Property cap value up 100%

Posted On Tuesday, 10 April 2001 03:01 Published by eProp Commercial Property News
Rate this item
(0 votes)

The market capitalisation of the listed property stocks sector has more than doubled in the past six months.

Bruce KerswillBruce Kerswill, director of Spire Property Services, said the sector was starting to come alive again, vying with cash and bonds for investors' attention.
Property economist Erwin Rode, CEO of Rode & Associates, agrees. He notes that there has been a narrowing of the gap between the capitalisation (cap) rates of directly-held property and the income yields of listed property. The reasons are:

* Cap rates of directly-held properties have been rising vigorously since 1996 because the institutions have been trimming their property portfolios, thereby creating a buyer's market, and
* investors now regard listed property in a similar light as long bonds, and the income yields of bonds have been on a declining trend in the wake of lower inflation

Eventually this confluence of the cap rates and income yields will lead to an avalanche of new property listings as institutions will find it less painful to list their portfolios, Rode said.

Kerswill said to Business Report that more activity was expected in the next two or three years as pension funds and institutions, which hold about R60 billion in direct property holdings, started to securitise their property holdings.
'We believe the tide has already turned for the property sector since the 1990s, when institutional investors reduced new investment in property in favour of more liquid investments,' he said.

Institutions had rebalanced their portfolio sector allocations following the relaxation of exchange controls.

With the current equity market volatility, they were now looking at the property sector afresh, because of its higher yields and lower risk.

Kerswill pointed out that heightened activity in the sector had already attracted four new property companies to the JSE Securities Exchange over the past year and he believed there was room for further listings

Last modified on Thursday, 24 April 2014 15:37

Most Popular

Residential property market gathering momentum, says Eazi Real Estate

Nov 18, 2020
In this last quarter concluding in December 2020, the residential property market…

Lockdown impacts buying trends of generations of home buyers

Nov 15, 2020
The Covid-19 pandemic and lockdown has been a catalyst for highlighting the different…

Second-hand shopping is being revolutionised and expanding the circular economy

Nov 18, 2020
EPP CEO_Tomasz Trzoslo
Conscious consumers are championing the resale of goods to reduce waste and extend the…

New cutting-edge Massmart Distribution centre launches one of the biggest Distribution Centre in the Western Cape

Nov 24, 2020
MASSMART’S brand-new, cutting-edge centralised distribution centre for the Western Cape…

SA commercial real estate delivers in excess of 12% yield on equity

Nov 18, 2020
Steven_Brown (1)
A silver lining amongst the many dark clouds dominating South Africa’s current economy…

Please publish modules in offcanvas position.