The South African listed property sector has recovered about 6,4% of its value on the back of a strengthening bond market since it bottomed out on July 3.

After plunging to 239,24 by July 3, the FTSE/JSE SAPY index yesterday reached 254,4 at 4.50pm.

However, Keillen Ndlovu, co-head of Stanlib Property Franchise, said there was still uncertainty about the direction of listed property prices despite the sector being attractive to investors.

“Which direction unit prices go at this stage will be driven by the bond market. There is uncertainty about whether bonds will continue strengthening,” Ndlovu said.

The performance of listed property tends to track the performance of bonds because they are both income generating investments.

Ndlovu said the coming August reporting season should help “cushion” the sector as most investors were expecting solid double-digit distribution growth from the companies and funds reporting financial results.

Until July 3, the listed property sector lost 37% of its value from its high in November last year because of soaring inflation and interest rates.

Last week, there was consensus among listed property analysts that the market was starting to look attractive from an investor point of view.

Yet they said there might still be some risk of further price depreciation, as bond prices could weaken because of inflation and interest rate uncertainty.

Analysts also said investors were tending to favour cash because of the capital protection it offered.

South African listed property has had a torrid time this year and has been experiencing major volatility since the beginning of the year because of general global market woes and the local interest rate environment.

The volatility seems to have nothing to do with the performance of the listed property companies and funds, however, with most of them reporting solid performances from their underlying property portfolios.

Even those listed property companies with large exposures to retail property have not yet reported any bad news about increased vacancies or tenant failure.