Biggest shopping mall in South Africa facing a crisis

South Africa’s biggest shopping centre, Fourways Mall, faces significant financial headwinds with high vacancies, poor foot traffic, and declining fair value.

Accelerate Property Fund (APF), which owns 50% of Fourways Mall, provided details about the shopping centre in its latest financial results. It did not look good.

The biggest challenge is the high number of empty shops. Fourways Mall’s vacancy rate increased from 3% to 8% from 2021 to 2023.

The impact on the company’s finances is significant. Fourways Mall’s net rent per square meter has significantly deteriorated – from R298 in 2020 to R262 in 2023.

The net rent refers to the income the company generates from the property after all property expenses are deducted.

Accelerate’s latest financial results showed that Fourways Mall’s gross rent, before expenses, was R223 in 2024, much lower than its 2023 net rent of R262.

This is a catastrophe. This means it is rapidly losing tenants and will need to do something special to get them back.

The high vacancy rate and declining rent per square meter have significantly impacted Fourways Mall’s value.

Between 2020 and 2024, Accelerate Property Fund’s 50% share of the property declined from R4.8 billion to R3.9 billion.

This decline is significant as it followed a big investment in Fourways Mall’s expansion and revamp in 2019.

After the expansion project, Fourways Mall’s gross lettable area (GLA) from 61,634 square meters to 88,785 square meters.

After this expansion project, Accelerate promised investors solid returns and customers a world-class shopping and entertainment experience.

It said new traffic routes, densification and more retail space will ensure users get an “international standard retail experience”.

Fast forward to 2024, and the plans did not work out as expected, with worse vacancy rates, lower-than-expected foot traffic, and worsening finances.

After the costly Fourways Mall expansion, it has suffered several downward fair value adjustments.

Asset fair values are reduced when performance suggests they are worth less than what is reported in the company’s books.

It has reached such concerning levels that Accelerate had to raise additional money to address its challenges.

In its 2024 financial results, Accelerate Property Fund said its expected credit losses increased significantly due to bad debt write-offs and increased provisions, especially in Fourways Mall.

The mall’s challenges have also significantly impacted Accelerate Property Fund’s performance over the last four years.

From 2019 to 2024, the property manager’s revenue declined from R1.2 billion to only R819 million. It has also recorded big losses over the period.

Accelerate Property Fund’s latest financial results, summarised in the charts below, illustrate Fourways Mall’s financial challenges.

Fourways Mall turnaround plan

The Fourways Mall co-owners have launched a new strategy to improve its performance. It included appointing Flanagan & Gerard as its strategic asset manager.

Flanagan & Gerard is well-known as developers and investors in dominant regional shopping centres that retain dominance within the trade area.

The company has developed many shopping centres, including Vaal Mall, Highveld Mall, Heidelberg Mall, Eyethu Orange Farm Mall, and Nicolway.

It was also behind the award-winning Morningside Shopping Centre, Middelburg Mall, and Mall of the North in Polokwane.

The Moolman Group has also been appointed to oversee property management at the mall.

The strategy includes improving signage for seamless navigation, introducing new tenants, deploying backup power solutions, and ramping up security.

There is also a strong focus on making it easier for people to visit the mall. It includes enhanced traffic flow, enlarging parking bays, and revitalising the surrounding area.

The first stage of the new strategy was implemented by opening a new taxi holding area to alleviate road congestion and offer commuters quick and safe access.

This improvement is aimed at managing traffic flow inside and outside the Fourways Mall, which has been problematic.

The mall expanded its transportation hub, providing a comfortable and convenient environment for taxi drivers and passengers.

The commuter court includes retail offerings, Roots Butchery and Restaurant, Real Fish and Chips and Arthur Ford.

“The secure and convenient movement of our consumers in and out of the mall is paramount to us,” says Paul Gerard, managing director of Flanagan and Gerard.

Fourways Mall vacant shops