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2015 IN PERSPECTIVE

CHAIRMAN’S REPORT

We live in interesting times. As we anticipate interest rate rises in

the UK and US, Chinese stock markets have fallen, economic news

flow from that country is largely negative and its currency has been

devalued to support the economy. The devaluation was limited, but

conclusions on the impact of lower Chinese demand on world markets

have impacted global growth projections and, more specifically,

emerging market currencies. Some progress has been made in

addressing the issues Europe faces, but it is likely to be some time

before certain of the more troubled economies in the European Union

are stabilised and interest rates can return to more normal levels.

The South African economy is stuttering. Growth is too low to address

the chronic unemployment problem. Load shedding and unionised

labour hinder business’ ability to create jobs and there is an absence

of leadership from government. The economy depends heavily on a

relatively small tax base and unless we are able to develop and grow

that tax base, the consequent lack of available funding will erode

even more aspects of what are perceived as normal attributes of

a functioning economy.

Despite uncertainties in the global economy and the obvious

difficulties locally, the domestic property sector has performed

strongly over an extended period. Many of the listed counters

produce significant real returns and the sector has seen some of the

consolidation we expected, as well as new listings. The South African

listed property sector produced a total return of 27% for the year to

30 June 2015 and the FTSE/JSE REIT index delivered a return of 22%.

Hyprop’s return for the same period was 59%.

Hyprop’s domestic portfolio performed well during the period. Despite

the pressure on South African consumers, retailers in our centres

produced strong results and we see pleasing demand for space in the

malls. As reported elsewhere, we were able to accommodate some of

this demand through a series of developments in our centres.

The financial state of certain South African retailers featured

extensively in the press during the year; we have replaced some tenants

with stronger covenants who were waiting for space, and will continue

to work with those who have not defaulted.

The redevelopment of Rosebank Mall was completed early in the

period and the mall has traded well since opening. We made various

investments in the remainder of our properties and there is an exciting

pipeline of opportunities that will be completed as appropriate to the

properties and our tenants.

The South African listed

property sector produced

a total return of 27% for

the year to 30 June 2015

and the FTSE/JSE REIT index

delivered a return of 22%.

Hyprop’s return for the

same period was

59%

Gavin Tipper,

chairman

6

Hyprop Investments Limited

Integrated Report 2015