Catalyst Fund Managers MD Andre Stadler said yesterday the negative return was due to the sharp fall in unit prices over the past six weeks.

He said in Catalyst’s latest report on the listed property sector that over the past six weeks, global equity markets — particularly emerging markets — had experienced weaknesses and high volatility.

“The South African listed property sector has suffered alongside general markets,” said Stadler.

“As inflation expectations have risen, risk aversion has increased. Emerging markets have experienced large sell-offs as both domestic and international investors moved to safer assets.”

There was also a possibility that the listed property sector could experience further weakness. “If bond yields move out further, it will have a knock-on effect on the listed property sector, and we could see further price falls if that scenario unfolded,” said Stadler.

The performance of listed property tends to track the performance of bonds because they are both good income-generating investments.

He said he expected the volatility to remain a feature of current investor markets. “Listed property is no different and will be impacted by the volatility.”

But Stadler said listed property was still attractive for investors who required an “income return with growth in that income”.

“If you are an investor who is looking for good income return and for that income to grow, but are not too concerned about short-term volatility of the price, then this is an attractive asset class for you,” he said.

Angelique de Rauville, MD of Investec Listed Property Investments, said the South African Listed Property Index had fallen about 20% in value since mid-May, eroding all the gains achieved in the first four months of the year.

“Based on current interest rate sentiment, we believe that the listed property sector is starting to offer inherent value at these levels. The risk would be an unforeseen aggressive hike in interest rates beyond what the market is currently anticipating,” she said