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Hundreds of millions in retail property assets up for grabs

by Sam Bartlett
5 minutes read

Premier retail real estate investment assets worth hundreds of millions of rands, including malls and landmark neighbourhood shopping centres, anchor a multi-property auction this month that will see 39 properties go under the hammer.

The extraordinary 39-lot auction showcase exemplifies the spectrum of South Africa’s most desirable real estate, from a national selection of retail opportunities to lucrative student accommodation enterprises, industrial infrastructure to the last word in luxury Atlantic Seaboard apartments – complete with underground tandem parking on a stretch of Victoria Road where dedicated residential parking is so scarce that even single bays frequently sell for more than R1 million.

High Street Auctions Director Greg Dart says the impressive retail collection under the hammer at the Bryanston Country Club on November 30th comprises a dozen properties.

“Retail has remained a consistently robust performer in commercial real estate, bouncing back strongly post-pandemic in 2022, with this year delivering the predictable period of levelling after the rebound.

“Cautious indications that consumers are likely to find relief in at least one interest rate cut in 2024, as well an improvement in real wages as inflation continues to shift towards the midpoint of the target band, bode well for household purchasing power and offer an even more positive outlook for the performance of retail investments.

“Given the plethora of fiscal challenges this sector has faced since 2020, its resilience has been a remarkable testament to sound investment and leadership decision-making. The centres we’re auctioning this month are among those; for the most part selected from extensive retail portfolios offered by property funds and REITs that started a process of realigning investment priorities a couple of years before the pandemic, and continue that process now.

“In 2018 and 2019 alone, High Street realised approximately half a billion rand for Shoprite through auctions of a dozen of its non-core assets. Subsequently we’ve done the same for several other funds, and we see no waning of appetite for this investment class.”

Dart says the retail centres on auction include:

  • Genesis on Fairmount: The bustling mall at the heart of suburban life in Fairmount, a cosy neighbourhood nestled between Highlands North, Sandringham, Raedene Estate and Fairmount Ridge in Johannesburg. This upmarket 17 812m², seven-storey retail node is anchored by Woolworths, Pick ń Pay and Clicks, and offers 74% retail space with apartments above. The centre also provides extensive open-air and underground parking facilities.
  • Fontainebleau Village: This neighbourhood shopping centre centrally located at Rabie Street is a 6 389m² retail site offering community convenience with a tenant mix that includes fast food franchises and restaurants, a butchery, Postnet, ATMs and cellphone stores, along with ample on-site parking.
  • The Shoprite-anchored community retail centre in Florentia, Alberton: This busy centre in Pieter Uys Avenue in the heart of Florentia near the Alberton CBD in Johannesburg’s south, owes its lively footfall to the long-term lease of a large Shoprite, as well as the adjoining Shoprite Liquor Store. The centre comprises approximately 3 090m² on a site of more than 8 000 m².
  • Buco Hardware-anchored retail sites in Salt River, Cape Town, Witbank and Kimberley – all portfolio disposals with triple net lease agreements.

Dart says the above-mentioned properties are already finding a great deal of interest from the market, and are ably supported by the intriguing two located in Gqeberha (Port Elizabeth) in the Eastern Cape.

“Both are community retail centres with high consumer footfall numbers, partially because they’re anchored by national supermarket chains. The other reason is because of where these centres are located – one in Motherwell and the other in KwaZakhele; both densely populated townships that fall within the Nelson Mandela Bay municipality.

“Townships are massively under-represented in South Africa’s retail sector. This presents enormous opportunities for entrepreneurs to establish a foothold ahead of the country’s larger investment funds.”

Dart says an article published in July by AfricaScope Director and Geographic Information Systems Specialist Craig Schwabe (Socio-Economic Impact of Shopping Centres in Townships of South Africa) demonstrates the massive potential that currently exists in township retail.

“Schwabe notes that only 10% of South Africa’s shopping centres are situated in townships, despite research showing dramatic differences in the shopping habits of consumers who reside in townships, and those who don’t.

“It’s the kind of research data that all investors should know. According to Schwabe, on weekdays, 34% of township residents travel to shops, compared to only 25% of non-township dwelling SA residents.

“He further comments that: ‘Over … weekend(s), 42% of township residents shop, compared to 31% of non-township residents. Malls play a vital role in township shopping habits, particularly during weekends when residents have more time to consider their purchases. The proximity of shopping malls to consumers affects their shopping habits, with more accessible malls leading to more frequent purchases’.”

Internationally renowned FNB Commercial Property Finance Senior Economist John Loos is the guest speaker at High Street’s November 30th auction at the Bryanston Country Club in Johannesburg.

Loos’ South African commercial property overview will include insight into property values and rentals having become more realistic since 2015, leading the current market closer to equilibrium.

For more information on this month’s 39-lot premium auction showcase, visit www.highstreetauctions.com.

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