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KFC will pay you R60,000 to find its next restaurant location

South Africa’s quick-service restaurant (QSR) sector remains robust, driven by innovation and expansion into previously under-served markets, while mall growth continues to rise.

Valued at $2.7 billion in 2018, the local industry is expected to reach $4.9 billion by 2026 – with township and rural growth at the heart of this growth.

The local fast-food industry is rapidly embracing innovative technology to elevate customer service, boost efficiency, and satisfy the evolving tastes of South African consumers.

Beyond enhancing customer experience, tech-driven solutions are improving brand engagement, supporting new product launches, and optimising internal operations – all fuelling the sector’s growth, according to Insight Survey’s SA fast food/QSR Industry Landscape Report 2024.

Globally, the fast food market is estimated to be valued at approximately $901.8bn in 2024 and is forecast to grow at a high compound annual growth rate (CAGR) of 4.5%, to reach approximately $1.2 trillion by 2032.

McDonald’s remained the most valuable fast food brand in 2024, by a large margin, achieving a brand value of $221.9 billion, with Sarbucks a distant second ($69.6bn), and KFC, third ($24.6bn).

KFC for example, is pushing the boundaries of fast food innovation in South Africa through the launch of KFC Play innovation hub. The store showcases 100% cashless digital graphics and interactive display kiosks. It also offers South Africa’s first crowdsourced Spotify playlist and lets customers digitally try on exclusive merchandise.

The brand also made history with South Africa’s first drone delivery during the KFC T20 International Series against Australia — airlifting a 21-piece bucket directly to Proteas cricketer David Miller on the pitch. It was a bold first for South African fast food and a clear signal of KFC’s tech-forward direction.

And instead of relying solely on market data, KFC is inviting South Africans to participate in its expansion, aligning their bottom line with public engagement.

The ‘finger licking good’ chain is offering a finder’s fee of R60,000 for site recommendations that result in a successfully opened restaurant or drive-through, valid until the end of 2025.

In a sign of how fiercely competitive South Africa’s quick-service restaurant (QSR) sector has become, McDonald’s secured the lease for a highly sought-after 24-hour drive-thru site in Green Point, Cape Town, after a bidding war with KFC in 2024.

The property, located at the entrance to the DHL Stadium, is leased from the City of Cape Town and commands a hefty monthly rental of R420,000 – equating to over R5 million annually.

Each new KFC outlet creates 25–40 jobs and upgrades surrounding infrastructure. The brand’s call for public input isn’t just about growth.

“Every time we build a new KFC, we reinvigorate infrastructure, we uplift communities, we boost local economies, and we create much needed jobs. From enhancing roads and utilities to introducing technology upgrades like WiFi and point-of-sale systems, our footprint leaves a lasting impact,” said Akhona Qenqqe, GM of KFC Africa.

“Each restaurant creates an average of 35 direct jobs, provides a modern hub for communities to connect and delivers high-quality meals made with the best ingredients.”

Every new KFC restaurant is constructed to meet the brand’s global Building Green standards, incorporating 11 essential features designed to promote a healthy and environmentally friendly space.

Globally, KFC operates more than 30,000 restaurants across over 150 countries, employing nearly one million people. A new KFC opens somewhere in the world every 3½ hours.

In Africa alone, the brand runs 1,500 restaurants -including nearly 1,200 in South Africa – employing around 40,000 people.

Mixed outlook for South Africa’s fuel prices in August

Motorists can expect a mixed bag at the pumps in August, with mid-month fuel price data from the Central Energy Fund (CEF) pointing to a drop in petrol prices – but yet another steep increase for diesel.

Fuel prices increased by 52 cents per litre for 95-octane petrol and 55 cents for 93-octane, while diesel went up by between 82 and 84 cents per litre in July.

According to the latest snapshot, petrol is showing an over-recovery of between 20 and 24 cents per litre, while diesel is under-recovering by around 62 cents per litre.

If current trends persist, this could translate into the following changes at the beginning of August:

-Petrol 93: down by 24c/l
-Petrol 95: down by 20c/l
-Diesel 0.05%: up by 63c/l
-Diesel 0.005%: up by 62c/l
-Illuminating paraffin: up by 26c/l

These adjustments reflect volatility in global oil markets and the ongoing rollercoaster in currency exchange rates.

