The launch of two funds with exposure to global property in recent weeks may offer South African investors more income-generating opportunities as demand for property as an asset class remains strong.
However, commentators say there are currency risks involved and that global property yields are much lower than those achieved in SA.
On the other hand, global property funds offer diversification for an investor’s portfolio.
Last week unit trust company Stanlib announced the launch of the Stanlib International Property Fund, aimed at retail and institutional investors.
Stanlib says the new fund offers international diversification at a time of relative rand strength and creates access to an asset class that for 10 years has consistently outperformed global stocks and bonds.
It says that last year the dividend yield was twice that of global equities.
Stanlib says the fund’s investment will be spread across 250 property companies in 19 countries in North America, Europe and Asia, with exposure to all product categories.
Stanlib and Fidelity share the management role.
Independent financial services group Forsyth Partners, with offices in the UK and Jersey and sales and marketing operations in Dubai, Hong Kong and Cape Town, have launched the Forsyth Global Property Fund.
Peter Toogood, chief investment officer at Forsyth Partners, says the company believes global demand for property from the corporate and the private sector will remain strong.
"In particular, Asia looks set to grow where increases in personal wealth have encouraged private property ownership," he says.
Forsyth Partners says the investment objective of the Forsyth Global Property Fund is long-term capital growth. The fund will invest in open-ended investment funds, which in turn invest in property-related securities and physical properties.
The group says the portfolio will provide exposure to different regions and types of property, including commercial, industrial and residential. The fund will not have any direct investment in physical properties.
Andre Stadler, MD of Catalyst Securities, says: "The reason local investors are attracted to property as an asset class is the relatively high income stream which serves as a living annuity-type investment, whereas global yields on property are at a significantly lower level."
He says the primary attraction of such funds to local investors is global diversification.
"The main risk is the currency risk, but it is also the benefit you would be hoping to achieve. If the currency works in your favour it can give you attractive rewards," says Stadler.
He says Catalyst Securities will look at the possibility of launching a global fund.
Property economist Francois Viruly of Viruly Consulting says that over the past few years the global property market has been relatively in sync with SA. He says he does not think South African investors would necessarily get a "great deal" in the way of diversification of their portfolio.
Viruly says if a South African is going to invest in overseas markets, "it becomes attractive to go the route" of a fund that invests in property on the investor’s behalf.
Viruly asks whether there could be a place for an Africa-listed property fund that has the best property selections on the continent. "I believe there could be an appetite for this. That is perhaps where the bigger opportunity lies."
