property

Fairvest ​Doubles Down on Retail, Sees Growth in Community Centers

Fairvest is intensifying its focus on community retail as it progresses its conversion into a dedicated retail-focused‌ Real Estate Investment Trust‌ (Reit).The company, formed through a merger with Arrowhead Properties in 2022, is actively reshaping its portfolio ⁣to prioritize high-performing shopping centers catering to essential consumer ‍needs.

According to a company statement released Friday, Fairvest is ​achieving this⁣ by⁢ divesting non-core assets -⁣ primarily office and industrial properties -‍ and reinvesting the capital into retail properties.This strategy appears to be ‌yielding positive results, with the ⁢group’s market capitalization increasing by​ 59% over the past year, ⁤rising from R8.3 billion to R13.2 billion. Simultaneously, its B-share price has climbed 27.5% during the same period.Fairvest anticipates vacancy‌ rates will fall below 5%. Currently, over 70% of the ​company’s revenue is generated by its retail portfolio.

The move aligns with recent trends in the South ​african retail property ⁤sector. A report from the SA Property Owners ⁣Association (Sapoa), compiled ‍by MSCI, indicates resilience in the sector ​during the second quarter, with average trading density growth increasing from 3.5% in ⁣the first quarter ⁤to 4.1%. Notably, smaller malls are ‌demonstrating stronger performance due to their convenience and accessibility,​ with food retail remaining‌ a key driver.

Despite positive indicators,Fairvest acknowledges the challenging macroeconomic surroundings. “The macroeconomic environment remains tough,with high interest rates,poor municipal service⁣ delivery and ongoing infrastructure challenges weighing on businesses across ‌SA. Pressure on consumers in value-focused communities continues to limit discretionary spending,” the company stated.

Fairvest has‍ also made a strategic investment of ​R486 million‌ in Onepath Investments, the owner‌ of digital infrastructure leased ​to fibertime™, a​ provider of pay-as-you-go fiber services targeting south⁣ African⁣ townships.

Autonomous property analyst Keillen Ndlovu believes the future of retail‌ lies in localized centers. “The days ‍of ​building massive regional malls are over – the market is well‍ served. The real opportunities now ⁣lie in community and neighbourhood centres, especially in growing residential areas, rural towns and townships, ​where shoppers ⁤still ⁣travel long distances just to meet basic ‌needs,” Ndlovu said.

Fairvest plans to continue selling off non-core ‌assets and ‌acquiring retail properties that fit its strategy, focusing on locations near high-traffic areas and ​transport hubs, anchored by strong national tenants serving underserved markets throughout South Africa.