Oil prices have recently edged lower following a pause in geopolitical escalation. Brent crude was trading at $69.23 a barrel on Tuesday, dipping slightly after US president Donald Trump issued a 50-day ultimatum for Russia to withdraw from Ukraine – a move which calmed fears of immediate sanctions, Reuters reported.

Still, the oil market remains highly sensitive. If Trump does follow through and the proposed sanctions are implemented, “it would drastically change the outlook for the oil market,” analysts at ING warned in a note on Tuesday.

The US dollar meanwhile, continued to recover from its multi-year low reached ahead of the original 9th July trade negotiations deadline said Annabel Bishop, chief economist at Investec. This put pressure on the local unit.

“That is, recent US dollar recovery (2.8%) has come on expectations that the time extension indicates the US favours trade deals over punitive tariffs, improving the US economic growth outlook from a worse case considered earlier in the year.

“Uncertainty does still persist on what the final outcome will be, and for how much longer the extensions and negotiations will continue. While markets are relying on the ‘taco trade’ (Trump always chickens out) there is room for disappointment,” Bishop said.

The dollar index has risen from 96.8 – last at this level in 2022 – to 98.1 during this month, causing the rand to correspondingly weaken to R19.97/$ from R17.48/$, with markets adopting a wait and see approach on the negotiations, Investec’s lead economist said.

On Saturday, Trump threatened to impose a 30% tariff on imports from two of the United States’ largest trading partners—the European Union and Mexico—starting August 1.

South Africa could also face a 30% tariff on exports to the US, along with an additional 10% levy tied to its membership in the BRICS group of developing nations, Reuters reported.

On the domestic front, mining production edged up 0.2% year-on-year in May 2025, according to StatsSA. Iron ore was the biggest positive contributor, while coal and manganese continued to drag.

Seasonally adjusted output rose 3.7% month-on-month, a small but welcome boost to economic activity.

Eskom delivers encouraging power update despite delays

Eskom says that Koeberg Unit 1 will return to service by the end of August, instead of the end of this month, due to additional steam generator maintenance.

The unit was initially pencilled in for a return by July.

“This revised timeline underscores Eskom’s commitment to conducting thorough inspections and maintaining the highest quality standards to ensure the ongoing safe and reliable performance of South Africa’s only nuclear power station.

“During scheduled detailed eddy current inspections – a non-destructive testing method used to detect cracks, corrosion or wear in the metal tubes of steam generators – defects were identified on four tubes, among several thousand tubes inspected, across two of the newly installed generators,” Eskom explained.

Upon discovery of the defects, the power utility, along with specialised international and local teams, “immediately carried out an advanced automated process to address the four tube defects”.

“These critical repairs have now been successfully completed to uphold the highest safety and quality standards.

“Importantly, the major maintenance activities, which included the legally required 10-year Integrated Leak Rate Test [ILRT], where the reactor building was pressurised over 72 hours and its leak rate and structural integrity were monitored – were successfully completed. The ILRT confirmed the robustness and leak-tightness of Unit 1’s containment structure, further reinforcing its safety, in line with international standards,” Eskom said.

Eskom Group Executive for Generation, Bheki Nxumalo, emphasised that the safety of employees, the public and the environment remains top priority at the power utility.

“Carrying out these additional inspections and repairs to world-class standards, we are investing in the long-term reliability of Koeberg and South Africa’s energy future.

“The planned maintenance underway on Unit 1 will help deliver decades of affordable, low-carbon baseload power, demonstrating how nuclear energy can support both economic growth and environmental sustainability. 

“Through our commitment to high-quality maintenance and the expertise of the Koeberg team demonstrating exceptional skills, we are ensuring nuclear power remains a vital part of the country’s energy mix,” Nxumalo said.

The power utility reassured that the delayed return to service will not increase the risk of load shedding.

Since mid-May, there has been no load shedding implemented, with the planned rolling power outages only reaching 26 hours between 1 April and 10 July 2025.

