Executives at major retail property landlords expect the momentum which resulted in a positive performance at shopping centres in 2024 will continue in 2025.
Interviewed for the first edition of Clur Connect, a video report on retail property performance, the executives identified the drop in interest rates, lower inflation, a more stable political environment, reduced loadshedding and the two-pot retirement system helping consumer pressures as key influences which brought growth in trading densities and rentals and a stable rent to sales ratio in 2024.
Clur Connect is part of the Clur Collective, an asset management industry standard and economic indicator, now tracking performance at more than 5.4 million square metres across over 130 shopping centres in South Africa and Namibia. Clur Connect aims to bring a refreshing new look to portray the strength and diversity of the SA retail sector and the importance of its contribution to the economy. Further, it aims to profile the sector’s international leadership.
Belinda Clur, managing director of Clur International which produces the Clur Shopping Centre Index, said: “We have world-class and forward thinking shopping centres, asset management and retailers in this country. South Africans often under-sell themselves on the global stage. We need to shift our thinking to a position of strength rather than weakness, as when it comes to the world of retail, we have much to teach the rest of the world.”
South African retail property emerged from 2024 in a healthy position which bodes well for the future, she said, with the combined November and December festive season showing better trading density and growth than the rest of 2024.
Muhammad Paruk, chief investment officer at Old Mutual Property and vice-president of the SA Council of Shopping Centres, said: “Shopping centres are destinations where our consumers want to be. It is quite clear that retail therapy is back in form. Customers are looking for unique and immersive experiences in our shopping centres.”
He said November and December saw a bumper and vibrant trading environment within their portfolio of shopping centres, with November outperforming significantly because of having five weekends compared to 2023. December particularly saw outperformance in the entertainment, healthcare, beauty and athleisure categories.
Looking ahead, Paruk said that with retail therapy returning, the appetite for consumers to spend was there, dwell times had improved, trading densities and footcounts were up, retailers were aggressively demanding space as they continued with their store rollout strategies, and renewal rates were up. He expected this momentum to continue in 2025.
José Snyders, chief executive at Liberty Two Degrees, said: “For the last couple of years Black Friday has evolved from being a single day to being a period. We’ve seen that the shopper patterns have stretched out over a week rather than a particular day.”
He said that there was a strong recovery in entertainment, particularly influenced by cinemas with parents bringing their children to the cinemas in the holiday period, and strong trade in restaurants and dining environments. He said: “our expectation for 2025 is continued stable growth. I don’t think it will be as accelerated as one would hope as a landlord. From a consumer perspective people will have money and we’ve got the right brands and retailers in our mix that will entice them to come and shop in our environments.”
Leemisa Tsolo, asset manager at Attacq, said the experience at their centres on Black Friday was that 2024 was definitely stronger than 2023. Spend was a lot more impactful, particularly since Black Friday was on a weekend whereas in 2023 it was midweek. These nuances in timing impacted on spend.
He said that during the holiday period “we definitely saw a lot more discretionary spending across apparel, shoes and fine jewellery - all consistently outperforming the essentials categories like pharmaceuticals and groceries.” He said trends will grow at best marginally unless big economic factors stimulated growth, and there would be growth in rental performance.
The fund’s strategy was to incentivize tenants to keep refurbishing stores, giving the best brand new look and feel. Often it was found tenants had 20-30% growth in sales after revamps.
Mark Mac Kaiser, retail asset manager at SA Corporate Real Estate, noted a momentum that started on Black Friday continued through to Christmas. Instead of hiking prices, a lot of retailers had kept prices reasonable and attractive to shoppers.
“It was the best season we’ve seen from Black Friday into Christmas, and there wasn’t a big drop off between Black Friday and Christmas. There was good growth in our grocery offering, pharmacy also performed well. Our best performing categories were bottle stores and drive thru’s. We did see an uptick in apparel, especially the outlet athleisure stores.”
He expected trading and rental growth to at least keep up with inflation. He did not foresee a boom of the likes of 2004-2008 with increases of 8 to 10 to 12%.
Belinda Clur said 2024 saw a clear shift in the positioning of large and small centres. Smaller centres took over the dominant growth position in the industry. This finding was reinforcing signals about social impact retail and community involvement.
Ben Kodisang, founder and CEO of ALT Capital Partners, which established the REimagine Social Impact Retail Fund to invest in convenience retail in underserved communities across South Africa, said December trading was better than November on the back of economic tailwinds including the lack of loadshedding. Food and fashion were standout categories in the fund’s portfolio over the festive season.
“As a social impact investor, we worry a lot around social – how we can restore dignity to communities we serve by bringing the economy to them. By building these environments, hopefully we’re getting parents to be more present at home which means the social ills of gender-based violence and alcoholism will hopefully be addressed.
“On the environmental side, we continue to look after energy security through solar, to address issues of water by providing backup in our environments, and we continue to be responsible in how we manage waste in our environments.
“We’re still seeing a lot of investment going into the convenience retail aspect of the market. We are a small player and are likely to invest an additional billion rand into building new products or buying existing products.”
Belinda Clur said an encouraging aspect heading into 2025 was the maintenance of the reduced level of market risk. This had been indicated by the continuation of the lowest rent to sales ratio over five years.
This first edition of Clur Connect can be viewed on YouTube at Retail property in perspective - Looking from 2024 into 2025 or at www.clurinternational.com