Big problem for shopping malls in South Africa

Shopping malls in Gauteng and KwaZulu-Natal saw below-inflation rent growth at the start of 2025 despite the country’s already incredibly low inflation levels. 

This is according to the latest Clur Shopping Centre Index, which tracks the performance of 5.4 million sqm of space at over 130 shopping centres in South Africa and Namibia. 

The index showed that the community and smaller retail centres continued to lead in growth in Q1 2025, while larger malls lag.

However, despite the troubled patches in the most populous provinces, the overall picture of shopping malls in the country is one of relative stability.

“The national Clur Index for Q1 outperformed March 2025 CPI and saw growth relative to December 2024, in both annualised trading density and base rentals,” said Belinda Clur

“The rent-to-sales ratio maintained its lowest level over five years, indicating continued stability and reduced market risk.”

Notably, the Western Cape showed the strongest rental performance of the three key provinces, with R256.22/sqm and 6.2% year-on-year growth, beating inflation by 3.5 percentage points. 

KwaZulu Natal was second at R238.53/sqm, growing by 2.5% y/y. Gauteng’s growth rate was 2.4% y/y, underpinned by a rental of R233.17/sqm.

With inflation at 2.7%, the performance of malls in Gauteng and KZN raises alarm bells as neither could overcome a relatively low base in overall selling prices. 

Inflation was incredibly low over the quarter, and currently sits below the South African Reserve Bank’s target range of 3% to 6%.

Elsewhere, the national Clur Index Base rent to Sales ratio closed the first quarter of the year at 6.6% and saw stable year-on-year percentage growth. 

“The market has not deviated from this level since late ’23, indicating an ongoing position of stability and reduced market risk against the volatility of the last five years,” said Clur.

The Western Cape had the lowest rent-to-sales ratio of the three key provinces, at 6.1%, while Gauteng had the highest, at 6.9%.

One slight positive for Gauteng is that its annualised trading density did increase to R39,462/sqm, an inflation-beating performance of 3.9%.

The Western Cape also saw 5.3% growth at R47,665/sqm. However, KZN was not as lucky and only saw growth of 1.0% to R43,107, well below inflation.

Overall results 

Over the quarter, all measured shopping centre segments outperformed March 2025 CPI. 

“The national Clur Index closed Q1’25 with an annualised trading density of R41,162/sqm and y/y% growth of 3.4%.” 

This was an outperformance of March 2025 CPI by 0.7 percentage points and showed an expansion of 0.4% compared to 2024. 

However, community and smaller centres showed the highest year-on-year growth rate of 5.1%, beating CPI by 2.4 percentage points and expanding by 1.4% relative to December 2024.

Small regional centres followed at 3.6%, while regional centres showed the next highest growth expansion of 0.9% compared to the end of 2024. 

Super regional centres showed the highest trading density of R50,440 sqm, followed by community and smaller centres at R46,564/sq.m

Regarding rental performance, community and smaller centres showed the highest year-on-year growth rate of 5.0%. Regional centres followed closely by at 4.9% 

The national Clur Index for Base Rent closed the first quarter of 2025 at R233.10/ sqm, with year-on-year growth of 3.4%. This showed a slight expansion relative to December 2024 of 0.1% 

Super regional centres showed the highest rentals of R314.23/sqm, followed by regional centres at R227.48/sqm. 

Super regional centre rentals grew by 2.6% y/y, underperforming CPI by -0.1%.