Nick Wilson

Property Correspondent

AS THE market capitalisations of listed property companies grow and trading liquidity improves, international fund managers should start looking to SA’s listed property sector for investment opportunities.

This is the view of Steve Buller of Fidelity Investments in Boston, US, who was delivering a presentation on international listed property trends at the Stanlib International Investment Conference held in Sandton yesterday.

Buller, Fidelity’s group leader of real estate securities and portfolio manager of a variety of real estate securities, said that SA was "about to be (put) on the map" as far as international investor awareness was concerned.

He said there was "very little" foreign ownership of listed property stock in SA, while in other countries foreign ownership was increasing.

But this could change as market capitalisations and trading liquidity of South African listed property stocks improved.

Buller said listed property was a popular asset class on the global stage and that there had been growth in the market capitalisations of listed property stocks throughout the world.

He expected this trend to continue, especially with the introduction of the Real Estate Investment Trusts structure pending in 15 countries. Listed property unit trusts are SA’s equivalent.

Buller said that in 1980 only 2% of all commercial property in developed countries was listed on stock exchanges. "Now it’s 11% and growing. We are going to see more and more properties being listed."

Colin Young, property sector head at Old Mutual Asset Management, said it was an "exciting prospect" that foreign investors would be interested in SA’s listed property sector.

Young said that in an environment where the rand was stable and attractive forward yields were on offer, it was understandable that foreign investors would look at SA’s listed property sector.

"Size and liquidity still need to be improved on. Taking a global view, our market capitalisation is still small."

Young said corporate governance in SA’s Africa’s listed property sector the would also have to improve and that there was a need for more property entrepreneurs to enter the sector.

"Investors are not the constraint (for growth of the listed property sector). The number of retired people is growing because people are living longer. There is hungry demand for income-type products like property," said Young.