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Retail sector transactions in 2012

Posted On Sunday, 14 April 2013 16:34 Published by eProp@News
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The total value of retail in 2012 was R7.7 billion a decrease of 14% when compared to R8,9 billion transactional value in 2011.

Retail sector transactions in 2012The V & A Waterfront and Boardwalk Shopping Centre transactions in 2011 would have had a notable impact on comparative figures for the period.

Despite the decrease in total value in retail transactions, the number of properties traded in 2012 increased to 51 compared to 33 in 2011. The basket of 2012 transactions reflected total traded GLA of 906 000m², up 15% from 2011.

In Gauteng, sales transactions increased by 6% to R3,1 billion from R2.9 billion in 2011. A few of the major transactions in the past two years, were; the acquisition of the remaining shares of Melrose Arch by Amdec for over R1 billion in 2011, the 50% acquisition of Eastrand Shopping Centre by Redefine Properties and Vukile Property Fund for over R1 billion in 2012 and the acquisition of the remaining shareholding by Growthpoint Properties in Alberton Shopping centre from Liberty Group Properties.

The Western Cape saw a sharp fall in transaction volumes recording a 50% decline from R1.3 billion in 2012. The 2011 retail sales were boosted by an exceptional deal of the retail portion of the V&A Waterfront. This decline in sales is despite an increase in the volumes acquired which doubled from 5 retail sales in 2011 to 11 sales in 2012.

The majority of listed funds are acquiring smaller rural and township centres from private investors, notably the Gugulethu Square Mall which was bought by Synergy Income Fund and the Westgate Mall in Mitchells Plain. Further out of Cape Town, a deal worth noting is the acquisition of Langeberg Mall in Mossel Bay by the newly listed Annuity Fund.

In KwaZulu Natal, sales transactions fell sharply by 65% in 2012. This is mainly attributed to the sale of Boardwalk Shopping centre twice in 2011; first by Resilient Property Fund to Capital Property Fund and later in the same year Capital Property Fund sold it because it was not strategically aligned to their portfolio objectives. This is the only regional shopping centre featured in the two years under review. Similar to other provinces, small neighbourhood and convenience shopping centre dominate the retail sales transactions in the region, indicative of the shortage of premium assets in the market for acquisition.

As for the balance of South Africa’s provinces, investment transactions in retail increased by 100% to 1,9 billion in 2012 from just under 1 billion in 2011. Particular interest was seen in the rural areas and townships led by Limpopo and Mpumalanga provinces. Listed funds seem to be acquiring neighbourhood and convenient centres in these areas after finding minimal activity in the regional and super regional shopping centre space.

Super regional and regional shopping centres are not easily brought to the market as they are trading well. The development pipeline for bigger retail assets has significantly slowed in the past few years, forcing investors to expand or revamp their current exclusive shopping centres.

A number of centres have done refurbishment recently; these include Clearwater Mall, Westgate Mall, Rosebank Mall, the Midlands Mall, Gateway, Menlyn Park, the Liberty Promenade Shopping Centre. Also included are the two super-regional shopping centres in Johannesburg; Sandton City and Eastgate. The only big mall built in the past two years being the Mall of the North in Limpopo.

An analysis of average yields at which retail transactions were concluded in 2012 reflects an increase in the greater Johannesburg and Cape Town areas. This is reflective of the fact that retail properties traded during this period were of a lower average grade compared to 2011.

Source: Jones Lang Lasalle

Last modified on Wednesday, 22 May 2013 10:41

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