Growthpoint Properties, one of South Africa’s largest property investment firms, has raised concerns over the steep increase in municipal rates and taxes, which has severely affected its operations and financial stability in South Africa. Despite positive leasing performance and high occupancy in its property portfolio, Growthpoint is struggling under what it describes as excessive hikes in municipal charges, compounded by unreliable service delivery.
These increased costs are largely attributed to inefficient spending and administrative issues within municipalities, which continue to raise rates without corresponding improvements in public services such as infrastructure maintenance or waste management.
CEO Norbert Sasse emphasized that the deteriorating service quality and rising rates threaten the profitability of its South African assets. Growthpoint’s 2024 results reveal a strategic shift, with increased investments in more stable international markets such as Australia and Central Europe, which are less affected by similar economic and governance issues. These international assets have seen growth, while Growthpoint’s South African portfolio has experienced a reduction in value and revenue challenges.
The situation highlights a broader trend among South African businesses, where increasing operational costs due to municipal inefficiencies push companies to explore more profitable overseas investments. This shift could have significant long-term impacts on South Africa’s economic landscape.
