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SA property sector shines on world stage

Posted On Friday, 08 April 2005 02:00 Published by
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SA’s commercial investment property sector expected to be the top performer out of 14 countries

Nick Wilson

Property Correspondent

SA’s commercial investment property sector, which recorded a total return of 23,4% last year, is expected to be the top performer out of 14 countries measured by the Investment Property Databank (IPD).

Stan Garrun, MD of IPD in SA and Simon Fairchild, director of IPD in the UK, said yesterday the company was "confidently predicting (SA’s return) will be the best".

The IPD measures the performance of commercial property portfolios in developed countries such as Switzerland, Germany, Sweden, Denmark, the Netherlands, France, Ireland, the UK and Canada.

The UK commercial property sector recorded a total return of 18,3%, and Ireland a total return of 11,5%, last year.

South African commercial investment property total returns, which include total movements in property valuation and net income, were also the highest in the country in the past 10 years, according to the annual index published by SA’s commercial property association, Sapoa, and the IPD SA Property Index.

Last year’s total return of 15,3% was the highest out of the 14 countries tracked.

IPD said the main contributor to the improvement in total property returns was double-digit capital growth that rose sharply from 4,3% in 2003 to 11,7% last year.

The index is based on the IPD database, which includes the property portfolios of South African listed property funds, institutions, pension funds and private portfolios.

Retail property was the top performer in SA last year with a total return of 26,1%, up from 17,3% in the previous year.

The retail sector’s capital growth also more than doubled from 7% in 2003 to 15% last year.

Industrial property was second with a total return of 24,4% last year, compared with 17,7% in 2003.

Although still lagging behind retail and industrial property, the performance of offices is continuing to improve.

The total return of offices almost doubled to 16,7% last year from 8,9% in 2003.

Property economist Francois Viruly said that the Sapoa/IPD figures "pointed to the fact that the South African property market in general, not just residential, is surpassing international benchmarks".

Publisher: Business Day
Source: Business Day
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