PROPERTY SET TO
OUTPERFORM
EQUITIES
Best performing funds have offshore expose
R
isk-averse investors have been cautious of local listed property. Prices have been volatile and the sector
is facing significant headwinds. However, the sector has surprised to the upside and outperformed
general equities this year on a total return basis.
The SA listed property index, with a market cap of about
R350 billion, has achieved a total return of 21.80% in the
year to date, compared with 10.49% for general equities and
8.98% for government bonds.
On a rolling 12-month period the picture is similar. Property has delivered a return of 20.49%, while general equities
have returned 12.54% and government bonds 8.98%.
“It is only in the last quarter that property has outperformed significantly,” says Evan Robins, a senior portfolio
14 PROPERTY MOGUL ISSUE 2 – NOVEMBER 2014
By Sasha Planting
manager at Old Mutual Investment Group, MacroSolutions.
“Prior to that the sector had underperformed.”
According to Robins, part of the reason for the uplift was
a recent crop of better- than-expected results from property
companies. “These were as good – or better – than expectations, with average double-digit distribution per unit growth.
No substantial company grew dividends by less than 8%.”
He adds: “It is encouraging that listed property funds have
continued to produce this growth under challenging conditions. However headwinds should temper these high growth
rates in time, given a stubbornly sluggish economy, credit
concerns in retail, tenants under stress and rising interest
rates.”
In this climate not all funds will perform equally.