- The average monthly footfall in Hyprop's malls is 7.6% lower than in 2020.
- But the company is 'repositioning' its malls to improve foot traffic and ultimately sales and rental income.
- But this repositioning will lead to lower rental income growth in the next two years as Hyprop changes its tenant mix.
The owner of Canal Walk, Hyde Park Corner and Rosebank Mall says post-Covid-19 recovery is slow in its malls. Customer footfall, trading densities and turnovers of travel, beauty and entertainment tenants are still below pre-Covid-19 levels.
Hyprop Investments said the average monthly footfall in its malls was 7.6% lower than in 2020, trading density was down 2.5%, but tenant turnover rose 3% on average in the 12 months to end-June.
Because of this slow recovery, the rental discounts the company is still giving its tenants and reduced net property income that the group generated because of Covid-19 saw the valuation of Hyprop's SA property portfolio decrease by R1.6 billion in the year to 30 June.
But the company has commenced several initiatives to strategically reposition its malls to improve footfall and help its tenants boost sales, which should translate into better rental income for it.
This repositioning is expected to last two years. And during that time, the company told investors to expect relatively low rental income growth as the repositioning will require changes to the tenant mix of each mall. But the group said that this "improvement" in the tenant mix should result in income growth in the long run.
In the year to June, Hyprop has already introduced a number of new anchor tenants into its malls. It opened Checkers FreshX stores in Rosebank Mall and Woodlands Mall. It is upgrading the existing Checkers at CapeGate Mall to Checkers FreshX too and hopes that the store will be operating by December.
Another initiative that the group hopes will build more resilience to its malls is embracing online shopping. Called the 'golden thread', that strategy aims to change Hyprop's shopping centres from traditional mall structures to an omnichannel environment that allows customers to choose how they want to shop - online or in brick-and-mortar stores.
The company said this will create a distinct personality for its malls and allow all of them to be connected through a unified set of services, offerings and experiences.
"The ongoing strategic repositioning of the South African portfolio is vital to improving footfall, tenant performance and ultimately rental income growth," said Hyprop CEO Morné Wilken.
He said while the company expects relatively low rental income growth for the next two years, the repositioning of its malls was necessary to ensure that they remain relevant in an ever-changing retail landscape.
"We are confident that our 'golden thread' initiative will assist with just that," added Wilken.