South African property giant snaps up shopping malls across Europe and triples profit in five years

South African property giant Vukile has steadily expanded its presence in Europe, with it now owning shopping centres in Spain, Portugal, and Italy. 

This is coupled with a strong local portfolio valued at R19.5 billion, centred on township, rural, urban and commuter shopping malls. 

The strategies the company has followed in Europe and in South Africa are markedly different from its peers, and CEO Laurence Rapp believes it is paying off. 

Rapp explained, following the company’s most recent set of annual results, that its choice to expand in Western Europe has given it a vastly different investor proposition than competitors. 

Many South African property companies searching for diversification have flocked to Eastern Europe and Poland in particular. 

This is because of the assumption that it is a similar market to South Africa. However, Rapp said the Polish market is now overtraded because of the relative ease of opening shopping malls. 

The ease of opening malls in Poland makes it difficult to generate sustainable returns, as your malls can easily be undercut by a new competitor. 

Operating in Western Europe, particularly the Iberian Peninsula and Italy, is vastly different, with it being relatively difficult to build from scratch. 

This makes it difficult for new competitors to enter the market, giving incumbents a competitive moat and enabling them to generate predictable returns. 

Rapp explained that by investing in Western Europe, Vukile’s cost of capital is substantially lower than its peers. It has also helped the company raise capital from foreign investors. 

In the latest set of annual results, Vukile revealed that it has expanded into Italy by acquiring a 35.65% stake in the Pradera Group for £2.5 million (R54.3 million). 

Vukile also snapped up three shopping malls in Italy for €115 million (R2.16 billion) after the end of its financial year, funding the acquisition through local debt and a R2.8 billion capital raise. 

This has built on the company’s Iberian foundation in Europe, which has proven highly lucrative for the company. 

The expansion, which has dovetailed with notable growth in South Africa, has seen Vukile’s revenue more than double to R5.8 billion since 2022 and its profit more than triple to R6.1 billion.

Vukile’s profit in the current year is higher than its revenue due to fair value adjustments on its properties. 

The Iberian base

Vukile has spent much of its time and resources over the past few years solidifying its bases in the Iberian Peninsula and South Africa. 

This has given it the launchpad to expand further into Europe, and Rapp said the company is on the hunt for deals in South Africa. 

Now firmly on the front foot, Vukile has ensured it is in this position by betting heavily on what it knows best and concentrating its resources. 

From 2022 onwards, Vukile reinvested much of its Iberian profits into taking increasing control of Castellana Properties after it first bought into the company in 2017. 

In recent years, Vukile’s stake has risen to 99.6%, with it buying out minority shareholders. While the company is largely run independently, Vukile is firmly in control. 

Castellana has been the vehicle through which Vukile has expanded more deeply into the Iberian Peninsula, acquiring three shopping malls in Portfula in 2025. 

These malls have been coupled with a 50% joint venture in an additional shopping mall in Lisbon. 

Notably, Vukile’s strategy has been to consolidate high-performing assets rather than build malls from scratch, enabling it to expand relatively quickly and avoid European bureaucracy. 

In Spain, the company has focused on dominant high-yielding shopping centres rather than smaller retail parks, which tend to work well in South Africa, for example. 

More recently, Castellana has snapped up two more shopping centres in Spain, with one being located in Madrid and another in Barcelona. 

To streamline its portfolio and fund these acquisitions, Castellana has sold off nine of its smaller retail parks to Ares Management for €279 million (R5.2 billion). 

Following the end of its financial year on 31 March, Vukile snapped up three shopping centres in Italy to expand its presence in Europe. 

Rapp is particularly excited about the opportunity in Italy, with the country offering strong opportunities for growth and a sizeable competitive advantage due to the difficulty associated with building new malls.