The growth in the local commercial sector was expected to begin to attract the large-fund international investors, who have so far steered clear of the local property market.

The total return on warehouses, offices and shops in SA was 30% last year, up from 23% in 2004 and 15% the previous year, the London-based international property researcher said yesterday.

"All property sectors produced good results, reflecting a growth economy and advantageous interest rate and inflation environments," said Stan Garrun, MD of the local unit of IPD.

"Local players have come to the party, but the large fund international investors are still absent," he said. SA, the largest economy in Africa, grew 5% last year as inflation declined, with office vacancy rates falling and more jobs created.

First National Bank property economist John Loos said yesterday that unlike in the residential sector, where the growth has started to slow down, growth in the commercial sector was gathering momentum.

He said the absence of large fund international investors was expected. "The truth is that we are not on the radar screen of investors in the US, Europe and east Asia."

Industrial and retail properties in SA returned 33%, while offices returned 25%.

The yield on commercial real estate, which is calculated by dividing rental income by the capital value of a property, fell to 8,9% from 9,5%, IPD said.

Ireland's commercial property posted total returns of 24% last year. The UK, which accounts for half of Europe's investment market for commercial real estate, returned 19%.