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“We’ve seen high leasing activity, with most of this coming from unlisted retailers. These national retailers, with between three and 600 stores, are showing high growth potential,” says Laurence Rapp, Vukile Property Fund CEO.
Rapp explains that at a time when some SMEs are closing shop, large unlisted retailers are expanding. “They are nimble and a pleasure to deal with.”
When these SME retailers vacated their spaces, they were replaced with better tenants thus making for a strong retail portfolio.
SMEs in urban centres are under pressure, while those in the township and rural centres are faring better in comparison.
Unlisted retailers within Vukile’s retail portfolio include the likes of Power Fashion, Choice Clothing, Studio 88 and Jam, among others.
On 26 November, JSE-listed Mr Price Group, a value retailer, announced its acquisition of Power Fashion, a national value retailer. With head quarters in Durban, Power Fashion has 170 stores across Southern Africa, offering affordable clothing and footwear.
Commenting on the investment case, Mr Price says Power Fashion is value-focused and cash-based, servicing low to middle income households. “It’s a high performing business and there’s opportunity for significant future growth in footprint and categories,” says Mr Price.
SA retail portfolio showing resilience
Rapp says Vukile showed sustained performance amid a tough trading environment in South Africa.
Thanks to unlisted retailers’ growth during the period, retail vacancies remain in single digits at 3%.
Annualised trading densities (annualised turnover per m² occupied space) increased by 1.3%. Groceries, food and pharmacies showing consistent growth prior to and during the pandemic.
|Urban (%)||Rural (%)||Township and commuter (%)||Value centre (%)||Total (%)|
|Grocery and food||1.4||8.6||0.3||16.2||5.3|
|Fashion, department and home||6.6||2.9||4.1||3.3||1.9|
Source: Vukile Property Fund
Rapp says 92% of retail tenant retention rate with the majority (56%) of vacated tenants fall in the SME category.
He notes that across the portfolio, there’s a noticeable shift in consumer behaviour. There are fewer feet entering the malls, but bigger spend per head.
“Retail spend is holding steady even though turnover is low. Spend per head, particularly in rural centres, has increased to approximately R100 per head currently,” says Rapp.
In particular, he says shoppers have been spending more on home furnishings and decor.
Footfall improved to 86% from last year, with rural centres recovering fastest at 90%. Township and commuter centres are performing well at 86% while visits to urban centres were slower to pick up at 83% of prior year trends.
During Level 5 lockdown, urban centres recorded the lowest footfall of 19% compared to township and commuter (32%) and rural (43%).
On Level 1, urban centres footfall is 83%, township and commuter (86%), with rural recording the highest footfall of 90%.
During the period, Vukile sold Welgedacht Van Riebeeckshof Shopping Centre for R80m. The company has no plans to acquire new assets.
Vukile’s property assets of R35.7bn include direct property portfolios in Spain of R19.5bn and R16.2bn in South Africa.
In SA, Vukile owns Dobsonville Mall in Soweto, Gugulethu Square in the Western Cape and Randburg Square, among others.
- SA retailers, manufacturers invest in reviving local clothing industry
- Food retailers survived lockdown, next challenge – e-commerce: Wall Street Journal
- Buying property now more affordable – insights from BizNews Property Talk
- Retail tenants to get relief from South Africa property owners
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