“The winter outlook released on 5 May 2025, which covers the period until 31 August 2025, remains valid. Importantly, the planned return of 2 500MW this winter does not rely on Unit 1.

“The outlook shows that load shedding will not be required if unplanned outages remain below 13 000MW. Even if outages rise to 15 000MW, load shedding would be limited to a maximum of 21 days over the 153-day winter period, capped at Stage 2,” the power utility assured.

Once the work on Koeberg’s Unit 1 is completed, its “reactor core will be refuelled, tested and synchronised back to the national grid” – further boosting the power system.

“To protect supply, planned outages at Koeberg are carefully staggered every 16 to 18 months so that both units are never offline at the same time. Together, Koeberg Units 1 and 2 provide around 1 860MW – approximately 5% of the country’s electricity needs. 

“Unit 2 remains fully operational, generating up to 946MW, with a year-to-date Energy Availability Factor [EAF] of 99.38% as of the end of June 2025.

“The national power system remains stable, with a month-to-date EAF of 62%. As the winter season continues, Eskom encourages all customers to adopt energy-efficient practices,” Eskom said

How a shift in trading partners could impact South Africa’s property market

As South Africa grapples with economic uncertainty – exacerbated by internal divisions within the Government of National Unity (GNU), reduced US aid, and new tariffs—there’s growing speculation that the country will pivot to alternative global alliances.

This shift could have implications for the residential property market, particularly in attracting foreign direct investment (FDI).

Trade flows and real estate are closely linked. Economic activity, job creation, and income growth stimulate urbanisation and fuel housing demand. International trade often brings foreign investment – and real estate remains a popular, resilient asset class.

However, global tensions can disrupt this relationship. The 2018 US–China trade war is a case in point, introducing uncertainty and market volatility in both countries. Similar friction between the EU and the US may now prompt investors to seek more stable real estate options elsewhere.

Could South Africa benefit by strengthening ties within groups like the G20 or BRICS?

A recent Knight Frank Wealth Report showed that all G20 countries failed to meet annual housing targets over the past five years, leading to rising house prices and rents.

Meanwhile, data from the Bank for International Settlements revealed that real residential property prices in China, India, and South Africa – three BRICS members – declined by 14%, 11%, and 9% respectively.

Dr Stravos Nicolaou, a member of South Africa’s BRICS Business Council, stated that the US – South Africa’s second-largest trading partner after China – remained essential to SA’s economic stability.

He explained that it was not in the country’s best interest to ignore US policy shifts.

“We also needed to trade with the East, South, and West, and attract investment from all three regions,” he noted. “But nor could we dismiss the opportunities that resided within BRICS.”

He pointed out that the combined GDP of BRICS had exceeded that of the G7. “That said to me that there were opportunities there. In order to realise them, South Africa had to adopt a non-aligned stance.

India had done this well – it traded with both Russia and the US,” he said. “No one was saying trade with the US must stop. In fact, we should have been looking to grow it.”

Nicolaou also warned of the potential fallout if the US failed to renew South Africa’s eligibility under the African Growth and Opportunity Act (AGOA). The preferential trade agreement gives eligible African nations duty-free access to US markets for goods such as vehicles, citrus, and wine.

With the agreement set to expire in September, powerful US lobbies argue that South Africa- classified as a middle-income economy – should no longer qualify.

If AGOA were withdrawn, the ripple effects could undermine the mid-tier property market, even if the luxury segment remains resilient. Nicolaou emphasised the need for urgency: “Given the geo-strategic and tectonic trade shifts we had seen in recent weeks, we needed to do a trade deal with the US, especially if AGOA was diluted or not reauthorised.”

High-net-worth individuals (HNWIs) from BRICS countries have already reshaped the luxury real estate market, according to Geoff De Weaver, CEO of Limitless USA LLC.

“BRICS buyers were injecting fresh energy into the luxury market,” he said, “demanding sustainable, tech-savvy homes that reflected their cultural values.”

Chinese investors, once among the biggest players in the US market, gravitated toward political stability and a transparent legal framework.

