By Xolile Bhengu

South Africa is ready for a world-class listed property investment structure but its industrial and political problems are likely to scare foreign investors away.

The Property Loan Stock Association, representing JSE-listed property companies , yesterday gave the thumbs up to the formation of a real-estate investment trust (Reit), probably next year. The trust will group the best-performing listed property shares and trade them under one index, replacing property unit trusts and property loan-stock structures.

The association warned that though a Reit structure would be attractive to, and recognisable by, foreign investors, the world would be deterred by the uncertainty created by the electricity crisis.

Brian Azizollahoff, the association’s marketing chief, said: “The general sense is that the country is in panic mode and there is a lot of uncertainty, fuelled mainly by the continued power crisis.”

The association said that though it understood the government’s need to intervene in the continent, as in the conflict in Kenya, the government also needed to pay attention to issues at home.

“What happens elsewhere on the continent affects us, but our interventions should not be to the detriment of this country, because we still need to make money and keep South Africa as one of the best developing economies,” said Azizollahoff.

Real-estate investment trusts were introduced in the US in 1961 and were adapted and taken up in the UK and , Australia, France, Canada, Japan, Singapore and The Netherlands.

The South African adaptation of the Reit structure is expected to be introduced next year.

Source: The Times