Capital markets to support listed sector in the short term

Posted On Tuesday, 07 July 2015 15:55 Published by
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Property fundamentals in SA remain challenging, but strong capital markets and lower yields for longer will be supportive of listed real-estate performance.

Catalyst Fund Managers

In the short term, the listed property sector’s returns are expected to take their direction from capital markets rather than real-estate fundamentals. However, over the longer term, fundamentals are likely to drive performance.

According to Catalyst Fund Managers’ monthly report for the past 12 months, South African listed property has recorded the highest total return of all asset classes, at 38.26%, followed by equities (17.82%), bonds (11.89%) and cash (6.67%).

But for April, the South African listed property index returned a mere 0.04% due to the weakened long-term government bond index, which ended the month at 7.96% from 7.79% at the end of March.

Historically, South African listed property-sector yields are closely correlated to long-term government bonds yields. The historic yield ended the month at 6% when excluding Attacq, New Europe Property Investments, Rockcastle and Pivotal.

The listed property sector’s historic rolled yield was at a premium spread of 1.95% to the long-term government bond yield to maturity at the end of April, compared with 1.79% at the end of March.

Last modified on Wednesday, 08 July 2015 09:25

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