Indian and Brazilian investors, on the other hand, were drawn by a booming tech sector and relative safety compared to domestic options. Russian buyers sought real estate as a hedge against rouble instability and economic turbulence.

“For these buyers, the location was just as important as the property itself,” De Weaver explained. “They were willing to pay a premium for homes with world-class views, privacy, and access to top-tier amenities.”

In his blog, De Weaver also noted that BRICS buyers and developers were “reshaping market dynamics, creating increased competition for prime properties and driving innovation in luxury developments.”

South Africa offers a unique opportunity for these investors, said Nicolaou. “We had properties valued at $94 million, especially in the Cape,” he explained.

“Tourism was going to be catalytic in attracting global HNWI property investors, and South Africa was very focused on this.”

He said the country needed to tap into new wealth coming from India and China. “These nations had significantly grown their wealth status. They had hugely mobile populations – both wealthy and middle class – who might consider buying property here,” he said. “In many cases, these investors would also invest in businesses. We needed to capitalise on that.”

Data from the National Association of Realtors (NAR) in the US shows declining confidence in the housing sector, largely due to fears of recession and trade policy shifts. South Africa, by contrast, may stand to benefit if it positions itself effectively.

The Knight Frank Wealth Report found that 29.8% of HNWIs in the next generation are prioritising real estate – especially luxury property – as a key investment. Nicolaou said this should be a wake-up call for South Africa.

“This was a chance for us to encourage FDI into South African real estate, especially among the BRICS,” he said.

“But we also needed to fish in all the seas. BRICS had a lot of potential, but investment decisions must always serve the best interests of the country and its people.”

The coastal hotspot in South Africa where homes cost three times the national average

New data from Lightstone shows that three-quarters of residential properties in Plettenberg Bay are now valued at more than R3 million, with 7% exceeding R10 million – highlighting ongoing demand from affluent buyers and a steady inflow of capital into the region.

Often referred to as “Plett,” the town is part of the Garden Route and has become increasingly attractive to remote workers, retirees, and holidaymakers seeking a quieter lifestyle with natural beauty and solid infrastructure.

The average value of the 5,700 formal residential properties outside of township areas now stands at R4.9 million, according to the data specialist group.

The average house price in South Africa reached R1.6 million in June 2025, with Western Cape leading at R1.8 million and significant variations across regions.

It noted that nearly 40% of homes have changed hands in the last five years, suggesting a steady stream of new residents — many of whom are semigrants from Gauteng or other parts of the Western Cape, echoing trends seen in coastal hubs like Ballito and Umhlanga.

The town also boasts a significantly higher concentration of estate and sectional title properties than the national average. Estates make up 36% of the market (compared to a national average of 18%), while sectional schemes account for 21% (against 18.5% nationally).

Freehold homes comprise the remainder. Prices vary dramatically: sectional titles average just under R3 million, freeholds outside estates average around R5 million, and those within estates command approximately R6.5 million.

At the top end of the estate market are properties in Whale Rock Ridge, boasting average values of R11.5 million. Brackenridge follows with R8.2 million, while Schoongezicht averages R5.6 million.

Ocean-facing suburbs, such as Keurbooms Lagoon and Lower Central Plett, also achieve higher price points, though they comprise fewer properties.

In contrast, districts like Formosa and Robberg Ridge are on the more affordable end of the spectrum.

However, this influx of high-value buyers is creating a growing affordability challenge. Lightstone points to a persistent lack of accessible housing for local service workers—those employed in hospitality, retail, municipal services, and other essential roles.

As buyers enter the market, misaligned pricing expectations are becoming apparent. According to PropData, an associate of Lightstone, over 85% of estate agents frequently advise sellers to lower their asking prices, while only 1.2% say this advisory is rarely necessary.

Data on time-to-sale reveals further insight: homes listed for sale for under a month typically sell at around 91% of the asking price, but if sales drag on for six to twelve months, the final sale price averages just 82%.

Plettenberg Bay’s property landscape is emblematic of the economic reshaping underway in South Africa. As wealth flows into desirable coastal towns, rising home values bring both opportunity and challenge.

Matching the needs of essential workers with affordable housing remains a critical hurdle as Plett navigates its transformation from holiday haven to mature residential community.

