SA’s real estate investment trust (Reit) sector paused for breath in September, delivering a marginal 0.3% decline that contrasted starkly with the buoyant performance across local equities and bonds.
According to the SA Reit Association, the sector underperformed both equities (+6.6%) and bonds (+3.4%) during the month. This setback comes despite growing optimism that the sector is beginning to turn a corner after several challenging years.
The SA Reit Association’s September 2025 Chart Book shows the Reit sector’s year-to-date return remained at 14% — matching bonds but trailing the 31.7% surge in equities.
“This subdued performance in September is notable. Dividends across the sector are growing by close to 10% year on year, yet investors remain cautious about whether this acceleration will be sustained,” said head of listed property and portfolio manager at Merchant West Investments and compiler of the Chart Book, Ian Anderson.
The caution may soon give way to renewed confidence. Recent data points to a sector rediscovering its rhythm — with dividend growth now edging back into double-digit territory and guidance for 2026 painting a picture of stability, Anderson said.
The transformation of the SA Reit sector has been gradual. Over the past five years, listed property companies have prioritised strengthening their foundations through balance sheet consolidation, portfolio optimisation and disciplined capital recycling, moving away from the previously expansionary, debt-driven growth strategies.
Interest rate relief
Now, with interest rates easing and capital markets gradually thawing, the sector is beginning to stir. About R4bn in new equity has already been raised in 2025, a far cry from the R30bn annual average seen during the sector’s golden years, but a meaningful rebound from the anaemic levels of the past half-decade, the association said.
“This is increasingly a story of returning investor confidence. The ability to raise capital again at competitive levels, alongside sharply lower borrowing costs, provides the sector with the resources to return to external growth,” said Anderson.
For example, Growthpoint Healthcare Property Holdings, managed by Growthpoint Investment Partners, the fund management business of Growthpoint, has recently announced that it has entered into an agreement to acquire the properties and operations of Auria Senior Living, a developer, owner and operator of senior living communities in SA.
While risks remain — including global market volatility and patchy domestic fundamentals — the sector appears more resilient, better capitalised and strategically positioned to deliver returns above inflation, the association said.
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