. Trips from townships to malls have risen to R3, while fares into town are up by R7 to R15 one way and R14 to R30 return into peri-urban areas. This shift is encouraging more localised shopping,” said Exemplar CEO Jason McCormick in a recent Absa MSCI South Africa real estate index webinar.
McCormick also noted that the hike could push consumers further toward local spaza shops for daily essentials. While this may slightly reduce formal retail footfall, turnover levels have continued to grow consistently over the past few years.
In most superregional and regional malls, retailers have been rightsizing their stores to ease rental pressure and better align space with present trading conditions. However, there has also been broad-based development and redevelopment activity across township and suburban retail nodes, with centres such as Fleurhof Mall and Princess Mkabayi Mall in Empangeni being developed, alongside other similar projects aimed at improving tenant mix, accessibility and trading performance.
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