The combined market capitalisation of SA’s listed property stocks has breached the R250bn mark for the first time in five years.
This marks a stunning turnaround for a sector that fell out of favour with investors in 2020 when Covid-19 rocked the industry and reshaped its future, with office owners particularly affected.
The sector has seen renewed optimism as improved operational performance caused investors to flood back to the sector.
The market capitalisation of the SA Reit sector has climbed past R250bn — its highest level since January 2020 according to data from the SA Reit Association.
Building on last year’s outperformance, the SA Reit sector continued its upward trend in May with a 4.1% gain, beating equities (3.1%) and bonds (2.7%). This follows April’s 6.9% surge, lifting the year-to-date return to 6.7% — a strong rebound from a slow January start, the association said.
“At the end of 2024, the combined market capitalisation of SA Reits was R244.3bn. That has now grown to R253.6bn. While the growth in market capitalisation has been driven primarily by positive share price movements, SA Reits have raised a net R584m in new equity this year,” said Ian Anderson, head of listed property and portfolio manager at Merchant West Investments.
Despite the recent rally, the sector still has far to go before it reaches the R430bn market cap it hit at end-2017.
Among the positive share price movements this year is that of Mall of Africa owner Attacq, whose share price was up about 6.2% year to date. Independent analyst Keillen Ndlovu said distributable income per share for the group was forecast to increase 24%-27%, reflecting strong underlying performance that is boosted by the Public Investment Corporations’ investment in Waterfall City.
Growthpoint’s year-to-date share price rose to 11.3% in May, supported by a strong performance in its industrial portfolio.
Vukile’s share price is up 10.74% year to date, while that of Redefine is up 4% and Accelerate has surged 10.42%. Resilient is up 2.84% in the period.
Siphesihle Zwane, portfolio manager at Allan Gray, said the listed property space was showing signs of recovery.
However, it was uneven, with the office space sector remaining under pressure due to lingering effects of hybrid work policies. The industrial and retail segments fared much better, Zwane said.
“The office space market was built for a level of economic growth that hasn’t materialised. Many properties are now standing empty — particularly older buildings in central business districts. Some are being converted for residential use, but that isn’t a viable solution for every property,” he said.
“The more goods are moved — between cities, towns and directly to consumers — the more important efficient logistics nodes become. Distribution centres located near key transport corridors have performed well,” Zwane said.
“In the retail space, there are contractual rental escalations and at the end of a lease cycle — typically four to five years — terms are renegotiated. We’re seeing more positive reversions than in previous years.”
According to property data firm Rode share prices were boosted by improved property results, especially in the retail and industrial sectors. Office property results also improved slightly, though a considerable distance has to be covered.
Anderson said expectations of lower interest rates largely shaped the positive outlook.
“A small reprieve in global tariff tensions, and growing evidence that property fundamentals are strengthening … set the stage for higher distributable earnings growth across the sector in 2025 and 2026,” he said.
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