Listed property returns 'still good'

Posted On Thursday, 12 August 2010 02:00 Published by eProp Commercial Property News
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SOUTH African listed property was the second-best performing asset class last month, returning 6,68%, beaten only by equities, which recorded a total return of 8,05%, but the sector’s outlook for the year is still uncertain.


Paul DuncanAccording to Catalyst Fund Managers’ listed property sector monthly overview released yesterday, listed property in SA remained the best performing asset class in the year to date and over the past 12 months.

Capital markets firmed last month with the yield to maturity on the long-term government bond index ending the month at 8,30% from 8,86% in June. The historic 12 month rolled yield of the listed property sector ended the month at 7,99% from 8,41% in June.

Catalyst Fund Managers investment manager Paul Duncan said yesterday that in the past 12-24 months, the direct property market had been characterised by weakening fundamentals and this led to a slowing in income distribution growth in the period. “Although the operating environment will remain challenging over the next 12 months, fundamentals are beginning to show signs of improvement,” he said.

This month is a busy time for the listed property sector, with nine companies reporting full year or interim results this month. These companies account for about 60% of the sector by market capitalisation.

There is concern in the market that these companies’ portfolios still have rising vacancies.

Although distribution growth has been good, it is still far off the double digit distribution growth experienced in the past couple of years.

Mr Duncan said the companies’ results and commentary would give investors “good” insight into how the direct property fundamentals may affect the outlook for income distribution growth.

The Catalyst report said that last month global markets appeared to shift attention from the sovereign debt issues in Europe to the sustainability of the economic recovery in the US.

Corporate earnings out of the US last month, on average, met or bettered expectations, but the improved profit performance had been driven by efficiencies rather than higher turnover. But the report said despite better profits, economic indicators point to a slowdown in the US economic recovery.

Mr Duncan said evidence out of global and South African real estate markets were pointing to improving property fundamentals. “The coming 12 months will continue to be challenging for both global and local listed property companies, but the outlook has improved,” he said.

Listed global real estate performed strongly last month with the UBS global investors index recording a total return of 10,23% in dollars. The best sub-market was Europe, with 14,64%.

Last modified on Tuesday, 22 April 2014 19:25

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