By Thabang Mokopanele

South African listed property continues to perform well compared with bonds and cash and was the second-best performing asset class last month, returning 1,38% to investors.

It was beaten only by equities, with a total return of 3,55%.

Since the beginning of this year the sector’s performance month on month has been variable, but has still proved the best bet for investors compared with other asset classes.

In the year to date, listed property has returned 27,41% to investors. Over the past 12 months the sector has returned 29,9 %.

According to Catalyst Fund Managers’ report for last month, the historic rolled income yield of the sector was 7,66%, which implied a forecast forward rolled income yield of 8,2 %.

Catalyst Fund Managers investment manager Paul Duncan said the income from a listed property investment has the ability to grow each year.

"The forecast forward rolled income yield compares favourably (albeit with arguably more risk) to the income yield to maturity on a 10-year bond proxy of 7,84%, the one-year negotiable certificate of deposit rate of 6,23% and the South African benchmark overnight rate of 5,78%," Mr Duncan said this week.

The UBS global investors index recorded a total dollar return of 4,53% last month.

The best performing listed real estate market was the UK, which recorded a total dollar return of 7,55%, with Australia being the weakest market for the month, recording a total return of 0,8%.

There also appears to be renewed world interest in property. Last month, the Bank of Japan set up a ¥5-trillion fund to invest in local assets.

Of this, Mr Duncan says 10% was allocated to Japanese real estate investment trusts, which boosted the real estate investment trust market in Japan for the month.

"In Hong Kong and Singapore, it is evident that the property fundamentals are improving quickly," Mr Duncan said.

Global property services firm Jones Lang LaSalle increased its forecast for growth in central Hong Kong office market rentals, predicting growth of 35,3% this year, 25,2% next year and 17,6% in 2012.

A large driver of the rental growth is the supply gap, with new supply until 2014 estimated at only 5,6% of existing space.

Source: Business Day