Investors seeking a balanced asset portfolio should seriously consider including listed property in their portfolios, says John Rainier the chairman of the Association of Property Unit Trusts.

Rainier says that while it appeared there was little scope for further significant strengthening in long bond yields, the growing income stream from listed property should for a good basis for protecting capital values.

“Reviewing the results of the IPD/SAPIX South African Property Index it is most pleasing to see total returns of 8,8% in real terms. More importantly net income for the broad index grew by 7,8% over 2002. Considering that all the major listed funds are represented in this R60 billion basket, this undoubtedly will feed through into improved earnings growth being reported by the listed funds,” he says.
Rainier says that although there may be little scope for further significant strengthening in long bond yields, this growing income stream from listed property should form a good basis for protecting capital values.  “Indeed, it appears that the market is already pricing this in, with the discount that the FTSE/JSE property trust index has traded at relative to long bonds halving from 2, 4 percentage points late last year to less than 0, 5 points currently”.

“In addition, as has occurred internationally, in times of low interest rates the attraction of listed property with its typically higher yields, comes to the fore.” He says.

Rainier makes a strong case. “Consider if one is largely dependent on investments for income, as is the case with many retired people.  Money market funds typically yield about 8% per annum currently and cash in the bank considerably less.  Nor do these amounts grow.  The yield on the property trust index is now 11%, with the reasonable possibility of some growth in earnings.  Quite simply, before tax, every R100 000 invested will today earn R3 000 per annum more in the index than in a money market fund.  This is not an inconsiderable difference”.

“I would urge all investors seeking a balanced investment portfolio to seriously consider an investment in listed property,” he says.
Ends

For further information, please contact:

John Rainier
Association of Property Unit Trusts
Tel: (021) 415 2300

Dustin Chick / Monica Bragança
Ogilvy Public Relations Worldwide / South Africa
Tel: (011) 880 2271

Date: 25 May 2004