Shopping centre rental growth mixed

Posted On Thursday, 26 January 2012 02:00 Published by
Rate this item
(0 votes)
Annual growth in rentals is 5,5% for bigger malls such as Sandton City, 3,4% for smaller malls but rents move down at neighbourhood shopping centres


LARGER and dominant shopping centres are expected to perform better than smaller ones in rental growth this year, with smaller centres likely to struggle to achieve rental growth.

The new Investment Property Databank (IPD) retail trading density index released last week shows that although gross rentals continued to grow nominally, the rate of growth appears to be subsiding after a solid period of real growth from 2008 to March last year.

IPD SA head of research Jess Cleland said rental growth was proving particularly difficult to achieve for smaller centres.

According to the index, the annual growth in gross rentals to September last year was 5,5% for super regionals such as Sandton City and Eastgate Mall, 4,1% for regionals such as The Glen and Rosebank Mall, and 3,4% for small regionals situated near transport hubs such as taxi ranks.

Community and neighbourhood centres actually saw a decline in rents, with figures of a negative 0,1% and 0,2% growth respectively.

"Analysing base rental growth trends provides fairly conclusive evidence that it has been the fixed recoveries portion that has tended to prop up gross rentals; and now that these fixed recoveries are not as easily transferable to tenants (as before), this explains the weakening gross rental position of late," Ms Cleland said.

Stanlib head of property funds Keillen Ndlovu said listed property companies with bigger and dominant shopping centres, such as Resilient, Growthpoint, Hyprop and Sycom , continued to benefit from rental growth.

"Township or rural retail is likely to remain relatively more defensive than metropolitan or higher income areas. In townships and rural areas that is where the population is, and this is where the growth is, with social grants also playing a key role in these areas," Mr Ndlovu said.

The index showed that a marginal improvement in vacancies was helping to stave off the eroding effects of property operating costs. But the movement had been slight — the overall vacancy rate for the third quarter was 2,7% compared to 3% in both the previous quarter and previous year.

Surprisingly, the index, sponsored by the South African Council of Shopping Centres, shows that growth in trading density at larger centres, which is measured as turnover per square metre, has been the most muted.

Publisher: I-Net Bridge
Source: I-Net Bridge

Most Popular

Wide-spread implications for South Africa’s real estate market following COVID-19

May 05, 2020
JLL, one of the world’s leading real estate investment and advisory firms, today released…

Deeds office reopen their doors to the public

May 09, 2020
Carlize Knoesen
The Department Agriculture, Land Reform and Rural Development has announced the reopening…

Sectional Title Trustees and Homeowners Association directors face COVID-19 liability

May 22, 2020
The Covid-19 pandemic and South Africa’s lockdown regulations are impacting all aspects…

SA REIT appoints Joanne Solomon as its first CEO

May 05, 2020
Joanne Solomon new CEO SA REIT Association
With her wealth of financial and property sector experience, Joanne Solomon has been…

2020 Commercial Property Outlook –Why Property Price/Valuations Indices don’t tell the full story of market weakness during a deep recession

May 09, 2020
John LoosFNB
In a downturn, Property Market Values can deviate dramatically from the market…

Please publish modules in offcanvas position.