The top performing Old Mutual SA (OML) property portfolio is set to remain overweight in the retail sector, says Colin Young, head of asset management at the Old Mutual Property Group.
 
"Retail was a major contributor to the outstanding portfolio performance in 2005," he says.
 
The Old Mutual SA portfolio, valued at 9.25 billion rand, delivered a total return for 2005 of 29.3% against the Investment Property Databank (IPD) benchmark for South Africa of 28.8%. The portfolio also outperformed the benchmark of 22.2% for the top five institutional property owners, according to IPD research released last week.
 
"Much of the 2005 success can be attributed to the strong relative performance of Menlyn Park Shopping Centre, Pretoria, and Cavendish Square, Cape Town, as well as the continued growth at Gateway Theatre of Shopping, Umhlanga," says Young.
 
"The portfolio's excellent results were also achieved through structural changes to the portfolio and to the management team.  The formation of the Old Mutual Property Group combining Old Mutual Properties and the Marriott business and the expertise in the merged group bodes well for the future."
 
The merger resulted in the formation of the biggest commercial property group in South Africa.
 
"Apart from maintaining an overweight retail position, given buoyant consumer spending, the strategy is to consolidate the portfolio position in the industrial market and to continue to reduce land holdings, through developments and sales, and the level of vacancies," says Young.
 
"The programme of inner city redevelopments of office buildings to apartment blocks will continue, with further projects planned for Johannesburg and Pretoria. Further growth in the portfolio is expected in 2006 as a healthy development pipeline has been established."
 
"Pension fund trustees should definitely be considering their weighting in directly held property, particularly in their post-retirement annuity portfolios. We are seeing significantly increased demand from actuaries for property. Property as an asset class has excellent liability matching, diversification and duration extension attributes. We will be responding to the market accordingly."

I-Net Bridge
Publisher: I-Net Bridge
Source: I-Net Bridge