SA’s listed property sector remains on a growth path despite global uncertainty, with a 1% dip in June seen as profit-taking after strong earlier gains, rather than a sign of weakening fundamentals.
According to the SA Reit Association, June’s decline was mainly due to technical factors, not fundamental weaknesses, with compiler of the association’s monthly chart book, Ian Anderson, noting it reflects market dynamics rather than structural issues.
While the SA Reit sector dipped 1% in June — underperforming equities (+2.4%) and bonds (+2.3%) — analysts maintain that the pullback does not reflect a shift in fundamentals.
Instead, it is attributed to profit-taking in larger counters after a strong run of outperformance.
“Many of the more liquid stocks have delivered stellar returns over the past 18 months, so some rotation was inevitable, particularly in a month where global sentiment was otherwise risk-on,” Anderson said.
Meanwhile, global uncertainty remains a headwind. The Golden Equity Section’s June review flagged the Trump administration’s erratic tariff policy as a key source of volatility, complicating the global investment outlook.
“While the Fed is expected to hold rates steady for now, a high base inflation environment restricts its flexibility to ease. This keeps refinancing costs elevated and is particularly punishing for Reits with near-term debt maturities. The unpredictability of US trade and fiscal policy is likely to defer capex plans, real estate development, and leasing decisions,” reads the review.
“While the Fed is expected to hold rates steady for now, a high base inflation environment restricts its flexibility to ease. This keeps refinancing costs elevated and is particularly punishing for Reits with near-term debt maturities.
Despite the challenging global outlook, SA’s listed property sector continues to demonstrate growth and positive momentum. A stronger rand and signs of decoupling from US-driven volatility are enhancing the appeal of the local property market as an attractive destination for investment capital, the review notes.
Last month’s slight weakness was driven by some of the larger Reits, with Hyprop, Resilient and Redefine each declining just more than 2%, while Growthpoint and Vukile also edged lower.
In contrast, Accelerate Property Fund delivered a strong performance, jumping 17.8% after announcing a R100m rights offer aimed at supporting Fourways Mall and strengthening its working capital position, according to the association.
“Despite softer price action, operational performance remained strong. Fairvest, Stor-Age, and Vukile’s June results showed solid progress, with all three projecting mid- to high single-digit growth in distributable income through the 2025 and 2026 financial years,” the association said.
According to Anderson, the positive dividend forecasts indicate sustained momentum in the sector. Early signs of renewed equity capital inflows are evident, highlighted by Spear Reit’s successful R749m capital raises. Additionally, Fortress’s resumption of dividend payments has significantly contributed to year-to-date growth.
“Looking ahead, the outlook for lower interest rates remains supportive, with a strong rand and lower oil prices bolstering expectations for a rate cut by the SA Reserve Bank.
“Rate cuts would further reduce funding costs, underpin valuations, and support income growth into 2026 and beyond,” Anderson said.
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