Paul Duncan, analyst at Catalyst Fund Managers, said the sector delivered a total return of 17,71% for the year to last month.

Total return includes income yield and capital growth.

“It’s delivered an attractive return. It has been characterised by a fair amount of volatility driven by uncertainty around the short-term interest rate and inflationary environment. In the seven months to date, we’ve had five positive-return and two negative-return months,” said Duncan. He said the volatility was experienced mainly over the past three months.

Duncan said he expected price volatility to continue in the listed property sector while there was still uncertainty about interest rates and the inflationary environment.

But he said property fundamentals remained strong, and the prospects for income distribution growth from the listed property sector were positive.

Catalyst said property fundamentals were benefiting from the strong demand generated by the good economic growth over the past few years.

“Vacancies in specific nodes have reached critical supply levels, which is placing upward pressure on rental levels. This is increasingly evident in the industrial and office sectors,” said the group.

It said the shortage of zoned, serviced land had resulted in commercial land prices growing strongly.

“Consequently, feasibility rentals for the construction of new premises are substantially higher than existing market rentals. This exerts upward pressure on existing rentals.”

Catalyst said this situation was set to continue for the next few years while there was upward pressure on construction costs due to factors such as government infrastructure spending, private investment and the 2010 Soccer World Cup.

The listed property sector, which largely withstood the recent general market weakness, should remain resilient with listed property companies expected to report good financial results in the next two weeks, Stanlib said last week.

Listed property companies and funds that reported financial results in the past few weeks had all delivered double-digit distribution growth.