Major mall landlord ditching Gauteng for Cape Town

The largest retail-focused landlord in the country, Hyprop, has been steadily refocusing its portfolio away from Gauteng.

As far back as June 2023, it stated its intention to prioritise “projects in favoured jurisdictions”, specifically the Western Cape and Eastern Europe.

Read: Hyprop lifts dividend nearly 10% as earnings beat guidance

To this end, it has acquired one sizeable mall in Cape Town and disposed of 50% of one in Johannesburg. It now has five in Gauteng and four in the Western Cape (all in the Cape Town metro).

Table Bay Mall

Shortly after it publicly stated that it would prioritise regions other than Gauteng, it acquired Table Bay Mall, a 68 000m² regional centre in Sunningdale near Blouberg, for R1.625 billion in cash.

At the time, it said this was a “unique opportunity for Hyprop to acquire a premium retail property at a fair market value at a relatively early stage of its life cycle, with the potential to unlock additional growth through active asset management initiatives, including optimising the tenant mix”.

Read: Hyprop buys Table Bay Mall for R1.6bn

It described the region as one that is expected to experience “above-average growth, due to residential development that is partly driven by relocation trends within South Africa that favour the Western Cape”.

“The area around the Table Bay Mall has been earmarked for future construction of 5 000 to 7 500 residential units over the next 5-10 years, depending on market conditions,” it said.

Listen:
Hyprop sharpens focus on Western Cape and Eastern Europe
Hyprop update supports improved consumer sentiment

Hyprop has applied for an additional 20 000m² of bulk with a view to expanding the centre in the medium term.

Hyde Park Corner 

Earlier this year, it finalised a deal to sell a 50% share in Hyde Park Corner (38 000m²) in Johannesburg to Millennium Equity Partners for R805 million. It said that aside from its shifting geographic focus, it is also prioritising “regional malls rather than mid-sized malls”.

Read: Hyprop sells half of Hyde Park Corner

Millennium has an option to acquire the remaining 50% in late 2027.

The fading Hyde Park has struggled in recent years as the tenant mix shifted dramatically.

A number of luxury brands have been added to the centre with mixed success.

In the past decade, it has practically only had two anchor tenants: Woolworths Food and, until the supermarket and liquor store were shut in September 2024, Pick n Pay.

A new Checkers Fresh X has invigorated footfall somewhat, with foot count up 12% in October this year compared to the same month last year.

Hyprop has been successful in reducing vacancies at the centre (under 4% as at 30 June) by adding a noticeable number of galleries. Whether this is a sustainable long-term solution remains to be seen.

Adding Workshop 17 (which offers coworking and serviced office spaces) to the centre, which solved a problem with one of its entire wings, has also helped with footfall. Despite the “co-ownership”, this arrangement means it will all but likely have four in each province in due course.

Another disposal to come

In its pre-close update on 1 December, Hyprop said it was “at an advanced stage of concluding another disposal, which will be announced once the agreements are finalised”.

In a later update, it specified that this is in Gauteng.

It says potential acquisitions will be funded from this sale, as well as its available lending facilities.

In South Africa, it has an enormous capital expenditure budget of R846 million for its 2026 financial year.

The biggest project is the Phase 2 extension of Somerset Mall in Somerset West, which includes bathroom upgrades and retiling. The Phase 3 extension is next.

Read: Somerset Mall gets R350m upgrade

At CapeGate in Brackenfell, it is busy with its Phase 1 retail extension of about 10 000m² .

There is also the addition of satellite offices at The Glen in the south of Joburg, where it is designing what it terms its “phase one masterplan”.

It is notable where Hyprop is and is not spending large amounts of money.

It certainly wouldn’t be selling Rosebank Mall, although its offices might be a sensible disposal (vacancies were at 22% in June). Another option could be its 17 Baker Street property (opposite the Shell service station under Rosebank Mall), which was acquired for strategic reasons and then mothballed in 2024.

A dark horse could be Woodlands Boulevard  in Pretoria East, which has battled with elevated vacancy levels in recent years.

Power projects

Along with these expansions, it is aggressively adding solar generation projects to its portfolio which it says will “deliver returns in excess of 20%”.

To this end, it raised R300 million in an accelerated bookbuild last week. It says that while its capex budget is fully funded for the year, it will bring forward a food court upgrade at its trophy asset Canal Walk in Cape Town, along with the solar projects, and ensure that it has the dry powder it will need for “potential acquisitions it is evaluating”.

Hyprop is clearly carefully considering an acquisition in the Western Cape. There are not too many regional mall-sized assets (50 000m² to 100 000m²) up for grabs in that market.

Will Old Mutual be looking to get rid of Cavendish Square? It’s doubtful that Attacq would be in a hurry to offload Eikestad Mall in Stellenbosch or Garden Route Mall in George, likewise with Redefine and its Blue Route Mall in Tokai in Cape Town.

Still, Hyprop’s direction of investment is clear.

Listen/read: Why major malls need to continually innovate and invest [Dec 2022]

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