Shopping centres based outside of large city centres are bringing convenience, choice and in many instances, community upliftment to the rural areas in which they are situated. Typically tenanted by supermarkets, clothing, banking and furniture retailers, these South African developments are also providing excellent returns for investors who care about social impact.
Rural shopping developments can provide much-needed impetus for transport infrastructure as well as municipal infrastructure for essential services such as electricity, water and sewerage. They too can spur social responsibility initiatives that provide youth and skills development programmes that seek to help the surrounding communities that need it the most.
For Futuregrowth’s Community Property Fund (CPF), which currently owns and manages 18 centres in seven provinces, its strategy of acquiring and developing shopping centres in underserviced communities throughout South Africa certainly appears to have paid off.
Portfolio manager, Smital Rambhai, says the detailed and focused management by Futuregrowth and their property asset management team, Capital Land, has benefited the portfolio with improved metrics across all key areas such as vacancies, leases, quality of tenants and cost to income ratios.
Having just won Best Performing Specialist Fund over 3 Years at the MSCI South Africa Real Estate Investment Conference 2017 held recently, Futuregrowth’s CPF was recognised for its three year annualised performance of 16,75% for the period ending December 2016. MSCI measures the best performer based on direct property total return on capital employed on an annualised basis. The methodology excludes the effect of gearing and allows the MSCI to compare property funds on a like for like basis in both the listed and unlisted property sector.
Anton Raubenheimer, from Capital Land, notes that the implementation of community engagement initiatives, focused on education, community upliftment and access to basic healthcare, has further strengthened the relationship between the shopping centres and the local communities.
Shopping centres in the portfolio include Kanyamazane Centre in Mpumalamga, Maxwell Centre in KwaZulu-Natal, Diepsloot Mall in Gauteng, Setsing IV Centre in Free State, Unity Centre in Mitchells Plain and Motherwell Centre in Eastern Cape
While the award specifically recognises performance, the Community Property Fund is also mandated to provide benefits to communities such as job creation, access to goods and services and reducing transport costs.