[Test] - The Week in Property (14th of June 2024)

Moratiwa Crossing

Moratiwa Crossing, a community shopping centre in Monsterlus in Limpopo, is currently undergoing an expansion with the addition of 11 000m2, bringing its total GLA to 26 000m2.

Situated in a vibrant area and home to a community known for its farming and mining activities within a 30 km radius, the revitalized shopping centre, valued at approximately R450m, will be a jewel in the crown of Our Generations says Michael Masemola, CEO of the RPIH group of companies and the newly formed fund, Our Generations Property.

“This is a very personal story that my parents have been planning since 1969 when they were still tenants on the NG Kerk land until 1985 when they eventually bought the land,” he says.

The centre’s rich history is interwoven with the legacy of the Bosele School for the Disabled, formerly known as the School for the Deaf and Blind. This institution will play a significant role in the opening ceremony as Masemola Senior has chosen Bosele School as the company’s corporate social investment (CSI) focus during the development phase, adhering to an adopted environmental, social, and governance (ESG) framework.

For the first time in the history of most retail developments, Moratiwa Crossing will be able to cater comprehensively to the needs of deaf, blind, and generally disabled persons. This groundbreaking initiative aims to set a new standard for accessibility, ensuring that all residents in the community can enjoy the shopping centre’s amenities.

Tenant additions to Moratiwa Crossing include renowned retail brands including Shoprite, Truworths, Studio 88, Skipper Bar, Flag Square, Power Fashion, Clicks, King Pie, Hungry Lion, Daniel J, Sport Scene, Exact, and Totalsports.

In addition to its inclusive design, Moratiwa Crossing has made a significant investment in solar energy, amounting to R17m.

With its grand opening on the 27th of June 2024, the revitalized Moratiwa Crossing promises to be a beacon of progress and a symbol of the enduring legacy of the Masemola family and their dedication to building a brighter, more inclusive future for all.

In other news, the JSE All Property Index closed at 8 329 last night.

SA’s shopping centre vacancies declined to 4% during Q1 2024, according to SAPOA’s latest Retail Trends Report, with gross rentals constituting 6.7% of sales turnover – the healthiest level since December 2012. The MSCI SA Quarterly Retail Trading Density Index, based on data from 148 retail centres covering 5.8m sqm, recorded an annualised trading density of R41 053 per sqm with year-on-year growth in annualised trading density increasing to 6.2%. The number of shoppers visiting SA’s major malls also increased during the quarter.

Exemplar REITail is celebrating its six birthday this week with the announcement of the potential acquisition of its first retail property in the Western Cape, subject to conditions precedent, for R282m. Situated in Stellenbosch, Eerste Rivier Mall is also the Group’s first asset that was not developed by its sister company, McCormick Property Development. Exemplar listed on the JSE in 2018 with 20 assets worth R5bn. To date, its retail portfolio comprises 26 assets worth approximately R9bn.

2024’s first quarter produced a lethargic construction environment caused by a combination of factors including the high cost of capital in SA, lending rates, dysfunctional municipalities, and fiscal constraints, according to the latest Afrimat Construction Index. While the year-on-year increase of 14 000 jobs in the sector is encouraging, the total employment figure of just over 1.2m is still 128 000 shy of the number of jobs that existed in Q1 2020.

Liberty Two Degrees (L2D) has published its first operational performance update since becoming a part of the Standard Bank Group and subsequently delisting from the JSE in November 2023. L2D recorded portfolio trading densities of R54 693 per m2 (6.7%) year-on-year for its retail assets with strong demand for space during Q1 2024. The apparel category contributed 27.3% of L2D’s overall turnover and occupying 26% of its lettable area while departments stores contributed 16.8%, occupying 24.4% of lettable area.

The City of Cape Town has imposed a record R1m penalty for an unauthorised 22-unit apartment block in Belville, Cape Town. The site on which the two-storey building was developed is currently zoned for Single Residential 1 (SR1) which only permits a single residence and related buildings not covering more than 50%.

The SPAR Group has reached salient terms with the prospective buyer of its Polish business. The retailer published its financial results for the 6 months ended March 2024, reporting a 7.9% increase in its total turnover for continuing operations (excluding SPAR Poland) to R77.2bn. SPAR Southern Africa delivered strong grocery retail sales of 7.1% with growth of 13.5% for its liquor business, TOPS at SPAR. Build It, which continues to hold its position as the number one building materials retailer in SA, delivered a marginal positive uptick in trading, a reflection of the subdued construction sector. Group CFO and executive director, Mark Godfrey, has also announced his retirement.

Delta Property Fund has entered an agreement to dispose of its Lexis Nexis building in Durban for a cash consideration of R37m, subject to conditions precedent. The net proceeds will be used to reduce debt, its LTV to 60.70% and vacancy levels from 33.40% to 33.2%. Transfer is anticipated for the end of September 2024.

Visual International has announced the cancellation of its 20% interest in residential property development company, Tuin Huis. Tuin Huis was undertaken to trial infill housing projects in Durbanville, Cape Town following an amendment to the City of Cape Town’s bylaws which permits the development of two additional houses or apartments on any suitable erven in the municipal area, subject to approval being granted by the municipality’s Minor Works Department. Visual was responsible for building and/or managing all projects undertaken by Tuin Huis at cost, with the intention of completing at least three infill housing projects per year. Deemed as a related party transaction with Charles Robertson, CEO of Visual and a shareholder in Tuin Huis, the infill housing project is running at a loss due to the weak residential property sector over the past year. Both parties have agreed to the cancellation of the agreement.

The City of eThekwini has requested assistance from the Government Technical Advisory Centre, a consulting arm of National Treasury, to review institutional mechanisms to support the regeneration of the inner-city through engaging with various stakeholders.

SAPOA members are asked to share their perspectives across the major metros by completing a survey.

The outcomes will feed into the situation analysis and recommendations to be considered during this project.

Survey deadline: 20th of June 2024.

For more info, contact Kgabo Moshia at SAPOA.