{"id":783965,"date":"2024-07-24T10:00:00","date_gmt":"2024-07-24T08:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=783965"},"modified":"2024-07-24T09:42:08","modified_gmt":"2024-07-24T07:42:08","slug":"biggest-shopping-mall-in-south-africa-facing-a-crisis","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/property\/783965\/biggest-shopping-mall-in-south-africa-facing-a-crisis\/","title":{"rendered":"Biggest shopping mall in South Africa facing a crisis"},"content":{"rendered":"\n

South Africa\u2019s biggest shopping centre, Fourways Mall, faces significant financial headwinds with high vacancies, poor foot traffic, and declining fair value.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

The biggest challenge is the high number of empty shops. Fourways Mall\u2019s vacancy rate increased from 3% to 8% from 2021 to 2023.<\/p>\n\n\n\n

The impact on the company\u2019s finances is significant. Fourways Mall\u2019s net rent per square meter has significantly deteriorated \u2013 from R298 in 2020 to R262 in 2023.<\/p>\n\n\n\n

The net rent refers to the income the company generates from the property after all property expenses are deducted.<\/p>\n\n\n\n

Accelerate\u2019s latest financial results showed that Fourways Mall\u2019s gross rent, before expenses, was R223 in 2024, much lower than its 2023 net rent of R262.<\/p>\n\n\n\n

This is a catastrophe. This means it is rapidly losing tenants and will need to do something special to get them back.<\/p>\n\n\n\n

The high vacancy rate and declining rent per square meter have significantly impacted Fourways Mall\u2019s value.<\/p>\n\n\n\n

Between 2020 and 2024, Accelerate Property Fund\u2019s 50% share of the property declined from R4.8 billion to R3.9 billion.<\/p>\n\n\n\n

This decline is significant as it followed a big investment in Fourways Mall\u2019s expansion and revamp in 2019.<\/p>\n\n\n\n

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

After this expansion project, Accelerate promised investors solid returns and customers a world-class shopping and entertainment experience.<\/p>\n\n\n\n

It said new traffic routes, densification and more retail space will ensure users get an \u201cinternational standard retail experience\u201d.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

After the costly Fourways Mall expansion, it has suffered several downward fair value adjustments.<\/p>\n\n\n\n

Asset fair values are reduced when performance suggests they are worth less than what is reported in the company\u2019s books.<\/p>\n\n\n\n

It has reached such concerning levels that Accelerate had to raise additional money to address its challenges.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

The mall\u2019s challenges have also significantly impacted Accelerate Property Fund\u2019s performance over the last four years.<\/p>\n\n\n\n

From 2019 to 2024, the property manager\u2019s revenue declined from R1.2 billion to only R819 million. It has also recorded big losses over the period.<\/p>\n\n\n\n

Accelerate Property Fund\u2019s latest financial results, summarised in the charts below, illustrate Fourways Mall\u2019s financial challenges.<\/p>\n\n\n\n

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Fourways Mall turnaround plan<\/strong><\/h2>\n\n\n\n

The Fourways Mall co-owners have launched a new strategy to improve its performance. It included appointing Flanagan & Gerard as its 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 oversee property management at the mall.<\/p>\n\n\n\n

The strategy includes improving signage for seamless navigation, introducing new tenants, deploying backup power solutions, and ramping up security.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

This improvement is aimed at managing traffic flow inside and outside the Fourways Mall, which has been problematic.<\/p>\n\n\n\n

The mall expanded its transportation hub, providing a comfortable and convenient environment for taxi drivers and passengers.<\/p>\n\n\n\n

The commuter court includes retail offerings, Roots Butchery and Restaurant, Real Fish and Chips and Arthur Ford.<\/p>\n\n\n\n

\u201cThe secure and convenient movement of our consumers in and out of the mall is paramount to us,\u201d says Paul Gerard, managing director of Flanagan and Gerard.<\/p>\n\n\n\n

Fourways Mall vacant shops<\/h2>\n\n\n\n
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South Africa\u2019s biggest shopping centre, Fourways Mall, faces significant financial headwinds with high vacancies, poor foot traffic, and declining fair value.<\/p>\n","protected":false},"author":10,"featured_media":783991,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12755],"tags":[20271,20270,19939,19746,20268,20267,20269],"class_list":["post-783965","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-property","tag-accelerate-property-fund-apf","tag-eyethu-orange-farm-mall","tag-flanagan-gerard","tag-fourways-mall","tag-heidelberg-mall","tag-highveld-mall","tag-vaal-mall"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/783965","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\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=783965"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/783965\/revisions"}],"predecessor-version":[{"id":783985,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/783965\/revisions\/783985"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/783991"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=783965"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=783965"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=783965"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}