Growthpoint has shifted its portfolio overhaul into top gear and said it is likely to exceed its R3.5bn disposal target in South Africa for the year to end-June as it cuts loose underperforming assets and doubles down on stronger income streams.
For sale are B-grade office blocks and older industrial and manufacturing assets, as well as noncore retail centres in weakening CBD nodes, the property company said in a trading update for the three months to end-September.
“We sold eight noncore assets for R391.6m, with a further four transferred since October for R270.4m, and we expect an additional R3bn in disposals by June,” Growthpoint said.
“This brings the total for the financial year of 2026 sales to R3.6bn, surpassing our R3.5bn target. We are also reviewing high-risk core assets for potential future disposal.”
Western Cape focus
Growthpoint will also focus on increased investments in the Western Cape, particularly in the logistics and retail segments, in its current financial year, which ends on June 30 2026.
The group’s vacancy rate improved to 7.4% at the end of the first quarter, down from 8.2% a year ago and the lowest since June 2019. The performance was driven by strong activity in the office and logistics & industrial sectors, with 338,928 m² let during the quarter — 234,970 m² from renewals and 103,958 m² from new leases.
The group said the average rental fell 6% in the first quarter compared to a 0.9% decline at the end of financial year 2025, mainly as a result of “significant office lease renewals that resulted in negative reversions”.
“However, our lease renewal success rate improved substantially, rising from 68.2% at the end of the 2025 financial year to 82.1%, the highest level in over a decade. All three sectors recorded improvements, with the office sector showing the most notable,” the group said.
Growthpoint intends to invest about R1.3bn in its core portfolio, focusing on active asset management and the development of high-quality assets — from modern logistics warehouses and the Olympus residential project to retail upgrades and sustainability initiatives — as it advances towards carbon neutrality by 2050.
For the retail sector, annual trading density rose 5% to R37,020/m², accelerating from 3% growth in the previous financial year. Footfall grew 3% year on year, while the rent-to-turnover ratio remained at 7.7%.
Trading density rose 4.2% to R57,909/m² in the first quarter, led by community centres and outperforming regional malls, with Gauteng and the Western Cape driving growth of 5.5% and 5.2%, respectively.
For the office sector, vacancies were steady at 14.6% year on year, despite regional shifts. The Western Cape improved to 3.3%, while Gauteng and KwaZulu-Natal rose to 19.2% and 1.3%, respectively. Vacancies for the 2026 financial year are expected to remain broadly stable, despite a slight uptick in December from planned large tenant exits, Growthpoint said.
The group sold three office properties in the review period — 70 Grayston in Sandton, The Oval in Bryanston and Arnold Crescent in Rosebank — and is set to sell a further 10 by the end of the 2026 financial year.
Among the group’s developments, 36 Hans Strijdom in Cape Town is expected to be completed by the end of 2025, it said.
“We’ve launched the e-CO2 wheeling programme across 10 Sandton buildings, providing tenants with green energy and tradeable renewable energy certificates. By lowering energy costs, we aim to reduce occupancy expenses and boost tenant retention,” the group said.
At the V&A Waterfront, performance was affected by the decommissioning and redevelopment of The Table Bay Hotel, though earnings before interest and tax rose 5% year on year, driven by an 8% rise in retail sales and strong hotel performances, Growthpoint said.
Excluding residential sales, we expect earnings before interest and tax for the financial year 2026 to be slightly higher than last year, driven by strong retail and hospitality trading, supported by rising international tourism
— Growthpoint
Tourism remained steady, with Cape Town International Airport passenger arrivals up 5% and hotel demand driving a 16% increase in average daily rates.
“Excluding residential sales, we expect earnings before interest and tax for the financial year 2026 to be slightly higher than last year, driven by strong retail and hospitality trading, supported by rising international tourism,” the group said.
“Adjusting for temporary income losses from The Table Bay Hotel and the Luxury Mall, underlying operational performance remains robust.”
The industrial segment delivered a strong first-quarter performance, with vacancies falling to 2.5% from 4.1% — the lowest level in more than a decade — driven by successful new lettings, especially in the Western Cape and Gauteng.
“Our long-term goal is to build a premium logistics portfolio anchored on high-quality warehouses and distribution facilities. We are rebalancing the industrial book by region and asset type, disposing of noncore properties and boosting our footprint in coastal and high-demand nodes,” Growthpoint said.
The group had R5.7bn in unutilised committed bank facilities at the end of the quarter.
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