Large institutional players - such as Old Mutual Investment Group (OMIGSA) and Government-owned pension fund manager Public Investment Corporation (PIC) - remain intent on growing their exposure to commercial property.

Ben Kodisang, MD of Old Mutual's property investment arm OMIGPI, says the group's ambitious target of increasing property assets more than threefold over the next seven years is still on track. "We're still backing bricks and mortar as a long-term play.''

Much of that growth will come via direct investments in new developments. The group already has R20bn worth of office, retail and industrial projects in the pipeline. A number of those projects are located adjacent or in close proximity to Gautrain stations in Rosebank and Sandton (north of Johannesburg) and in Midrand. New developments also include two multi-million rand high-rise office towers on Cape Town's foreshore and a joint venture with an Indian partner to develop a number of regional shopping centres in that country.

The plan, says Kodisang, is to take property assets under management from around R28bn currently to R100bn by 2015. Some 20% of Old Mutual's property portfolio could be invested offshore within 10 years. Future growth will also come from developments in SA's previously underserviced rural and township areas.

Kodisang dismisses the notion that current global uncertainty requires developers and asset managers to adopt a more cautious approach to property development. "Access to debt funding may be tighter but there's still plenty of money chasing the kind of predictable and secure income streams that fixed property offers."

Kodisang notes some SA pension funds that previously had no exposure to property are starting to regard physical bricks and mortar investments as a safer bet than equities and bonds.

He expects demand for property as an asset class to rise markedly over the next few years. Although the institutional savings market in SA has already doubled its exposure to property between 2002 and 2008, Kodisang says only around 5% of SA's institutional investments worth an estimated R3,5 trillion are currently going into property.

Wayne van der Vent, who heads the PIC's property division, recently told delegates at a property conference in Cape Town it intends increasing its property portfolio from the current R20bn to around R75bn within five years. That will see property as a percentage of PIC's total assets increase from around 3% to more than 8%. The PIC is currently believed to be negotiating a deal to acquire a sizeable stake in leading SA developer Zenprop's R10bn commercial property portfolio.