SA Listed Property second best performing asset class in January 2013

Posted On Monday, 11 February 2013 00:00 Published by Commercial Property News
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SA Equities recorded the highest total return (+ 3.23%) of the four traditional asset classes for January. 

SA Listed Property (+ 0.99%) and SA Cash (+ 0.43%) were the next best performing asset classes for the month. For the last 12 months SA Listed Property, as an asset class, has recorded the highest total return (31.00%), followed by SA Equities (23.68%), SA Bonds (13.73%) and Cash (5.50%).

The SA Listed Property Index (J253) recorded a total return of 0.99% in January 2013. The Property Loan Stock Index (J256) and Property Unit Trust Index (J255) recorded returns of 1.28% and -0.36% respectively over the same period. Capital Markets weakened during the month with the yield to maturity (YTM) on the Long Term Government Bond Index ending the month at 6.87% (6.76% - 31st December 2012). The historic yield of the sector ended the month at 6.60% (6.56% - 31st December 2012).

A total of thirteen companies will be reporting either full year or interim results in the month.

These companies account for approximately 60% of the SA listed sector in terms of market capitalization (excluding Capital Shopping Centers and Capital and Counties).

These company results and commentary will give investors good insight into how the direct property fundamentals are likely to impact the outlook for income distribution growth.

The traditional drivers for total property returns remain intact. The current income yield plus prospect of income growth will drive the total return over the long term. As at the 31st January 2013 the historic rolled income yield of SA listed property was 6.60%. The outlook for distribution growth in 2013 remains reasonable and the sector is likely to deliver inflationary type growth in income distributions. Assuming distribution growth of 6% over the next twelve months, the forward yield from listed property at 31st January 2013 is 7.00%. This compares favourably to the South African Benchmark Overnight rate of 4.74% and the yield to maturity on long term government bond index of 6.87%. The income distribution from a listed property investment has the potential to grow whereas the coupon payment on a government bond does not.

The risk to total returns in the short term is a weakening in capital markets and / or deterioration in the income growth outlook. Listed property is a long term investment and over the long term the total return from listed property will be driven by the income yield plus growth in that income.

Last modified on Wednesday, 22 May 2013 21:34

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