That will see listed property yields drop even further from already record lows of around 6% - down from an average 15% in 2002. Will yields converge to the international norm of between 2% and 4% or will SA-listed property retain its value proposition?

That was one of the questions raised at the annual SA Property Owners' Association (Sapoa) convention held earlier this month at Sun City. Speaking at the convention, Nedbank Corporate Property Finance MD Frank Berkeley said that though some may argue that SA-listed property is already overpriced, there's no doubt that yields will drop further.

Highly rated property stocks, such as Hyprop Investments, are already trading at yields of less than 5%. Berkeley said nobody expected listed yields to drop to those levels as quickly as they did. "And there's no reason why SA yields shouldn't be in the same range of around 2,5% as that of many international markets."

Growthpoint Properties CEO Norbert Sasse said the worldwide search for income continued to send global listed property prices up and yields down. That trend would manifest increasingly in SA as more overseas investors were lured to SA's relatively high-yielding real estate sector. Sasse said over the past 18 months Growthpoint's international shareholder base had already doubled to just less than 5%.

On the one hand, a further decline in listed property yields is good news for existing investors, because prices rise when yields drop, creating more scope for capital growth. But it also means that for new investors listed property could lose its attraction as an income-generating asset class.

Macquarie First South Securities property analyst Leon Allison said if the yield gap between SA and overseas property continues to close (and prices continue to climb) there will come a point when income returns on listed property may no longer be attractive compared to other asset classes, such as bonds, cash and equities.

But Allison points out that SA listed property's value proposition should be underpinned over the next two to three years by double-digit income growth. "Investors may be buying in at lower initial yields, but the income on SA-listed property stocks is growing at double the rate of that of most of its overseas counterparts."

For example, New Zealand listed property offers an initial yield comparable to that in SA, but growth in income is expected to be only around 2,1%/year over the next two years, compared with SA's 12%/year.