The market cap of the sector recently breached R100bn for the first time.

Major US, Canadian and European players that are already invested in SA property stocks - or are interested in taking positions - include the Capital Group, Lehman Brothers, Fidelity Investments, Cadillac Fairview, RREEFF Investment Managers, Woodbourne Capital and Norges Bank Investment Management.

Macquarie First South Securities property analyst Leon Allison says that a year ago SA property funds had to go overseas to market themselves to offshore investors. That's reversed, with international fund managers now starting to come to SA to explore potential opportunities.

Bigger funds - such as Growthpoint Properties, Hyprop Investments, Redefine Income Fund, Allan Gray Property Trust (Grayprop) and SA Corporate Real Estate Fund - are the major beneficiaries of that trend.

Growthpoint CEO Norbert Sasse says that over the past 18 months the company's foreign shareholding has already doubled to just under 5%. He says there's plenty of room for further growth, given that the overseas stake in JSE general equity shares is around the 20% to 30% level.

It's also likely that Growthpoint will be included in the high profile FTSE EPRA/NAREIT global real estate index later this year now that the fund is approaching the R20bn market cap level. Such an inclusion will place Growthpoint - and SA listed property in general - firmly on the radar screens of fund managers in Europe.

But SA Corporate CEO Craig Ewin says that scale remains an obstacle. The larger pension fund managers with multi-billion US dollar portfolios under management generally like to invest amounts of US$50m (R360m) plus. "Unless listed funds have a market cap of at least R10bn they're unlikely to attract serious offshore investment flow."

Mike Flax, executive director at Madison Property Fund Managers (which manages Hyprop, Redefine and ApexHi Properties), says he's seen foreign shareholdings in its funds creep up from 2% to around 5% over the past nine months.

He agrees that a shortage of stock is a problem. Says Flax: "If our funds were bigger and more liquid, we could attract a few billion from offshore investors in no time." He says some fund managers want to hold stakes of between 10% and 20% in one fund. "But it's just not possible to get those lines of stocks together."