First South Securities said on Monday that the sector was fully priced and the brokerage was not expecting much in the way of increases in unit prices. This follows a listed property boom that saw average total returns, which include unit price movement and income yields, of about 30% a year for the past six years.

First South Securities research analyst Leon Allison said he expected total returns of 13% next year and 16% the following year based on his expectations for unit price changes and income yields.

"I don't see much more upside in terms of price change. I believe the valuation of the listed units is close to fair value. Most of the total returns next year will come from income yields on the listed units," said Allison.

He said on average he was not expecting price declines.

Allison said the

 would be underpinned by income growth of 5%-6% a year in the next two years. He said he did not expect any "unpleasant hangover" for listed property in terms of negative returns.

"We still expect listed property to outperform cash and bonds over the next 12 months," he said.

Catalyst Securities reported last week that the JSE Securities Exchange SA's listed property index, which includes the property loan stock and property unit trust sectors, had recorded a total return of 33,62% for the year to date, outperforming the all share index, which recorded a total return of 23,7%.

This is the second consecutive year the listed property sector has outperformed the all share index in terms of total returns. Last year listed property delivered total returns of 38%.

Analysts have attributed listed property's top performance this year to the strength of long bonds, as property yields have followed the same trend.

Listed property's performance tends to track that of government long bonds because both are income-generating investments, and analysts attributed the sector's performance in the previous year to falling interest rates.

Andisa Securities property analyst Len van Niekerk said he "broadly" agreed with Allison, but expected fractionally better total returns of about 14% on a one-year basis.

"On the capital side, property should do better than bonds because of a rise in distribution growth and this will underpin unit price values," Van Niekerk said.

He said there would probably be a few empowerment deals concluded, but he was not expecting a lot because "realistically" the property charter could only come out in the third quarter of next year.

"We'll see an increase in the number of black economic empowerment deals once the property charter is released, because the listed property sector will then have a better understanding of the
," he said.

Meanwhile, First South Securities also rated listed property sector heavyweights Growthpoint, Grayprop, Sycom and Hyprop as the "core, strategic bluechip holdings".