{"id":688269,"date":"2023-05-16T10:37:23","date_gmt":"2023-05-16T08:37:23","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=688269"},"modified":"2023-05-17T16:48:54","modified_gmt":"2023-05-17T14:48:54","slug":"shopping-malls-are-surviving-despite-south-africans-not-having-enough-to-spend","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/688269\/shopping-malls-are-surviving-despite-south-africans-not-having-enough-to-spend\/","title":{"rendered":"Shopping malls are surviving despite South Africans not having enough to spend"},"content":{"rendered":"<p>Despite the harsh economic conditions that South Africans find themselves in, Octodec, a leading real estate investment trust company, says its rental spaces in shopping malls have continued to see increases in rental income.<\/p>\n<p>Higher rental incomes can often indicate more positive consumer behaviour and economic activity. This comes at a time, however, when South Africans are cash-strapped &#8211; overburdened with increased monthly debt repayments and soaring inflation.<\/p>\n<p>Although there is stable shopping behaviour, consumers are at large shifting to spending on shelf-staple goods rather than luxury items, according to NielsenIQ.<\/p>\n<p>Positive developments for shopping malls are reflected in Ocotdec&#8217;s latest interim results for the six months that ended 28 February 2023, which recorded income growth in its retail and residential sectors.<\/p>\n<p>It said that several renewals of commercial leases are currently being concluded, with demand remaining strong in Johannesburg and Tshwane.<\/p>\n<p>Although Octodec mainly deals with properties in CBDs, it has several malls or shopping centres in its portfolio &#8211; including Killarney Mall, Woodmead Value Mart in Johannesburg, Waverley Plaza, and the Park in Tshwane.<\/p>\n<p>Across its entire portfolio, the group achieved 3.2% growth, mainly due to the 10.3% increase in its residential portfolio.<\/p>\n<p>Octodec said that its retail shopping centres portfolio, mainly comprised of convenience shopping centres, continued to perform strongly, with core vacancies ranging between 0.1% and 6.4%, excluding Killarney Mall.<\/p>\n<p>Overall rental income across all its shopping centres, including Killarney Mall, jumped by 3.6% on a like-for-like basis.<\/p>\n<p style=\"font-weight: 400;\">The group&#8217;s financial results can be seen below:<\/p>\n<ul>\n<li>Rental income increase of 3.2% to R974.2 mil (HY2022: R944.4 mil)<\/li>\n<li>Like-for-like rental growth of 4.1% (HY2022: 1.2%)<\/li>\n<li>Cash generated from operating activities before dividend payment R239.8 mil (HY2022: R93.9 mil)<\/li>\n<li>Distributable income after tax (REIT funds from operations R234.5 mil (HY2022: R211.8 mil)<\/li>\n<li>The all-in weighted average cost of funding is 9.0% (FY2022: 8.7%)<\/li>\n<li>Distributable income per share (cents) 88.1 (HY2022: 79.6)<\/li>\n<li><strong>Dividend per share (cents) 60.0<\/strong> (HY2022: 50.0)<\/li>\n<li>Net asset value (NAV) per share R24.01(FY2022: R23.28)<\/li>\n<li>Loan-to-value (LTV) 38.8% (FY2022: 39.7%)<\/li>\n<\/ul>\n<p>Octodec said that its property operating costs only increased by 1.1% due to a reduction in assessment rates because of the favourable outcome of several municipal appeals and the decrease of bad debts.<\/p>\n<p>However, the group said that its generator costs increased by R6.9 million (1HFY2022: R1.0 million) due to extensive load shedding over the six months to February 2023.<\/p>\n<p>&#8220;We continue to investigate opportunities to install solar panels at some of our better-suited properties that have adequate and appropriate roof space,&#8221; Octodec said.<\/p>\n<p><strong>Shoppers returning\u00a0<\/strong><\/p>\n<p>Increased revenue for rentals in shopping malls aligns with recent reports that South Africans remain committed to shopping sprees over the weekend.<\/p>\n<p>In mid-February, asset management company Clur released a report detailing that in 2022, trading density and growth for South African shopping centres were at their highest in four years.<\/p>\n<p>The group added that despite tricky operating environments, the retail property sector is remaining resilient, backed by strong and new leasing activity.<\/p>\n<p>In October last year, Eight20 reported that foot traffic in South Africa&#8217;s malls was steadily increasing.<\/p>\n<p>Eighty20 said that foot traffic in seven of the malls it studied &#8211; including Sandton City, Mall of Africa and Canal Walk &#8211; had recovered and even exceeded pre-Covid 19 numbers.<\/p>\n<p><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2022\/10\/Footfall-per-Mall-e1666773717343.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-638007 aligncenter\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2022\/10\/Footfall-per-Mall-e1666773717343.jpg\" alt=\"\" width=\"1000\" height=\"563\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2022\/10\/Footfall-per-Mall-e1666773717343.jpg 1000w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2022\/10\/Footfall-per-Mall-e1666773717343-300x169.jpg 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2022\/10\/Footfall-per-Mall-e1666773717343-768x432.jpg 768w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><\/a><\/p>\n<p>Although more people returned to malls, the amount of time spent in the malls did not match previous levels &#8211; declining by 65% and 85% during the lockdown.<\/p>\n<p>Andrew Fulton, a director at Eighty20, said the assessment showed that South Africans were far more deliberate in their shopping trips and spent less time browsing.<\/p>\n<p>&#8220;People tend to go into the store, get what they need, and get out quickly to avoid lengthy contact with other shoppers,&#8221; noted Fulton. &#8220;The closing of cinemas, the shift to more online shopping and the rise of grocery delivery services are other likely contributors to decreased dwell time.&#8221;<\/p>\n<hr \/>\n<p><strong>Read<\/strong>: <a href=\"https:\/\/businesstech.co.za\/news\/business\/678967\/new-18000-sqm-shopping-mall-opens-in-kzn-as-another-makes-a-big-comeback-after-the-2021-riots\/\" rel=\"bookmark\">New shopping mall opens in KZN \u2013 as another makes a big comeback after the 2021 riots<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Octodec has published its interim results for the six months ended 28 February 2023. <\/p>\n","protected":false},"author":95,"featured_media":688271,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26,18065],"class_list":["post-688269","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline","tag-octodec"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/688269","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=688269"}],"version-history":[{"count":9,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/688269\/revisions"}],"predecessor-version":[{"id":688947,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/688269\/revisions\/688947"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/688271"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=688269"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=688269"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=688269"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}