Bruce Kerswill, director of Spire Property Services, said the sector was starting to come alive again, vying with cash and bonds for investors' attention.
Property economist Erwin Rode, CEO of Rode & Associates, agrees. He notes that there has been a narrowing of the gap between the capitalisation (cap) rates of directly-held property and the income yields of listed property. The reasons are:

* Cap rates of directly-held properties have been rising vigorously since 1996 because the institutions have been trimming their property portfolios, thereby creating a buyer's market, and
* investors now regard listed property in a similar light as long bonds, and the income yields of bonds have been on a declining trend in the wake of lower inflation
expectations.

Eventually this confluence of the cap rates and income yields will lead to an avalanche of new property listings as institutions will find it less painful to list their portfolios, Rode said.

Kerswill said to Business Report that more activity was expected in the next two or three years as pension funds and institutions, which hold about R60 billion in direct property holdings, started to securitise their property holdings.
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'We believe the tide has already turned for the property sector since the 1990s, when institutional investors reduced new investment in property in favour of more liquid investments,' he said.

Institutions had rebalanced their portfolio sector allocations following the relaxation of exchange controls.

With the current equity market volatility, they were now looking at the property sector afresh, because of its higher yields and lower risk.

Kerswill pointed out that heightened activity in the sector had already attracted four new property companies to the JSE Securities Exchange over the past year and he believed there was room for further listings