Listed properties outlook positive
The outlook for South Africa’s R223-billion listed property sector was encouraging, Real Estate Investment Trust South Africa (REIT SA) regulation and taxation committee chairperson and Growthpoint Properties executive director Estienne de Klerk said on Thursday.
Listed property in South Africa had a rolled yield of over 7% for the sector as a whole by the end of August, and while the sector’s short-term outlook remained cautious, with income distributions expected to grow at about 6% to 7% over the next 12 months, the average trades in South African listed property exceeded R7-billion a month.
“ … underlying property fund fundamentals are showing improvement, despite the recent bond-driven share price volatility on the JSE REIT board,” De Klerk explained.
Over the next five years, listed property as an asset class could deliver total returns of between 10% and 12% a year.
Current positive market signals included a more proactive leasing approach to maximising demand and ensuring rental reversions result in maintaining and growing rental income.
“More attractive tenant incentives are driving better occupancy levels, as are market-related rentals,” he noted, adding that slowing utility cost increases were a “welcome factor” after years of significant cost escalations.
Despite this, shifting bond yields were set to continue to influence listed property share prices, resulting in continued capital market volatility, he concluded.
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