Putprop, the property investment company listed on the Main Board of the JSE, has reported a strong performance for the six months ending 31 December 2024.
With an overall positive outlook for the South African property market, the company is expecting further interest rate cuts in 2025, which is set to bolster economic and property market growth.
“Our expectation is that the trend downwards will continue in 2025, with a possible further reduction of 50 basis points.”
Putprop’s property portfolio currently includes 13 strategically located properties, predominantly in Gauteng, with a total Gross Lettable Area (GLA) of 97,601m².
The value of these properties stands at R1.098 billion, which is relatively stable compared to June 2024 figures.
“The South African property market has continued to show a recovery which began in late 2024. We expect this positive trend to continue throughout the 2025 financial year,” the group said.
The formation of the Government of National Unity (GNU), a halt to load shedding and the start of a lower interest rate cycle has resulted in economists forecasting an upgrade to the country’s economic growth to between 1% to 1.5% for the calendar year 2025.
“By implication, the property market outlook for the medium term will improve,” it said.
Commercial (office) properties continue to be the worst performing sector in the property segments. There is the start of a modest recovery however, evidenced by lower vacancy rates and a slow improvement in nominal rentals.
The vacancy rate at end 2024 was 13.1%, down from 13.9% in the previous quarter (Rode), Putprop said.
“We continue to see a definite trend of large corporates returning to the formal office environment either in the form of a hybrid model of working off site for 2 days and in formal offices for 3 days, or a full return to the office environment.
“This will be essential for this segment of the property sector to recover from its current position of high vacancies in all geographic regions,” the group said.
Putprop’s financial performance for the six months ending December 2024 showed a solid improvement.
Property rentals and recoveries rose by 7% to R74.8 million, up from R70.0 million in the same period in 2023. Operating profit before finance costs also increased by 9% to R41.9 million.
Putprop reported an increase in profit after interest, which rose from R11.4 million in December 2023 to R17 million in the current period. However, the company experienced a 69% decrease in profit before taxation, largely due to adjustments in property asset valuations and write-downs.
Despite this, Putprop has declared an interim gross cash dividend of 7 cents per share for the first half of the year, up from 6 cents in 2023, reflecting the company’s ongoing commitment to delivering value to shareholders.
The group has also been successful in maintaining a low vacancy rate of 3.6% in its portfolio as of December 2024, down from 4% in June 2024. This performance is in line with the company’s strategic objectives for 2024/2025, focusing on keeping vacancies below 4%.
Key Highlights:
-Property rentals and recoveries up 7% to R74.8 million.
-Net profit from property operations up 11%, to R49.9 million.
-Finance costs reduced by 7%, to R24.9 million.
-Anticipation of a further 50 basis point interest rate cut in 2025.
-Interim gross cash dividend declared at 7 cents per share.
