SA IS GOOD AND
OFFSHORE IS EVEN
BETTER
L
Rand could be a game changer.
isted property total returns over the past ten years have
been exceptional, averaging 23% per annum, beating
the JSE All Share Index (19%) and leaving bonds (9%)
in the dust. It has been the best performing listed asset
class over the last decade.
Last year was disappointing, thanks to on-going bond yield
volatility and weaker capital markets. Despite a rush of property
listings, meaningful capital raising and high levels of corporate
action, the sector generated a weak 8.4% total return in 2013.
This was in contrast to the All Share return of 21.4%, but still
way above Cash at 5.2% and the All Bond of 0.6%. There were
a handful of overachievers in the property sector, mainly those
with foreign portfolios, who benefitted from huge rand weakness.
Sentiment at the start of 2014 was that this year would be another mediocre time for the listed property sector. Global factors
forecast to drag on this part of the market included US Feder12 PROPERTY MOGUL ISSUE 2 – NOVEMBER 2014
By Judy Gilmour
al Reserve Quantitative Easing tapering and global bond yield
movements.
The list of local detractors included consumers under dire
pressure, possible shopping centre oversupply, concerns over rising office vacancies, as well as increased operating and maintenance costs.
Surprising on the upside
Volatility in SA’s listed property sector picked up early at the start
of the year, but by the end of the third quarter, performance to
date has pleasantly surprised.
While the AllShare has posted 9.4%, the SA listed property
index (SAPY) has returned 14.01% to date, with the REIT index
showing 14.03%, and listed property has currently outperformed
the inflation-linked bonds index by around 4% to 5%. The All
Bond Index comes in at 5.66% and Cash at 4.29%.