The index shows a total return of 27.7% for 2007, representing a slight increase on the 2006 return of 27.1%, but below the 2005 return of 30.1%. The last three years have seen the highest returns in the history of the index. Property outperformed the equity and bond markets in 2007, which returned 19.2% and 4.2% respectively.

This strong return was mainly driven by capital appreciation, which at 17.7% is the second highest recorded since 1995. Income return of 8.6% was slightly down on the 2006 value of 9.2%, due to the higher capital values realized. The capital growth is underlined by a combination of spectacular income growth of 17.6% - the highest in the IPD history - and a further reduction in vacancy levels to only 3.1%. Yields continued to fall in all sectors, with the all property yield down to 7.6% at the 2007 year end.

Top performing sector in 2007 was Industrials with a total return of 33.6%, followed by Offices at 30.8% and Retail at 26.0%.

The South African property returns are particularly impressive in a global context. In comparison to other IPD country indices already released for 2007, the South African results are ahead of the pack. Other IPD index results for 2007 published so far are:

New Zealand (22.4%),
Australia (18.1%),
Canada (16.1%),
Sweden (14.9%),
Finland (11.3%),
Netherlands (11.3%),
Denmark (10.2%),
Ireland (9.9%),
and the UK (-3.4%).

Stan Garrun Managing Director of IPD South Africa comments: “Returns in 2007 remained very strong, buoyed by surging demand combined with supply-side constraints. The retail sector dipped with slower consumer spending, but offices and industrials powered ahead. Vacancy rates are now incredibly low across the board, and the best ever rental income growth was recorded in 2007. These factors conspired to produce another year of exceptional performance for SA real estate.”