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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