Dipula cut total vacancies to 6%

Dipula Income Fund, a South African property company, has shown resilience and positive growth in challenging market conditions. The CEO, Izak Petersen, recently discussed the company's performance in an interview with CNBC Africa. Petersen highlighted the difficulties faced by property owners in South Africa, citing dysfunctional municipalities and challenges at the national government level. However, he emphasized the country's large population and the essential need for basic goods and services, which has contributed to the resilience of the retail sector. Petersen noted that Dipula Income Fund has been experiencing better trading in smaller centers, both in urban and rural areas, with some rural areas outperforming urban centers. The key factor driving the strong performance in rural areas is the dense population, smaller basket sizes, and limited supply of retail centers. This trend has led to a diversification strategy for the company, contributing to a 3% increase in revenue and a decrease in vacancy rates across the portfolio. The CEO expressed optimism about the future outlook, citing a significant improvement in vacancy rates compared to the previous year. Vacancy rates across the portfolio have dropped from 10% to 6%, with office vacancies decreasing from 30% to 15%. Petersen attributed this positive trend to a potential uptake in economic activity and improving market conditions. He also highlighted the positive impact of lower interest rates and increasing space absorption in the market. Regarding the office and residential sectors, Petersen acknowledged the challenges posed by the COVID-19 pandemic on office spaces but noted a shift towards a hybrid work model. Companies are adopting flexible approaches to office work, balancing remote work with in-person collaboration. Petersen predicted a normalization of the office market as companies recognize the value of office spaces for collaboration and professional development. In the residential sector, Petersen pointed out the growing trend of renting for flexibility, especially among the younger generation. With high-interest rates and changing cultural attitudes towards renting, the affordable rental market is expected to perform well, driven by rapid urbanization and population movement within South Africa. When questioned about the company's decision not to provide guidance for the full year, Petersen cited global volatility, including geopolitical tensions and uncertain market conditions. While acknowledging potential challenges such as upcoming elections in South Africa, Petersen emphasized the company's commitment to transparency and communication with the market. Overall, Izak Petersen remains optimistic about the future of Dipula Income Fund, buoyed by improving market conditions, decreasing vacancy rates, and positive trends in the retail, office, and residential sectors.