South African real estate investment trusts (Reits) stepped up their recovery in 2025, recording a 38.6% total return as improving operating conditions and the return of dividend growth lifted investor sentiment.
The performance follows a 35.8% gain in 2024, taking cumulative returns over the past two years to about 88%, according to the latest SA Reit Association Chart Book.
“The year exceeded expectations. After a 4.1% drop in the first quarter, South African Reits staged a strong recovery, with the fourth quarter delivering 21.5%. Dividend growth at the sector level jumped to 10% year on year in the third quarter, after nearly three years of stagnation,” said Ian Anderson, compiler of the chart book and head of listed property at Merchant West Investments.
Meanwhile, the JSE’s all property index ended last year at 12,061 points — its strongest closing level in five years — after touching a high in December as expectations of further interest rate cuts continued to support the sector. The index was up almost 25% for the year.
The year exceeded expectations. After a 4.1% drop in the first quarter, South African Reits staged a strong recovery, with the fourth quarter delivering 21.5%.
— Ian Anderson, Merchant West Investments
Delta Property Fund rebounded strongly as its turnaround strategy began to take effect. It was closely followed by Fairvest, while Heriot, Vukile, Growthpoint and Resilient also delivered substantial gains, reflecting the broad recovery.
“Over longer periods, the sector has also outperformed equities and bonds on a three- and five-year basis, reinforcing its appeal as an income-focused asset class, the association said.
However, momentum slowed in December with the sector gaining 0.5% as trading activity tapered off into the festive season. A stronger rand weighed on counters with offshore exposure.
The association expects South African Reits to deliver again this year. While the substantial capital gains of the past two years are unlikely to be replicated the sector remains compelling, driven by robust income yields, steadily improving fundamentals and attractive relative value that continue to capture investor attention, it said.
“Total returns are likely to be skewed towards income rather than capital gains. The outlook for dividend growth of 5%-8% per annum over the next two to three years is supportive of current valuations and could also drive some capital appreciation in the medium term,” Anderson said.
Reits, anchored by a stronger macroeconomic backdrop, are already positioned for growth. Lower interest rates, the end of load-shedding, removal from the greylist and the S&P credit rating upgrade have created a more conducive environment for the sector. These developments are expected to boost capital flows, reduce risk premiums and improve access to funding markets, providing a solid foundation for continued recovery and expansion, the association said.
Also read:
Property stocks stage sharp recovery as rate pressures ease
SA Reits smash past R300bn as sector posts strongest gains since 2019
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