Listed property shows signs of flagging

Posted On Sunday, 13 December 2015 13:17 Published by
Rate this item
(0 votes)

There are signs that the South African listed property sector's strong run is ending.

Keillen_Ndlovu_StanlibMD

Although South African listed property fared relatively well against European markets last month, there are signs that the sector’s strong run is ending.

After several years of doubledigit total returns, analysts are predicting listed property will struggle next year as domestition that domestic real estate markets will also weaken.

Year to date, South African listed property has outperformed equities and bonds, mustering a 15% return in rand terms for the first 11 months of 2015.

According to Catalyst Fund Managers’ monthly listed property report, North America recorded a negative total US dollar return of -0.49% and a rand return of 4.30% in November. Australia managed a negative -2.66% US dollar return and a 2.02% return in rands.

Asia’s return in dollar terms was a negative -0.97% and 3.79% in rand terms.

Although the FTSE-JSE SA listed property index (Sapy) was only slightly behind the US, with a negative total return of -0.50% in rand terms, the weak rand meant that it also recorded a -5.07% total return in dollars. Europe was the worst-performing market with a negative -5.68% total return in dollars and -1.14% in rand terms. Listed property is now likely to only just beat inflation.

“We are forecasting single-digit total returns of 6% to 8% in 2016 in our base-case scenario,” head of listed property funds at Stanlib, Keillen Ndlovu, said yesterday.

This is about half the 15.04% that the Sapy achieved from January to November. In this period, the Sapy has beaten equities, which achieved 6.96%, cash (4.76%) and bonds (2.94%). Evan Robins, listed property manager of Old Mutual Investment Group’s MacroSolutions boutique, said: “Next year will be tough operationally for SAbased operations, as have the last few years. The more prices come off this year, the better the return outlook next year.”

The Sapy achieved a 26.6% return in 2014 including dividends, outpacing the JSE all-share index, which only returned 10.9%.

The South African listed property sector has seen a lot of consolidation this year, the most recent merger involving the tie-up of Capital Property Fund and Fortress Income Fund. It was the largest merger this year.

The new enlarged Fortress is expected to be included soon in the JSE/FTSE Top 40 index.

It will bring the total number of property companies in the index to five, the others being Growthpoint, Redefine, Capital & Counties and Intu Properties.

source Business Day

Last modified on Sunday, 13 December 2015 15:22

Most Popular

Pam Golding Properties Annual Residential Property Report 2019

Nov 08, 2019
SA Reserve Bank
Signs that the residential property market is beginning to stabilise.

Rebosis Property Fund retail portfolio delivers excellent operational performance despite a tough market

Nov 11, 2019
Sisa Ngebulana REBOSIS
Rebosis Property Fund, the JSE’s first listed black-managed REIT, today reported its…

Massive property auction on behalf of Telkom

Nov 11, 2019
Agricultural Land Beaufort West
GoIndustry DoveBid SA (GoIndustry) is hosting a massive property auction on behalf of…

SA REITs featured among the JSE’s most empowered companies

Nov 08, 2019
Estienne de Klerk SA REIT Chairman
In order of most empowered, the REITs are: Arrowhead Properties, Redefine Properties,…

South Africa’s first ever blockchain-based property register pilot

Nov 07, 2019
DANIEL BLOCH
The pilot study area consists of almost 1 000 properties located in four sites in…

Please publish modules in offcanvas position.