First South Securities property analyst Leon Allison said yesterday that listed property was fairly priced and total returns would be lower than in recent years.

He said the listed property sector average total return for the past five years had been 30% a year and that he was expecting a 12%-14% total return for the next 12 months.

Total return includes unit price movement as well as income yields.

"There are fewer bargains in the current investment market. Barring an external economic shock, property should still outperform cash and bonds in the next 12 months. It is less certain whether property will outperform general equities," he said.

He said investors in listed property should be more selective when choosing listed property stocks to invest in.

"I look for good income growth prospects and a stock price that is not too demanding," he said.

In recent years, if investors were exposed to listed property they achieved excellent results no matter which stocks they picked.

"I don’t believe that will be the case going forward. You now can’t just buy anything. You need to be more selective to achieve solid returns," said Allison.

First South Securities said the South African listed property sector continued to attract attention and money flows from institutional and retail investors, driving up prices and lowering income yields.

"Nearly as impressive has been the income distribution growth achieved by the majority of listed property companies and funds. Seasoned property executives indicate that current economic and property fundamentals are about as good as it gets, or has ever been," said First South Securities.