The JSE Securities Exchange SA's listed property index, which includes the property loan stock and property unit trust sectors, has recorded a total return of 33,62% for the year to date, outperforming the all share index, which recorded a total return of 23,7%.

This is the second consecutive year that the listed property sector has outperformed the all share index in terms of total returns, a measure that includes unit price movement and income distribution.

Last year the listed property sector delivered total returns of 38%.

According to Catalyst Securities' December listed property sector overview, the index produced a total return of 13,4% last month.

Catalyst Securities MD Andre Stadler said one reason for the good performance of listed property was that long bonds had continued to strengthen this year and property yields had followed the same trend.

Listed property's performance tends to track that of government long bonds because they are both income-generating investments.

Stadler said that 10year long bonds had strengthened by 50 basis points, moving from a 9,2% yield to 8,7%. "In addition property funds have demonstrated their ability to grow income streams, which adds to their appeal," he said.

Mariette Warner, fund manager of the Stanlib Property Income Fund, said the reason the listed property sector did so well last year was because of falling interest rates.

She said the reason for this year's performance was twofold, namely lower long bond yields and a re-rating of listed property relative to bonds.

Warner said the yield gap between listed property unit trusts and long bonds had decreased to zero, while the gap between the listed property loan stock sector and long bonds was only 100 basis points.

She said long bonds were considered virtually risk-free because they were government issued.

The risk in listed property was now lower, Warner said. She attributed this to the growth in earnings.

"I think the performance next year (of listed property) would be more muted," she said.

"It is not impossible for property yields to strengthen further relative to bond yields, dependent on the level of growth in earnings during the course of next year."

Listed property would still be a solid performer over the next 12 months, Warner said.