Cape Town - Strong underlying demand for listed property investments, speculation about the introduction of real estate investment trusts (Reits) in the UK and the release of good results were the likely reasons for the share price of Liberty International touching new highs over the past month.

This was according to David Fischel, chief executive of the third-largest UK property group, which owns and operates nine of the 15 major shopping centres in that country.

Liberty is listed in London and Johannesburg.

Fischel was in Cape Town on a road show for investors on Friday, as 35 percent of the group is owned by South African shareholders - excluding the family interests of Donald Gordon, who, with 21.4 percent, is the largest shareholder.

Liberty International's share price was up 20c to R90 in Johannesburg on Friday, only slightly down on the R91.50, 12-month high it traded at weeks before.

A day before the release of the results on February 11, the share price was only R85.70.

Fischel said underlying demand for listed property investments in the UK was strong because returns from the property sector had outperformed equities on a three-, four-, five- and 10-year basis.

"Property has become re-established as an asset class after investors scorned the sector in the 1990s," he said.

Institutional investors were increasingly attracted to the high-yield stable returns offered by property.

In Liberty International's case, with its strong focus on retail, the retail property market had outperformed returns from the office market in the UK over the past two years "by a huge margin". Office vacancy rates in the City of London were high at 16 percent and vacancy rates at Canary Wharf were much the same. 

At Liberty's commercial properties at the West End, vacancies were closer to 10 percent. However, at Liberty's retail shopping malls, which comprise more than 80 percent of its assets, the supply of retail space was scarce.

Liberty's two new developments, the extension at MetroCentre, Gateshead and the extension at Chapelfield, Norwich, were the only two major new shopping centre developments in the entire UK for at least two years.

MetroCentre was already 86 percent let and the extension was scheduled for completion in about four months, while the Norwich development was scheduled for completion later this year.

Fischel said Reits were a tax-efficient property investment vehicle for institutional investors, and the UK was almost the only major developed county that did not have this type of company.

In the UK, institutional investors tended to invest directly into the property companies.

He said speculation about the introduction of Reits was driving up prices in the entire UK property sector, even though Liberty was not likely to be a big beneficiary of their introduction.

Liberty International earlier this month reported a 13.5 percent increase in net asset value to £9.06 (about R112) a share. Subsequently, Smith Barney, the research house for US bank Citigroup, upped its rating of Liberty because net asset value was better than expected.