South African listed property once again outclassed bonds, cash and equities in 2015, with listed property generating returns of 7.99% for investors, outstripping cash’s 6.46%, equities’ 5.13% and bonds’ 3.93% contraction in returns, Catalyst Fund Managers reveals.
Despite being the best performing asset class of 2015, listed property’s returns were, however, somewhat lower than in recent years after capital markets, in December, responded to President Jacob Zuma’s reshuffling of Finance Ministers.
In the aftermath, listed property dropped around 10% in two days and, although some gains were made, still lost 6.12% for December.
South African Real Estate Investment Trust (Reit) Association chairperson Laurence Rapp noted that, despite the tough operating environment and the turmoil that hit local markets, the local Reit sector continued its “excellent” record.
He added that, while the limp local economy would put all sectors under pressure this year, the listed property sector was already ahead in finding greater value for investors by entering new markets and subsectors.
“International and sectoral diversification has been a growing trend in the sector for some years now and certainly dominated strategies in 2015. Given the stagnant economy, weakened rand and further threats of a credit downgrade, the sector will work hard to sustain value in local markets, while also looking for offshore assets with more attractive fundamentals and rand hedge benefits.
“However, property is a long-term game, so Reits favour taking a corresponding long view when making investments. It is this approach that has sustained the sector’s performance in tough times,” he noted.