Tag Archives: Growthpoint Properties

South Africa’s largest REIT is leaning into the country’s hottest asset class right now

Growthpoint Properties, South Africa’s largest primary JSE-listed REIT, phase 2 of its Arterial Industrial Estate development in Cape Town.

The developer says it has strategically grown its logistics and industrial assets from 15% to 20% of the total SA portfolio value in recent years.

At the same time, Growthpoint has expanded its investment in modern logistics warehouses — the cornerstone of its long-term value creation strategy in the industrial sector. These state-of-the-art facilities now account for approximately half of the portfolio’s gross lettable area.

The company is also strategically concentrating its investments in high-demand, better-performing regions, with a particular focus on the Western Cape and KwaZulu-Natal.

By completing Phase 2 of its Arterial Industrial Estate, Growthpoint has increased capacity in this high-demand location with the addition of six premium warehouse units. Offering a combined 21,831m² of new lettable space, the units range in size from 2,945m² to 5,713m², designed to accommodate a diverse range of business requirements.

With both phases now complete, the development represents a total investment of nearly R400 million by Growthpoint.

The estate is experiencing strong demand, with two of the six units in Phase 2 already snapped up supported by strong tenant interest, highlighting the need for high-quality industrial space in the region.

Phase 1 of Arterial Industrial Estate, spanning 19,741 square meters is fully let to top names in national and international industry.

“Growthpoint is reporting strong performance in its logistics and industrial portfolio, fuelled by high occupancy rates and a strategic focus on modern facilities. Our well-let logistics and industrial portfolio demonstrates the increasing demand for modern, strategically located facilities,” said Errol Taylor, Growthpoint’s head of Asset Management, Logistics and Industrial Property.

Arterial Industrial Estate is strategically positioned in Blackheath, a popular industrial hub in Cape Town, offering exceptional access to key transportation routes, including the R300, N1, and N2 highways, as well as Cape Town International Airport and the region’s seaports.

This prime location allows businesses to efficiently connect with both local and global markets.

The estate offers 24-hour security, flexible warehouse and office space, and a commitment to sustainability, including solar panels and a four-star Green Star certification from the Green Building Council of South Africa.

“This project reflects a continued and deliberate pivot toward better-performing, future-fit logistics assets and aligns with Growthpoint’s strategy of targeted investment and divestment, and development,” said Taylor.

South African REIT sector surprises in face of global market turmoil

There’s a silver lining for South African real estate investors despite ongoing turbulence in global markets.

Ian Anderson, head of Listed Property and portfolio manager at Merchant West Investments and the compiler of the SA REIT Association’s monthly Chart Book, highlights that the local REIT sector is in a far stronger position today than it was five years ago.

Anderson contrasts the current environment with the sharp downturn the sector faced during the Covid-19 pandemic. “The current turmoil in global financial markets comes almost exactly five years after the last major drawdown for South Africa’s listed property sector, when the South African economy was shuttered at the start of the pandemic.

“Between March 2017 and March 2020, South African REITs, on average, lost more than 70% of their value. In the years since, the sector has clawed back nearly 68% in value (excluding dividends), though it remains more than 50% below March 2017 levels.”

With fresh waves of political and economic uncertainty gripping global markets, many investors are wondering if history might repeat itself. Anderson, however, reassures them.

“Large drawdowns from current levels are highly unlikely,” he said, citing several key factors. First, South African REITs are now trading at significant discounts to their net asset value, a stark contrast to the premium conditions at the end of 2017.

“Second, the sector has focused on strengthening balance sheets in the post-pandemic years through lower payout ratios, strategic asset recycling, and timely equity capital raises. This has helped reduce loan-to-value ratios across most of the sector.

While economic growth may be sluggish or even negative, Anderson points out that the context is vastly different from 2020. “Economies remain open, tenants continue to trade, and rents are being paid. That’s a far cry from the conditions during April and May of 2020,” he said.

However, Anderson cautioned that short-term volatility is likely to persist, particularly with global headlines dominated by geopolitical tensions and trade disputes, especially between the United States and China.

Beneath the noise, property fundamentals in South Africa continue to improve. “Companies that reported results in March, including sector heavyweight Growthpoint Properties, all reported improved trading conditions in their South African portfolios,” Anderson said.

Growthpoint, for instance, has revised its guidance upward, shifting from a decline in distributable income per share (DIPS) to expected growth between 1% and 3% for the year ending June 2025.

The company also saw a 6.2% increase in South African net property income for the six months to December 2024, while the V&A Waterfront recorded a remarkable 16.6% surge in like-for-like net property income, driven by increased tourism.

Other REITs are showing positive momentum too. Resilient exceeded its dividend guidance with a 7.5% increase in comparable net property income, while Hyprop Investments delivered improved results and raised its dividend payout ratio thanks to a healthier balance sheet.

Although 2025 has so far been more subdued than 2024, Anderson remains optimistic about the sector’s future. “The improving property fundamentals in South Africa continue to point towards a return to net property income and dividend growth for the sector over the next 2 to 3 years,” he said. “Investors should not lose sight of that.”

In Anderson’s view, the South African REIT sector is not only stronger than it was five years ago—it’s better positioned to navigate the uncertainties that lie ahead.

