Executives at major retail property landlords expect the momentum, which resulted in a positive performance at shopping centres in 2024, to continue in 2025.

Interviewed for the first edition of Clur Connect, a video report on retail property performance, the executives identified the drop in interest rates, lower inflation, a more stable political environment, reduced load shedding and the two-pot retirement system helping consumer pressures, as key influences which brought growth in trading densities and rentals and a stable rent to sales ratio in 2024.

Clur Connect is part of the Clur Collective, an asset management industry standard and economic indicator, now tracking performance at more than 5.4 million square metres across over 130 shopping centres in South Africa and Namibia. Clur Connect aims to bring a refreshing new look to portray the strength and diversity of the South African retail sector and the importance of its contribution to the economy. Further, it aims to profile the sector’s international leadership.

“We have world-class and forward-thinking shopping centres, asset management and retailers in this country. South Africans often under-sell themselves on the global stage. We need to shift our thinking to a position of strength rather than weakness, as when it comes to the world of retail, we have much to teach the rest of the world,” says Belinda Clur, managing director of Clur International which produces the Clur Shopping Centre Index.

South African retail property emerged from 2024 in a healthy position which bodes well for the future, she notes, with the combined November and December festive season showing better trading density and growth than the rest of 2024.

“Shopping centres are destinations where our consumers want to be. It is quite clear that retail therapy is back in form. Customers are looking for unique and immersive experiences in our shopping centres,” comments Muhammad Paruk, Chief Investment Officer at Old Mutual Property and Vice-President of the SA Council of Shopping Centres (SACSC).

He says that November and December 2024 saw a bumper and vibrant trading environment within their portfolio of shopping centres with November outperforming significantly due to five weekends compared to 2023. December 2024 particularly saw outperformance in the entertainment, healthcare, beauty and athleisure categories.

Looking ahead, Paruk says that with retail therapy returning, the appetite for consumers to spend was there, dwell times had improved, trading densities and foot count were up, retailers were aggressively demanding space as they continued with their store rollout strategies, and renewal rates were up. He expected this momentum to continue in 2025.

José Snyders, Chief Executive at Liberty Two Degrees, says: “For the last couple of years, Black Friday has evolved from being a single day to being a period. We’ve seen that the shopper patterns have stretched out over a week rather than a particular day.”

He adds that there was a strong recovery in entertainment, particularly influenced by cinemas with parents bringing their children to the cinemas in the holiday period, and strong trade in restaurants and dining environments. “Our expectation for 2025 is continued stable growth. I don’t think it will be as accelerated as one would hope as a landlord. From a consumer perspective, people will have money and we’ve got the right brands and retailers in our mix that will entice them to come and shop in our environments.”

Leemisa Tsolo, Asset Manager at Attacq Limited, says the experience at their centres on Black Friday was that 2024 was stronger than 2023 with spend a lot more impactful, particularly since Black Friday was on a weekend whereas in 2023 it was midweek. These nuances in timing impacted on spend.

“We definitely saw a lot more discretionary spending across apparel, shoes and fine jewelry – all consistently outperforming the essentials categories like pharmaceuticals and groceries,” he notes, adding that trends will grow, at best, marginally unless big economic factors stimulate growth with growth in rental performance.

Attacq’s strategy was to incentivize tenants to keep refurbishing stores, and it found that tenants had 20% to 30% growth in sales after revamping.

Mark Mac Kaiser, Retail Asset Manager at SA Corporate Real Estate, notes a momentum that started on Black Friday which continued through to Christmas. Instead of hiking prices, a lot of retailers kept prices reasonable and attractive to shoppers.

“It was the best season we’ve seen from Black Friday into Christmas, and there wasn’t a big drop off between the two. There was good growth in our grocery offering, with pharmacies also performing well. Our best performing categories were bottle stores and drive-thrus. We did see an uptick in apparel, especially the outlet athleisure stores.”

He expected trading and rental growth to at least keep up with inflation but he did not foresee a boom like 2004-2008 with increases of 8% -10% to 12%.

Belinda Clur says that 2024 saw a clear shift in the positioning of large and small centres. Smaller centres took over the dominant growth position in the industry and this finding reinforces signals about social impact retail and community involvement.

Ben Kodisang, founder and CEO of ALT Capital Partners, which established the REimagine Social Impact Retail Fund to invest in convenience retail in underserved communities across South Africa, says December 2024 trading was better than November 2024 on the back of economic tailwinds including the lack of load shedding. Food and fashion were standout categories in the fund’s portfolio over the festive season.

“As a social impact investor, we worry a lot around social – how we can restore dignity to communities we serve by bringing the economy to them. By building these environments, hopefully we’re getting parents to be more present at home which means the social ills of gender-based violence and alcoholism will hopefully be addressed,” he says.

“On the environmental side, we continue to look after energy security through solar, to address issues of water by providing backup in our environments, and we continue to be responsible in how we manage waste in our environments.”

“We’re still seeing a lot of investment going into the convenience retail aspect of the market. We are a small player and are likely to invest an additional billion rand into building new products or buying existing products.”

An encouraging aspect heading into 2025 was the maintenance of the reduced level of market risk, says Belinda Clur, which had been indicated by the continuation of the lowest rent-to-sales ratio over five years.

View the first edition of Clur Connect below: