Cape Town’s iconic R25 billion precinct is crushing it

The V&A Waterfront continues to perform well, with Growthpoint properties saying that international and domestic tourists are flocking to the mixed-use precinct.

Growthpoint is one of South Africa’s largest real estate investment trusts (REITS) and has 60.2% of its assets within the nation’s borders.

The group also owns 50% of the V&A Waterfront in Cape Town alongside the Public Investment Corporation (PIC).

The V&A Waterfront is a 123-hectare mixed-use property development situated around the historic Victoria and Alfred Basin, which formed part of the city’s original harbour.

Its properties offer retail, office, fishing, logistics and industrial, hotel and residential services, as well as undeveloped bulk.

In its interim financial results for the six months ended 31 December 2024, the group said that the Waterfront exceeded expectations due to increased domestic and international tourism.

The value of Growthpoint’s share in the Waterfront jumped from R11.5 billion to R12.4 billion over the period, valuing it at almost R25 billion.

The mixed-use precinct also contributed R421 million of the group’s overall R2.5 billion profit before tax. V&A Waterfront is anticipated to achieve mid-single-digit growth over the full 2025 financial year.

Outside of the Waterfront, the group said that the improving perception of the South African political landscape is creating a more favourable environment for the REIT sector.

“This, coupled with lower inflation, further potential interest rate relief during the remainder of FY25 and limited load shedding, will impact positively on all sectors,” said the group.

Elsewhere, the group said that the office sector seems to have stabilised and is outperforming in Cape Town and Umhlanga Ridge, KwaZulu-Natal.

The group added that the logistics and Industrial sector, which benefits from a more balanced supply-demand dynamic, is expected to outperform other sectors.

The group also believes that KwaZulu-Natal and the Western Cape will continue to deliver superior performance.

However, the group warned that the redevelopment of the Lux Mall and the Table Bay Hotel would hurt FY25’s performance. Both redevelopments are expected to open near the end of 2025.

The group added that it continues to prioritise the growth of its investments and exposure to the better-performing logistics sector and the Western Cape region.

This includes R182.6 million spent on developing new logistics and industrial warehouses, as well as R945 million used for redeveloping the Bayside Mall, Table View and The Hilton Canopy Hotel, Longkloof Studios.

The group said that this successful implementation is evident in the performance of the logistics and industrial portfolio, with vacancies dropping to a six-year low of 3.5%.

Financials

The group’s distributable income per share (DIPS) increased by 3.9% to 74.0 cents per share (HY24: 71.2 cents per share).

This was due to improved contributions from its three South Africa sectors, including like-for-like rental growth, lower negative rent reversions and reduced vacancies in the logistics and industrial sector.

The V&A Watefront delivered a 16.6% like-for-like increase in net property income due to increased tourism and the positive impact this had on retail, hotels and attractions.

Growthpoint’s 50% share of distributable income also by 4.5% to R398.2m (HY24: R380.7m) after taking into account increased net finance costs on external borrowings.

The group’s dividend per share also increased by 3.7% to 61.0 cents per share.

“Our diversified portfolio and income streams position us defensively for FY25,” said the group.

“Our domestic portfolio’s improving performance driven by strengthening property fundamentals, the strong operational fundamentals of our international investments.”

“And the first interest rate cut in Australia since November 2020 indicates that we have reached the bottom of the property cycle.”

“We expect DIPS to grow by between 1% and 3% for FY25, even though interest rate movements remain uncertain.”