THE unit price of Madison Property Fund Managers, the first property asset management firm to list on the JSE’s real estate index in June, has recovered significantly over the past week after suffering a more than 20% drop since listing.

Madison, along with other listed property companies on the JSE, experienced the drop in price as fears of interest rate hikes in SA rocked the listed property sector.

The sector has had a torrid time since early May when listed property, along with other asset classes, weakened following higher interest rates in the US.

Though the sector recovered, it experienced another dip because of the 50-basis-point hike in SA’s repo rate two months ago. But since the further 50-basis-point hike last week, the sector has started to recover.

Madison executive director Marc Wainer said yesterday that Madison’s unit price had recovered about 12% in the past week.

Madison, which listed at R5 a unit, experienced a significant drop in value, with the unit price trading in the R4,10 to R4,20 band about two to three weeks ago. Madison was now trading in the R4,70 band. Wainer said the whole listed property sector’s prices increased by between 5% and 10% “based on people being more comfortable with the interest rate environment”.

Wainer said the fact that interest rates increased by only 50 basis points last week instead of 100 basis points, as well as the recent positive results from listed property companies, had contributed to restoring confidence in the listed property sector.

Macquarie First South property analyst Leon Allison said the listed property sector had recovered because of a “combination of good results coming through, earnings growth surprising on the upside”.

Interest rates increasing by 50 basis points, instead of 100 basis points, had contributed to the recovery.

“I still believe the medium-term prospects for listed property remain positive, supported by strong property fundamentals,” said Allison.