In the short term, the listed property sector’s returns are expected to take their direction from capital markets rather than real-estate fundamentals. However, over the longer term, fundamentals are likely to drive performance.
According to Catalyst Fund Managers’ monthly report for the past 12 months, South African listed property has recorded the highest total return of all asset classes, at 38.26%, followed by equities (17.82%), bonds (11.89%) and cash (6.67%).
But for April, the South African listed property index returned a mere 0.04% due to the weakened long-term government bond index, which ended the month at 7.96% from 7.79% at the end of March.
Historically, South African listed property-sector yields are closely correlated to long-term government bonds yields. The historic yield ended the month at 6% when excluding Attacq, New Europe Property Investments, Rockcastle and Pivotal.
The listed property sector’s historic rolled yield was at a premium spread of 1.95% to the long-term government bond yield to maturity at the end of April, compared with 1.79% at the end of March.
