The FTSE/JSE South African Listed Property Index (Sapy) achieved total returns of 17.2% in 2017, building on its performance of returns of 10.2% in 2016, to deliver double-digit growth to investors for the second year in a row.
Last year, listed property outshone cash, which delivered returns of 7.52% and South African bonds at 10.19%, and came in hot on the heels of equities at 20.9%.
Research from bridge fund managers shows that, within the overall listed property universe, local real estate investment trusts (Reits) specifically returned 13.5% in 2017.These trusts also delivered their second consecutive year of double-digit performance, having returned 14.7% in 2016.
South African Reit Association chairperson Izak Petersen highlights that despite a very tough operating environment throughout 2017, the local sector continued its solid record of a strong positive performance for investors.In 2017, the internationalisation of South Africa‘s listed Reits emerged as the sector’s dominant trend. Its international exposure increased significantly as the sector continued to pursue growth in other investment markets around the world. This trend seems likely to continue this year and as long as local market conditions remain difficult.
While the sector’s offshore expansion began over a decade ago with early investments in the UK, Western Europe and Australia, it has gained increasing momentum over the past two years and now the sector has exposure in over 25 countries, mostly in Eastern and Western Europe.In fact, some 40% of the listed property sector’s assets are now offshore.As more South African property companies invest internationally in response to poor local conditions and investor preferences, both local and global industry insights have become crucial for local players.