Luxury spending trends reveal new priorities among the rich

Global cost of luxury eases as health, longevity, and financial planning reshape high-net-worth priorities

In a year marked by global uncertainty, economic headwinds, and shifting consumer preferences, the 2025 Julius Baer Lifestyle Index reveals a subtle but meaningful shift in the world of high-net-worth individuals (HNWIs).

For the first time in several years, the overall cost of maintaining a luxury lifestyle has fallen – down 2% in US dollar terms – largely driven by declining technology prices across all regions.

Despite the changing dynamics, the index’s top three cities remain unchanged, though the rankings have shuffled. Singapore retains its status as the most expensive city for HNWIs, followed by London, which overtook Hong Kong to claim the second spot.

The index, which analyses the cost of 20 high-end goods and services in 25 global cities, serves as a barometer of global affluence and regional economic performance.

While the tech sector saw price drops that eased overall costs, not all categories followed suit. Business class flights and international school fees have seen sharp increases, underlining continued inflationary pressure in premium travel and education – two major spending areas for the global elite.

The Julius Baer Lifestyle Index includes a broad range of items, from luxury watches and fine wines to legal fees, MBAs, and real estate. It assigns more weight to high-cost items like property and vehicles, which heavily influence a city’s ranking.

Beyond material costs, the 2025 Index underscores a growing preoccupation among HNWIs with longevity and wellbeing. The post-pandemic health focus has only deepened, with 87% to 100% of respondents – depending on region – actively taking steps to extend their lifespan.

These range from diet and exercise to more radical approaches such as gene therapy and even cryogenic chambers, especially popular among respondents in Asia-Pacific and Latin America.

With the pursuit of long life comes the challenge of financial sustainability. HNWIs are increasingly reassessing their wealth strategies to ensure their portfolios can support longer lifespans.

According to the survey, the majority reported growth in asset values over the past year, but many acknowledged they would need to adjust investment and succession plans if they were to live 10 years longer than anticipated.

It’s worth noting that this year’s data was collected prior to the U.S. administration’s announcement of new tariffs – meaning the full impact of recent economic disruptions has yet to be reflected. This suggests that further volatility may affect luxury pricing and consumer confidence in months to come.

Still, the 2025 Julius Baer Lifestyle Index offers a snapshot of a world where luxury is no longer just about spending, but about strategic living – with health, wealth, and longevity now the defining pillars of high-net-worth lifestyles.

Fourways mall co-owner warns of potential R800m impairment

Accelerate Property Fund (APF), a co-owner of Johannesburg’s Fourways Mall, may be forced to write off nearly R800 million if it fails to finalise a new settlement deal with a group of interlinked entities tied to one of its largest shareholders and directors, Michael Georgiou.

Georgiou’s vehicle Azrapart, the developer of Fourways Mall owns the other 50%.

The fund said that negotiations with related parties over a revised settlement agreement remain ongoing, as the company prepares to publish its annual financial results for the year ended March 2025.

In an update released via the JSE’s Stock Exchange News Service (SENS), the real estate investment trust (REIT) reiterated its intent to finalise a new agreement with related parties involved in the development and management of the Fourways Mall.

The original agreement, which lapsed in late 2024 after certain conditions were not met, was designed to settle inter-company balances without cash outflows.

Although all parties have expressed willingness to sign a new deal on similar terms, no agreement has yet been concluded. Accelerate has warned shareholders that should the negotiations fail, it may be forced to fully impair approximately R800 million in receivables owed by the related parties.

Despite uncertainty around the settlement, Accelerate said it will proceed with its previously announced R100 million rights offer, opening on 14 July 2025. The capital raise is aimed at funding improvements to the Fourways Mall and general working capital needs.

The rights offer is fully backed and follows a prior R200 million capital raise completed in June 2024.

If a new agreement with the related parties is not reached, Accelerate said it may impair the full value of the receivables, which would materially affect its financial results. In that case, the board will seek legal advice and explore all available remedies, including potential litigation to recover outstanding amounts.

However, if the agreement is successfully concluded, it would offset balances due to and from the related parties to zero, without requiring any cash payments. A circular will be published for shareholder approval should a new deal be signed.

