Property is a far more physical asset class than less tangible share certificates (now electronic anyway) or units in a fund, which might account for some of its appeal to investors. Even listed property has this tactile quality: investors in a real estate fund may know some of the properties in the portfolio or be able to obtain a list of the concrete buildings that make up their investment.

But that almost instinctive attraction is only a small part of the reason investors have pumped huge cash flows into listed property and property unit trust funds since Marriott introduced the latter to the market about 10 years ago. The performance of listed property, particularly the regular and growing stream of income, has been outstanding, outperforming other asset classes in SA for most of the decade.

In a comprehensive and generally upbeat report concerning the listed property sector, Leon Allison, research analyst at First South Securities, says that the sector has outperformed cash, bonds and equities in four of the past five years. But while he believes listed property remains "fairly priced" and should beat cash and bonds over the next 12 months, though perhaps not equities, he also asks: Is there still value?

On a fundamental basis, perhaps the answer is yes ? though much also has to do with investor perceptions and expectations. And investors who expect listed property to continue delivering the same total returns as in the past, or new investors chasing what they think will continue to be the top-yielding asset class, are bound to be disappointed.

Share prices are a function of demand, and as long as investors keep buying, share prices will go up and for property income yields will come down until something fundamental changes perceptions. There's currently little sign of demand easing up. Just looking at new inflows into unit trust funds for the third quarter, 47% of the net new inflows went into fixed interest and property unit trusts, compared to 7% of the total inflow in the previous quarter.

But ultimately investor perceptions will change, or be forced to change, and the favourable listed property cycle we have enjoyed will change direction. Says Allison: "Structural changes may lengthen the current property bull market, but a period of underperformance will inevitably occur. It's simply a question of when."

In similar vein, Chris Naidoo, portfolio manager at Metropolitan Asset Management, sees encouraging prospects for the sector over the next 12 months but also cautions investors not to expect the 41% growth notched up last year.

Naidoo says: "There are indications that the listed property market is nearing its peak, so the potential for major outperformance is no longer there. In addition, most of the growth (35% to end-September) has already been achieved and the last quarter of this year won't add significantly to that."

Economic fundamentals that drive listed property stocks are well known, key being interest rates and bond yields, in turn influenced by SA's inflation and the value of the rand. There now seems a fair chance that the next interest rate move will be up, a minor adjustment perhaps but nonetheless reversing a declining trend that's been in place and underpinned listed property for the past few years.

Allison has already adjusted his forecast for listed property over the next 12 months achieving total returns of between 12% and 16%, made in the September report, to between 10% and 12% due to the rerating of listed property stocks, saying the majority of the total return (around 8,5%) will come from income distributions.

And this part of the return is of course subject to tax. It would not be too hard for an investor attracted by the past high income and capital returns of listed property to put together an equity portfolio with a similar tax-free income stream from dividends and more potential for capital appreciation.

But it could get worse. High oil prices are currently undermining SA's interest rates because of the inflationary effect they have on our economy. But what if the other pillar supporting the low inflation SA has enjoyed ? the strong rand ? were to suddenly and dramatically weaken due to some unforeseen and uncontrollable global shock?

Or on a more basic level, if the decline in growth of residential property prices evident since the middle of the year spills over, perhaps for no logical reason, to perceptions of property prices in the commercial, retail and industrial sectors, and therefore rental income, in general?

Nobody wants to sound gloomy, but if these shocks do happen the effect on shares is often more immediate than the positive fundamentals that drive share price increases.

Listed property remains a great investment for the appropriate type of investor, typically someone retired or planning for retirement who needs a low risk, secure and steady source of income. Or an investor with no property who needs to diversify a portfolio. But don't be attracted by past returns: chances are they cannot be repeated ? and may even perform worse than currently expected.