Meago Asset Management, a division of black owned and controlled financial services group Meago, announced on Friday that together with Absa it had launched a new property focused unit trust.

The unit trust, called the Absa Property Equity Fund, will invest in the listed property sector on behalf of retail clients.

It will be managed by Meago Asset Management.

This is Absa's first property focused unit trust.

Meago executive directors Jay Padayatchi and Thabo Ramushu said they initially wanted to launch the property focused unit trust at the beginning of the year but felt that listed property was "expensive at the time".

But Padayatchi and Ramushu said they decided to launch this month because the market had "corrected significantly", losing more than 20% of its value from May.

"We believe there are substantial pockets of value," said Padayatchi.

Ramushu said they also believed property fundamentals were positive across the property sector.

"Our view on industrial property is that it's on the way up. Offices are recovering and strong rental growth is expected. The rate of growth in retail property is still positive but the rate of growth is slowing down."

Listed property companies on the JSE experienced a 25% drop in price from May as fears of interest rate hikes in SA rocked the listed property sector.

The sector has had a torrid time since early May when listed property, along with other asset classes, weakened following higher interest rates in the US.

Though the sector recovered, it experienced another dip bec-ause of the hike of 50 basis points in SA's repo rate two months ago. But since the further hike of 50 basis points two weeks ago, the sector has started to recover.

Meago Asset Management's investment "philosophy" was to invest "primarily for the medium to long term" but the division said it recognised there were opportunities to add value through "disciplined trading". It said it would invest in companies with sustainable cash flow that could grow and "support the dividend pay-out".

Ramushu said the Absa Property Equity Fund had about R80m worth of assets under management.

"The intention is to grow that significantly. The medium-term plan is to get it to R400m and a R1bn in the longer term," he said.

Meago's subsidiary Meago Investment Partners was also interested in investing in the listed property sector.

It owns 3,5% of Hospitality Property Fund, the hotel focused property company which was launched on the JSE in February.

Ramushu said this division also believed there was still value to be had within the listed property sector.