The funds that have been closed are:

The Marriott Property Equity Fund, which is 90 percent invested in listed property investments;
The Marriott Property Income Fund (95 percent invested in listed property); and
The Marriott Core Income Fund (50 percent invested in listed property).

Ian Anderson says Marriott has closed the funds to new investments because "the listed property market is over-valued". This is not to say that there may still be some further upside in property unit trusts and property loan stock companies, he says.

Anderson says Marriott is waiting for various economic factors, which the company believes will affect property prices and yields on listed property, to settle down.

High international commodity prices are buoying the value of the rand and keeping local interest rates low, Anderson says. However, he foresees a drop in commodity prices as the world economy slows down. South Africa is a commodity-exporting country and so the rand (which he believes is about 15 percent over-valued) will fall, leading to a rise in interest rates. Rising interest rates affect property prices, because higher rates make it more expense to borrow money to purchase a property.

He says property loan stock companies, such as Growthpoint Properties and SA Retail Properties, with a forward yield of about 12 percent, still offer value. However, he believes many others - including major player Hyprop Investments, with a forward yield of 9.5 percent - are over-valued.

On average, the premium to net asset value (NAV) is in excess of 10 percent, Anderson says. Although such a premium is justified for a number of reasons, including the fact that property valuers have tended to under-value properties held by the listed property investments, he believes a more realistic premium to NAV should be about five percent. The fact that properties are consistently being sold for more than their valuation price shows that valuers are being too conservative in their assessments.

Anderson says retired investors, if they could invest in one of the three Marriott funds today, would receive a yield of about 10.5 percent. They would not be happy if, a year later, the yield increased to 12.5 percent - as he expects will happen - and they were locked into a yield of 10.5 percent.