South Africa’s Reit sector is moving onto firmer ground as the recovery is increasingly leaning towards improving fundamentals rather than fixing difficulties with balance sheets.
According to the SA Reit Association, shares in the sector stocks edged higher in January, delivering a 0.9% return for the month. While this lagged the broader market’s stronger showing, the industry body said it points to a sector that is settling into a steadier rhythm after a strong performance last year.
“The improvement was driven largely by rising share prices rather than income, reflecting a shift in investor sentiment as inflation expectations ease and the interest-rate outlook turns more supportive,” it said.
Ian Anderson, head of listed property and a portfolio manager at Merchant West Investments, said investors are once again warming to yield-sensitive assets, helped by stronger balance sheets, steadier distributions and improving funding conditions.
“A firmer rand, easing inflation and rising confidence that interest rate cuts could follow later in 2026 have lifted sentiment,” he said. “In this environment, Reits are regaining their appeal as a hybrid asset class, offering defensive income alongside the potential for capital growth, even as economic growth remains slow but stable.”
Uneven performance
Gains have not been uniform, however. Some of 2025’s top performers saw profit-taking temper the returns, while others raced ahead. Attacq (6.7%), Oasis Crescent (4.5%) and Redefine (4%) stood out, buoyed by stronger operational results and renewed investor confidence.
“Over the longer term, the data shows a clear recovery across most of the sector. Importantly, distribution growth has turned positive on a rolling basis, suggesting that the recovery is increasingly being driven by underlying cash flows, rather than by valuation gains alone,” the association said.
South African 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.
Anderson believes the sector is well-positioned for the year ahead, despite expected volatility.
“The sector enters 2026 in a far stronger position than in recent years. Balance sheets are generally healthier, asset quality has improved through active portfolio management and valuations remain compelling relative to both equities and bonds,” he said.
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