Plans to supersize Fourways Mall begin

18-11-2015
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Moneyweb
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Tenants flock to the retail centre that is part of a new CBD.

Construction at the much-talked-about Fourways Mall in Johannesburg, which Accelerate Property Fund is looking to supersize and could potentially take on Sandton City, has started. The master plan for Fourways Mall includes the addition of 90 000 square metres to the centre which will see it grow to 170 000 square metres – transforming it into a super-regional shopping centre.

When the development was announced in 2013, management looked to break ground in the first-quarter of 2015. But the earthworks on the retail development, in which Accelerate has partnered with Fourways Precinct Proprietary, only began in the third-quarter and construction is to be completed in three years. Speaking after the release of Accelerate’s interim results to September 30, chief operating officer Andrew Costa said although the counter would have liked for it to start quicker, “we wanted to get it right rather than rushed.”

Already tenants are lining up at the shopping centre, which is 70% let and heading towards 85%, said Costa. Some of the tenants include toy retailer Hamleys, fashion retailer Forever 21 and fitness trampoline company Bounce. Accelerate is looking to attract international fashion retailers which, over the past five years have been growing their exposure in the SA market as a stepping stone to expand into other African markets. Accelerate is in the process of concluding a lease agreement with Zara. Upon completion, Accelerate will own 50% of the retail centre, with the balance owned by the Fourways Precinct Proprietary, which has the development rights to Fourways Mall. This structure enables Accelerate to not hold any development risk.

Fourways Precinct is a wholly owned subsidiary of Eriologix which is associated with Accelerate CEO Michael Georgiou. Costas said management is mindful of SA’s worrying economy, which in some cases has prompted counters in the JSE’s more-than-R600 billion real estate sector to put the brakes on acquisitions and rather focus on developments. He said as the development rolls out, Accelerate will be looking at the performance of the economy and tracking whether it will have a bearing on the retail development.

Accelerate’s refurbishment of Fourways Mall will complement plans by the local council to position Fourways as a new CBD. The idea is to create a CBD using the existing critical mass within the Fourways node, which has been identified as one of the fastest growing and populated areas in Johannesburg. Surrounding residential areas such as Fourways Garden, Dainfern and the mega mixed-use development Steyn City will also have a positive spin-off for the planned CBD. The plans for the new CBD come as Sandton battles congestion issues, with corporates continuing to relocate to the business hub.

Amenities such as schools, the Life Fourways Hospital, Accelerate’s retail centres and Lanseria airport, for example, add to Fourways’ mini-city appeal. Plans to extend the Gautrain line to the Fourways area are in the pipeline, as part of the Department of Transport’s 25-year integrated transport master plan. Accelerate’s retail properties in Fourways, such as Cedar Square, Fourways View, The Buzz Shopping Centre and Leaping Frog Shopping Centre, will benefit from the planned CBD, as Fourways Mall has in recent years lost foot traffic to Sandton.

Retail properties make up 71.9% of Accelerate’s revenue of R417 million for the period under review. Since listing in 2012, the property counter, with a market capitalisation of R4.9 billion, grew its property value from R5.5 billion to R7.6 billion. Investors were rewarded with a 10.93% growth in the dividend payouts to 26.61 cents per share.