The R320bn listed property sector last week had its best week yet, gaining close to 20.34% and outperforming other asset classes.
Head of listed property funds at Stanlib, Keillen Ndlovu, said some real-estate stocks had been oversold in 2020 but there had been optimism for the sector last week as the economy moved to level three lockdown restrictions.
The FTSE/JSE SA listed property index (Sapy), which includes the top 20 liquid real-estate companies by market capitalisation, gained 19.76% last week. The all property index, which includes listed real estate investment trusts and developers, gained 20.34% over the same period. The JSE all share, meanwhile, returned only 8.4%.
“Both the Sapy and the all property index have had record weeks,” said Ndlovu.
The rebound is a welcome development for the sector which has lost a whack of market value since January. Year to date, the Sapy has lost 34.06% and the all property index has lost 34.31%. The all share has lost 2.57%.
Evan Robins, the listed property manager at Old Mutual Investment’s MacroSolutions boutique, said the week had been a pleasant surprise, “an unbelievable week”.
“It is in the context of the global trend of ‘value’ suddenly doing very well after a prolonged period of value shares having been smashed,” he said. “This is very apparent given the extent of some of the rallies of some of the really beaten-up property shares. Many other SA companies, such as banks and retailers, also bounced enormously.”
Second, Robins said, a surprising amount of the rebound was “catch up” from May. “In May many property shares collapsed and a significant component of this rally is retracing that fall, but in the space of just a few days in June,” he said.
The share price of SA's largest real estate company, Growthpoint Properties, climbed 19.39% to R14.90 in the week and the share price of its rival, SA's second largest property group, Redefine, climbed 65.1% to R3.17. The largest mall owner in central and Eastern Europe, Nepi Rockcastle, which has a listing on the JSE, saw its share price gain 9.72% last week to close at R98.20.
Listed property has some way to go if it is to reward SA investors overall in 2020. Patient investors, including pensioners who rely on property stocks to return income to them, are waiting for listed real estate to muster an overall return including dividends and capital growth, which is in excess of inflation.
The Sapy returned only 1.93% including dividends in 2019 after suffering a total loss of 25.26% in 2018, its worst year in more than two decades. This was largely fuelled by the Resilient property group scandal. Resilient and companies related to it saw their share prices plummet as investors fled the stocks, after allegations of insider trading and market manipulation.
There were also allegations of the companies using related-party transactions to inflate share prices and profits. But the Financial Sector Conduct Authority investigated these allegations and cleared the companies.
In 2019 the Sapy also performed poorly in comparison with the JSE all share which returned 12.05% and the bond index which returned 10.32%. The standout property stock was Sirius Real Estate which returned 52.2% including dividends and capital share price growth that year.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.