{"id":773750,"date":"2024-05-27T07:16:12","date_gmt":"2024-05-27T05:16:12","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=773750"},"modified":"2024-05-28T14:16:10","modified_gmt":"2024-05-28T12:16:10","slug":"south-africas-largest-shopping-mall-is-in-serious-trouble-2","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/773750\/south-africas-largest-shopping-mall-is-in-serious-trouble-2\/","title":{"rendered":"South Africa’s largest shopping mall is in serious trouble"},"content":{"rendered":"\n

Fourways Mall is in serious financial trouble. It has a large number of vacant stores and is facing serious financial problems.<\/p>\n\n\n\n

It has reached such a dire situation that Accelerate Property Fund (APF), which owns 50% of Fourways Mall, is looking to raise R200 million to address the problem.<\/p>\n\n\n\n

The group said it will use the money to pay off debt and reposition its finances, particularly in relation to Fourways Mall.<\/p>\n\n\n\n

Fourways Mall is the largest shopping centre in South Africa, with a gross lettable area of 178,000 square meters and 350 stores.<\/p>\n\n\n\n

It has an excellent location and a great track record. However, it is not producing the results expected after its big expansion and revamp, which was completed in September 2019.<\/p>\n\n\n\n

Although no official figures about the cost of the expansion and revamp have been given, Fourways Mall\u2019s fair value increase suggests it is north of a billion rand.<\/p>\n\n\n\n

Accelerate Property Fund\u2019s latest results revealed that Fourways Mall\u2019s vacancies increased from 14,349 sqm in March 2023 to 15,109 sqm six months later.<\/p>\n\n\n\n

\u201cManagement continues to focus on reducing vacancies, with the overall vacancy of 17.0%,\u201d it said.<\/p>\n\n\n\n

An analysis of Fourways Mall\u2019s finances shows why the shopping mall is in such deep trouble and needs an intervention.<\/p>\n\n\n\n

Following the expansion, Fourways Mall\u2019s gross lettable area (GLA) increased from 61,634 square meters in 2019 to 88,785 square meters.<\/p>\n\n\n\n

However, a lot of the additional gross lettable area is standing empty because of the low occupancy rate.<\/p>\n\n\n\n

The net rent per square meter declined from R298 in 2020 to R262 in 2023. This decline is devastating to a property owner faced with increasing costs.<\/p>\n\n\n\n

Fourways Mall\u2019s fair value declined from R4.8 billion in 2020 to R4.02 billion three years later. This is bad news for the property owners, who are losing money.<\/p>\n\n\n\n

The charts below provide an overview of Fourways Mall\u2019s financial performance over the last four years.<\/p>\n\n\n\n

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Fourways Mall problems<\/strong><\/h2>\n\n\n\n

To see first-hand why the Fourways Mall is struggling, BusinessTech visited the shopping centre on a weekday.<\/p>\n\n\n\n

The first problem was traffic. The roads leading to the shopping mall were clogged because of traffic light problems.<\/p>\n\n\n\n

Although there were pointsmen directing traffic, there were long queues at the main arteries feeding into the mall.<\/p>\n\n\n\n

Another problem was knowing where to enter the mall and park. Although there was some signage, it could be improved.<\/p>\n\n\n\n

Once we entered the mall, it was clear that there was a problem. There were nearly no people in the mall, and many restaurants were empty.<\/p>\n\n\n\n

There was a large percentage of unoccupied stores. In some areas, multiple adjacent stores had no occupants.<\/p>\n\n\n\n

Some empty stores had branding from the previous occupants, others had Fourways Mall paper in the windows, and others were simply empty.<\/p>\n\n\n\n

The photos below show what shoppers visiting the Fourways Mall have grown accustomed to.<\/p>\n\n\n\n

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Fourways Mall empty stores<\/figcaption><\/figure>\n\n\n\n
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More empty stores at Fourways Mall<\/figcaption><\/figure>\n\n\n\n

Big plans to improve Fourways Mall<\/strong><\/h2>\n\n\n\n

In its latest attempt to improve Fourways Mall\u2019s performance, it appointed Flanagan & Gerard as the mall’s strategic asset manager.<\/p>\n\n\n\n

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

The company has developed many shopping centres, including Vaal Mall, Highveld Mall, Heidelberg Mall, Eyethu Orange Farm Mall, and Nicolway.<\/p>\n\n\n\n

It was also behind the award-winning Morningside Shopping Centre, Middelburg Mall, and Mall of the North in Polokwane.<\/p>\n\n\n\n

The Moolman Group has also been appointed to have oversight of property management at the mall.<\/p>\n\n\n\n

The Fourways Mall co-owners have also revealed the targeted strategy to reestablish it as a top-tier shopping destination.<\/p>\n\n\n\n

The strategy will offer a mix of retail options within a convenient, safe, and engaging environment. It includes:<\/p>\n\n\n\n