This property class is now on average trading at a small premium relative to non-listed property, which should lead to more listings of directly held property in the listed property sector.

Rode & Associates' latest review of the property market, Rode's Report, shows that listed property was about 5% overvalued relative to correctly valued, directly held property at the end of 2002.

This follows a consistent narrowing of the value gap over the previous three quarters, as investors' appetite for listed property as a secure investment grew, says Rode's Report editor Dirk de Vynck.

"Our analysis shows that property unit trust (PUT) yields have been converging with leaseback capitalisation rates in 2002's final quarter. The drop in the income yield of PUTs follows a similar decline in long-bond yields over the same period, again showing the close correlation that has existed between the yields of listed property and bonds since 1998.

"The closing of the value gap should heighten the activity in an already budding listed property sector, creating the ideal climate for a flurry of new listings."