Property Prospects. Compuspace 29 Jan 2002

Performance has been great 

The performance of the listed property sector has been exceptional over the last couple of years, with PUTs recording returns of 43,9%, 42, 5% and 23,5% over 1-, 3-, and 5-year periods respectively. The listed property sector has also outperformed strongly relative to equities and bonds, as indicated in the chart below.

Forecast return is 15,9%
Property loan stock company Shopsforafrica, which listed on the JSE Securities Exchange this week, poses a dilemma for investors. It is heavily exposed to the underperforming retail sector; on the other hand, falling interest rates are good news for the property sector.

Property loan stock firm has top-grade space

There aren't any easy bargains to be picked up along the way Two years ago you could have bought virtually any property share, property unit trust (PUT) or property loan stock (PLS) and made money.

Real estate has a bad name amongst most portfolio investors. Yet few realise that listed property trusts performed on a par with equity over the past ten years (14,5% p.a.) and outperformed financial & industrial shares by a wide margin over the past three years (27% p.a. vs 5%), says Erwin Rode of Rode & Associates, property economists and valuers.

NEW life is being breathed into the listed property stocks sector which is vying with cash and bonds for investors' attention. Bruce Kerswill, Director of Cape Town based Spire Property Services which brought the Paramount Property Fund Limited (Paraprop) to the JSE Securities Exchange earlier this month, says the property sector is fast regaining its popularity as an investment class.

A transaction of R1,5-billion that will make Growthpoint properties the largest property loan stock company on the JSE Securities Exchange is expected to start a trend to convert direct ownership of property portfolios into property listings.

The market capitalisation of the listed property stocks sector has more than doubled in the past six months.

GIVEN the poor performance of equity markets worldwide, many SA investors with money offshore are now questioning the wisdom of their overexposure to this asset class.

Directly-held industrial property needs extra care and is as prone to new trends and changing demographics as the office or retail sectors, says Roger Perkin, asset manager of Marriott Property Fund (Martprop).Perkin said to Business Day that the performance of listed property vehicles against directly- held property continues to highlight the need for experience and skill in assembling and managing a portfolio.