This iconic South African retail space achieved R10 billion in sales in 2024

The V&A Waterfront enjoyed an exceptional December, attracting over 3 million visitors and achieving record retail sales of nearly R1.4 billion.

“The December period is always special at the V&A Waterfront, with locals and tourists coming to experience the best of what we have to offer, and this year was no exception,” said David Green, CEOr at the V&A Waterfront.

“With over 3 million visitors for the month and 25 million visitors for the year, this reflects the incredible appeal of the Waterfront as a destination where people come to connect, celebrate, and create memories.”

Co-owned by Growthpoint Properties and the Government Employees Pension Fund, the V&A Waterfront has active projects worth R4.5 billion underway over the next two years. Funding for these developments is being arranged through debt providers on the Waterfront’s balance sheet.

The upcoming projects include a new hotel and residential units, alongside the redevelopment of the Table Bay Hotel and a section of the mall.

Approximately R2 billion of the investment will be directed toward two internationally branded hotels at the V&A Waterfront, including a R1 billion transformation of the iconic Table Bay Hotel into an InterContinental Hotels Group (IHG) property.

The reimagined hotel will offer 306 rooms, including 45 newly designed guest suites. Scheduled to open in 2025, the InterContinental Table Bay Cape Town aims to both preserve the hotel’s legacy and usher in a new era of luxury hospitality in the region. The hotel will be managed by Sun International under a hotel management agreement.

In addition to the Table Bay redevelopment, the development includes a new hotel at Quay 7 for approximately R1 billion, around 100 residential units worth approximately R750 million, and an upgrade of the luxury section of the mall, totalling just over R100 million.

A new parking facility will be added for R300 million, and a new heliport, costing about R150 million, has already been completed.

Significant capital is also being invested in bulk infrastructure at the site to support the new developments, which will span just under 100,000 square metres.

The V&A Waterfront also expanded its retail offering with the opening of the repurposed Union Castle Building just in time for the festive season.

This welcomed high-profile tenants such as Marble Restaurant, Nike, Thule, and Wedgewood. These new additions, alongside other tenant mix enhancements—including the enlarged and relocated Yuppiechef and Mr Price outlets—helped drive nearly double-digit sales growth.

More than R10 billion was spent within the precinct in 2024.

“During the year, we saw sales growth across most categories, but some sectors stood out. Our enhanced restaurant offering and Food Markets drove significant Food and Beverage revenue,” Green noted.

Increased international tourism helped boost performances at the revamped Watershed, Curios, and jewellery sectors. Athleisure and outdoor wear continue to see growing demand, and Health & Beauty remains a perennial favourite. In fashion, the retail space is seeing stronger performances from independent and differentiated stores.

“Looking ahead, our ongoing investment plans will ensure that the V&A Waterfront continues to innovate and evolve, keeping South Africa’s tourism offering at the forefront of global travel trends, for both local and international visitors to enjoy,” Green concluded.

Sandton set for growth spurt with new twin towers development

Growthpoint Properties, the real estate investment trust (REIT), says that demand for its new luxury residential development in the heart of Sandton has been exceptional, with 60% of units already sold.

The property said that construction of the R2 billion Olympus Sandton twin towers, in partnership with leading luxury residential developer Tricolt, will begin in the coming months, fuelled by strong demand from both individual buyers and investors.

Olympus Sandton will be situated in the mixed-use Sandton Summit precinct, anchored by the Discovery Head Office on the corner of Rivonia Road, where Katherine Street becomes Sandton Drive.

Growthpoint has been rolling out different elements of the Sandton Summit vision for over a decade, and Olympus Sandton is its first development positioned to capture the increased demand for residential property in Sandton Central, it said.

The development will comprise two towers. The first residential tower of 26 storeys will be the first phase of the development along Rivonia Road.

It will include a premium dining experience from Marble Hospitality Group on one of the tower’s upper floors, as well as its extraordinary Pantry convenience retail offering in Grade-A ground floor retail space.

The second phase is a tower of at least 16 storeys, located east of the first.

The sale of the development’s more than 400 residential apartments by Tricolt has commenced and will launch to the public on 27 February 2025, with prices starting from R1.49 million.

Olympus Sandton’s 26-storey tower, although not the tallest building in the area, will become the highest in Sandton, offering unmatched views across Johannesburg and beyond.

Neil Schloss, head of asset management South Africa at Growthpoint Properties, said: “We believe that commencing the Olympus Sandton development is well-timed for the reawakening of the powerhouse that is Sandton Central, and aligned with its accelerated transformation into a vibrant neighbourhood as it evolves with the trend of people wanting to live closer to workplaces and amenities, to offer an exceptional mix of residential, office, retail and other types of properties.”

Timothy Irvine, Growthpoint’s head of asset management for offices, said: “Sandton is experiencing a significant revival. After years of office downsizing, companies are now maintaining their physical presence and even starting to grow it again as return-to-office becomes standard practice.

“Vacancy rates in Growthpoint’s office portfolio are declining nationwide, with Sandton — the country’s cosmopolitan business capital — showing the start of a particularly promising recovery.

“Despite a slow initial post-pandemic resurgence, the district is adapting not only its office spaces to meet growing demand but its entire lifestyle, with more living and gathering spaces.”

The best-known mixed-use asset in Growthpoint’s investment portfolio is the iconic V&A Waterfront, of which Growthpoint is a 50% owner.