SA’s retail giants on the ropes

Mall

Cape Town – South African shopping malls, particularly the largest and mid-tier centres, are facing a range of financial, operational, and structural challenges in 2025, reports say. 

While some regions and segments show resilience, the overall sector is under pressure from multiple fronts.

Financial Strain and Business Rescue Cases

  • The most high-profile case is Fourways Mall, the country’s largest shopping centre, which has entered business rescue due to severe financial distress, according to BusinessTech and Daily Investor. The mall has struggled with high vacancy rates, declining foot traffic, and a drop in net rent per square meter—from R298 to R262 between 2021 and 2023. Its fair value has dropped from R9.6 billion in 2020 to R8.04 billion in 2023.

  • The mall’s co-owner, Azrapart, was unable to service debts of R2.3 billion, prompting creditors to seek court intervention. Hopes for a R2.6 billion capital injection from a UK-based investor proved unfounded, leading to the business rescue order, the report said.

  • Accelerate Property Fund, which owns the other half of Fourways Mall, is seeking to raise R200 million to stabilise the asset, Nova Property reported.

Wider Market Performance and Regional Differences

  • According to the Clur Shopping Centre Index, rent growth in major provinces like Gauteng and KwaZulu-Natal has been below inflation, which is notable given that inflation itself is at historically low levels (2.7%). This means real rental income is declining in these key markets.

  • The Western Cape stands out as an exception, with rental growth (6.2% y/y) significantly outpacing inflation and outperforming other provinces.

  • Smaller community and convenience centres are performing better than large malls, which continue to lag in growth.

Structural and Operational Challenges

  • Many large and middle-market malls are struggling with empty storefronts, declining customer bases, and increased competition from both luxury/budget malls and online shopping. Notable struggling malls include Northgate, Eastgate, and Fourways.

  • The shift to online shopping, although still a small share of total retail, is accelerating, particularly among middle-market consumers, further eroding foot traffic in traditional malls.

Development and Infrastructure Hurdles

  • New mall developments face significant barriers, including regulatory delays, land acquisition difficulties, inadequate road networks, and unreliable utilities. These infrastructure issues make it harder for new projects to succeed and for existing malls to attract tenants and customers.

  • Competition from established retail centres, combined with high operating costs and the need for unique customer experiences, pressures both new and existing malls to innovate or risk obsolescence.

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