South African PLS companies have demonstrated defensive performance in comparison to other financial stocks, in the light of the current global market volatility and local market dynamics.

The results for the 2007 SAPOA / IPD South African Property Index show a total return for commercial property of 27.7% for 2007, representing a slight increase on the 2006 return of 27.1%. 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. 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%).

The top performing sector in 2007 was industrial with a total return of 33.6%, followed by offices at 30.8% and retail at 26.0%. The dip in the retail sector reflects the slower consumer spending after eight (now nine) consecutive interest rate hikes.

The good news is that solid underlying property fundamentals continue, driven by a shortage of available space – with record low vacancy rates reported for 2007. While share prices have taken a beating, and liquidity has also come under fire, distribution growth of listed property stocks continues with income returns increasing at an average of some 12%.