Listed property funds gave a remarkable 42% total return in 2003, supported mainly by the 5,5 percentage point fall in interest rates. Lower rates mean lower borrowing costs for funds, and better returns.

This year will not be as good as 2003, but the sector will move into new territory as investors continue to wake up to the high, steady income available in property.

The listed sector consists mainly of regulated and low-risk property unit trusts, and loan stock companies that borrow more and have fewer controls.

Forward yields are almost certain to fall from their current average of 10,9% into single digits, for the first time since property funds were listed in the 1980s.

Independent adviser Liliane Barnard and Provest MD Angelique de Rauville also see investors having more choice, as funds grow from their current market capitalisation of R24bn to R30bn. It's estimated that R1bn will come from rerating of existing funds, R2bn from new listings, and the rest from capital-raising by existing funds.

Income should also improve slightly as rents track inflation, albeit at a lower rate. But total returns will be boosted by growth in market cap, as interest rates drop further. This could bring total returns for 2004 above 20%, likely to be beaten only by the resources sector on the JSE.

De Rauville picks Martprop (forward yield 10,2%), Sycom (10,7%) and iFour (12,5%) as her top performers for 2004, with Acucap (10,9%) as a long-term choice and ApexHi B (15,4%) for the short term. Barnard's choices are ApexHi B, Pangbourne, of which she is a director (12,3%), Grayprop (10,9%) and Metboard (11,2%).

My first choice is ApexHi B, as it has been each year since Corpcapital listed it three years ago.

Management teams in Acucap, Pangbourne and Martprop should give great performances with their very different portfolios. My choice for a high-risk pick is a tie between Corpcapital's innovative Prima (14,4%) and Spearhead (11,4%).

Financial Mail