Growthpoint half-year revenue up 5.3% to R13.37bn

South Africa's largest listed property company, Growthpoint Properties, has released its annual earnings report, revealing a 5 per cent increase in headline earnings per share. The company's revenue also saw a modest growth of 5.3 per cent, but CEO Norbert Sasse acknowledges the challenges of operating in the current economic environment. With vacancies standing at 9.2 per cent, a slight improvement from the previous year's 10.1 per cent, Growthpoint Properties is navigating a tough market with various headwinds affecting its performance. Sasse attributes the muted growth to the impact of high interest rates globally and domestically, as well as challenges like unprecedented load shedding and a stagnant economy. Despite these obstacles, Sasse remains optimistic about certain segments of the company's portfolio showing signs of stability and potential growth. The CEO highlights the success of the V&A Waterfront fund as a significant contributor to the company's overall performance. However, he cautions that the forecast for the next financial year anticipates a decline in distributable earnings of between 10% and 15%, mainly due to the impact of high interest rates on the company's floating rate debt. Looking ahead, Sasse believes that a recovery may not materialize until the year after next, contingent on a gradual decrease in interest rates and an improvement in the fundamental property performance. Addressing the evolving dynamics of the office market, Sasse acknowledges that traditional office layouts may need to adapt to attract tenants in a post-COVID world. He emphasizes the importance of providing additional amenities and services to make office spaces more appealing and competitive in a changing landscape. While acknowledging the oversupply of office space, particularly in Gauteng, Sasse points out pockets of high demand in regions like the Western Cape, where Growthpoint Properties has seen a significant reduction in vacancies and even considers constructing speculative office spaces to meet the growing demand. Despite challenges in some areas, Sasse remains confident in the resilience of the office sector as an asset class, emphasizing the need for innovation and adaptation to meet evolving market demands.