Accelerate has cautioned shareholders that discussions are still underway and the final outcome remains uncertain.

Affordability improves across SA housing market, but activity still lags

South Africa’s residential property market is showing clear signs of renewed momentum, with home loan application volumes rising by 7.4% year-on-year for the 12 months ending May 2025.

The latest data from the BetterBond index reveals that application growth is now outpacing inflation – which stood at 2.8% in May – indicating a rebound in buyer confidence.

Although overall application volumes remain 28% below the highs seen in 2021, the index is now 4.5% higher than two years ago, reinforcing the view that the market is stabilising after an extended period of monetary tightening.

With inflation now below the South African Reserve Bank’s target range, economists are increasingly optimistic about a potential interest rate cut at the end of July – a move that could further support property market recovery.

The average home purchase price has declined across the board, with first-time buyers (FTBs) seeing the biggest benefit. The average price for FTBs fell to R1.28 million in Q2 2025, while the average across all buyers dropped to R1.58 million.

The average deposit required for home purchases has also fallen meaningfully. In Q2 2025, average deposits declined 11% year-on-year for all buyers and 17% for first-time buyers (FTBs).

After exceeding R300,000 in late 2023, the average deposit has dropped to R272,000 – and to R165,000 for FTBs, down from nearly R200,000 a year ago.

This trend, coupled with a slight decline in credit impairments (now at 2.5% of total bank assets), suggests effective credit risk management and improving affordability in the housing market.

The regional composition of home loans granted showed a strong 13.6% year-on-year increase. Johannesburg’s South-Eastern suburbs topped the list, while Greater Pretoria posted an impressive 26.7% jump – attributed to its vibrant university and manufacturing base.

The Western Cape also continued its upward trajectory, with loan activity up 14.7%.

Only the Eastern Cape and Mpumalanga recorded a decline in home loans granted, while the North West and Johannesburg’s North-Western suburbs underperformed relative to the national average.

The affordability ratio – average home price relative to annual income – has improved since peaking in 2021. For younger buyers (aged 21–30), the ratio declined from 3.2 to 2.6 years of income.

Despite this, market activity remains below pre-COVID levels, partly due to elevated lending rates and high deposit requirements, which have kept some buyers on the sidelines awaiting further rate cuts.

Building activity has been uneven across provinces. KwaZulu-Natal led with a 53.6% year-on-year increase in residential building completions (January–April 2025), while the Eastern Cape lagged with a 46.5% decline.

The Western Cape continued to benefit from the “semigration” trend, posting a 32% increase, while Gauteng saw a 20% drop, likely linked to service delivery challenges.

Average home prices also saw regional variation. The Eastern Cape led price growth with a 10% year-on-year increase, followed by the North West. The Western Cape retained the highest average price at R2.1 million.

Notably, the recent surge in platinum prices could further boost the North West property market, given the province’s dominance in platinum group metal production.

With inflation below the MPC’s target range and the prime rate at 10.75%, analysts believe there’s a strong case for another interest rate cut at the end of July — a move that could further boost affordability and spur activity in the residential market.

In his latest economic commentary, Dr Botha noted that GDP growth came in at 0.8% year-on-year in Q1, with vehicle sales rebounding and platinum prices surging by 49% since January – a development that could stimulate further housing demand in the North West, South Africa’s key platinum-producing region.

“The continued demise of capital formation, especially in the area of infrastructure, has also contributed to a decline in the Afrimat Construction Index in Q1 2025, which reflects the lethargy of building activity. Unless interest rates start declining at a faster pace, South Africa will continue to experience sub-optimal economic growth, due to the excessively high cost of credit and of capital.”

Sesfikile sees 15% upside in SA listed property

Kundayi Munzara, executive director and portfolio manager at Sesfikile Capital, believes that South Africa’s listed property sector could potentially deliver total returns of 15% per annum in the medium term.

The sector has seen DIPS decline by about -2.0% per year over the past three years-lagging the 5.1% average inflation rate and falling short for income-focused investors.

