Quintin Rossi. Picture: SUPPLIED
Quintin Rossi. Picture: SUPPLIED

Spear Reit, which owns properties in the Western Cape, says distribution growth will slow in the year to February 2020 as the weak economy raises the prospect of higher office vacancies.

Spear said on Wednesday total distributions for the year to end-February rose 10.1% to 86.42c per share, in line with its earlier forecasts.

The landlord, which focuses mainly on Cape Town and owns the Sable Square shopping centre, said it will probably grow distributions per share by 6% to 8% in the year to February 2020.

The office sector in the Western Cape and nationally “may experience headwinds in the form of increased vacancies”, the group said.

This was because of SA’s low economic growth and “aggressive cost cutting” by companies, many of which were considering “space optimisation”.

But Spear said the Western Cape property sector “has proven to be more resilient than most other provinces in SA”. The province’s infrastructure was better than in other parts of SA, “which makes doing business across the entire Western Cape possible”.

Meanwhile, trading conditions in the hospitality sector had started to improve, albeit slowly, said Spear, which is headed by CEO Quintin Rossi.

Hotel occupancies and bookings were rising, but the recovery in room rates had lagged behind since the end of the water crisis in the Western Cape. 

“Spear continues to have a healthy pipeline of greenfield and brownfield development opportunities within the portfolio, which will unlock further value for the group in time,” it said.

hedleyn@businesslive.co.za