Smaller shopping centres seem to be doing better as Fairvest Property Holdings, the landlord that owns centres in densely populated areas and central business districts recorded a 1% growth in the value of its properties.
This comes as owners of big high-end malls like Hyprop and Attacq who respectively own Canal Walk and Mall of Africa saw multi-billions being wiped off their property values because of lower rental rates that they expect when tenants' leases come up for renewal over and above the losses caused by rental discounts that the lockdown forced them to offer tenants.
While Fairvest recorded a negligible growth in its like-for-like property portfolio value to R3.5 billion, Attacq's South African portfolio valuations decreased by 8.6% and Hyprop recorded a 13.9% decline to the value of R4 billion in its local portfolio.
Fairvest is focused on the lower LSM market and owns centres like the Nyanga Junction in Cape Town and some Boxer Centres in the Eastern Cape to name a few. The group also record much less decline in distributable income at 3.4% while its bigger peers saw this fall by double digits, well above 30% in some instances. But some of the bigger landlords still performed better than Fairvest in terms of tenant retention rates and retail vacancies.
Analysts have been predicting that smaller convenient centres and those who predominantly house essential services tenants will outshine their bigger peers who own fancy malls during this period since they experienced less disruptions during the hard lockdown. Even though lockdown restrictions have eased substantially, big malls remain big losers as people frequent them less often than they used to.
"There is a perceptible shift in consumer preference towards convenience and neighbourhood shopping and this is borne out by trading density growth in the local market, which has favoured smaller retail formats," said Fairvest CEO, Darren Wilder.