However, a recovery is underway, with DIPS expected to grow by approximately 6% annually over the next three years, signalling a return to real earnings growth and improved value for investors.

Munzara noted that the inflection point and acceleration in earnings growth are underpinned by improving property fundamentals, not once-off or non-recurring items.

Key drivers of stronger net operating income (NOI) growth include positive rental reversions in retail and industrial portfolios, along with lower vacancies driven by broad-based tenant demand.

“Furthermore, companies are likely to report better cost-to-income ratios going forward due to improved tenant retention rates (i.e. less letting fees and tenant installation costs), high yields on solar PV investments and lower cost inflation on expenses like cleaning and security.”

Vukile’s results showed 6.4% like-for-like NOI growth across its South African and Spanish portfolios. The team also highlighted an improved net cost-to-income ratio from 16.8% to 15.2% with a better ratio expected in the next 12 months, the portfolio manager said.

Similarly, Equites Property Fund delivered a 5.9% like-for-like NOI growth in its year-end results, he said.

“Lastly, due to increased appetite from commercial banks to fund listed property companies, we have seen a marked reduction in bank margins across the board. This will contribute positively to mid-term earnings.”

“Turning to balance sheets, after approximately R49 billion in asset disposals over the last four years, loan-to-value (debt-to-fair value of assets) ratios are at a healthier 37%. We are further encouraged by the fact that after three years of value write-downs, asset value growth has inflected up to 2-4%.

Munzara said that companies are back on the ‘front-foot’ and can raise capital via accelerated book builds to fund earnings accretive growth as demonstrated by Spear (R749m), Lighthouse (R400m) and Hyprop(R805m) to name a few, over the last few months.”

He said the sector is back on the front foot, supported by a combination of strong revenue growth, improved cost efficiencies, solar PV investments, lower funding costs, and access to capital for accretive expansion.

Distributable income growth is expected to shift from around -2% per annum over the past three years to approximately 6% going forward – roughly double expected inflation. Despite this recovery, the sector remains attractively valued, trading at a 23% discount to NAV and offering an 8% dividend yield.

A total return of around 15% per annum appears achievable over the medium term.

Interest rate cuts and solid fundamentals support SA REITs despite June dip

South Africa’s listed real estate investment sector saw a modest pullback in June, but improving property fundamentals and the potential for further interest rate cuts suggest that strong growth in distributable income is set to continue through the remainder of the year.

Following a strong April 2025, South African REITs saw a modest correction in June, dipping 1% and underperforming both equities (+2.4%) and bonds (+2.3%).

Analysts caution that this pullback reflects profit-taking in larger, recently outperforming counters rather than a shift in fundamentals.

Ian Anderson, head of Listed Property at Merchant West Investments and compiler of the SA REIT Association’s monthly chartbook, describes the June decline as “more technical than structural.”

“Many of the more liquid stocks have delivered stellar returns over the past 18 months, so some rotation was inevitable, particularly in a month where global sentiment was otherwise risk-on.”

Hyprop Investments, Resilient REIT, and Redefine Properties each fell just over 2%, while Growthpoint and Vukile Property Fund saw slight declines.

In contrast, Accelerate Property Fund surged 17.8% in June after announcing a R100 million rights offer to fund enhancements at Fourways Mall and bolster working capital.

Despite the price dips, operational results remained robust. Fairvest Limited, Stor-Age REIT, and Vukile all reported solid progress in June, projecting mid-to-high single-digit growth in distribution income through FY2025 and FY2026.

“These are healthy forecasts and suggest the dividend growth story has further to run,” said Anderson. He also points to renewed access to equity capital – highlighted by Spear REIT’s successful R749 million raise.

The resumption of dividends by Fortress REIT has also bolstered year-to-date returns. With expectations for lower interest rates, a strong rand, and lower oil prices, a rate cut by SARB appears increasingly probable.

“Rate cuts would further reduce funding costs, underpin valuations, and support income growth into 2026 and beyond,” he adds.

Sector valuations continue to look compelling, with dividend momentum boosting investor confidence. “Improving property fundamentals, lower official interest rates and access to capital at reduced costs all support stronger distributable income growth in the medium term,” Anderson said.