South African Reits fell 12.3% in March, surrendering much of the gains recorded earlier this year, as higher oil prices due to the war in Iran, a weaker rand and rising inflation concerns weighed on markets.
The pullback leaves the sector down 4.3% for the first quarter, as the war hit global markets and the local listed property sector pulled back to levels last seen in October 2025.
According to the SA Reit Association’s March report, compiled by Ian Anderson, portfolio manager at Merchant West Investments, the drop was widespread.
“The pullback in March was a valuation reset driven by geopolitical risk, not weakening fundamentals. Rolling 12-month distribution growth and total returns remain strong, suggesting a period of market derisking rather than declining performance,” Anderson said.
Octodec, Oasis Crescent and Fairvest A were among a handful of companies that ended the month in positive territory even as equities and bonds in general declined sharply.
The March review of the sector by Golden Section Capital says that much of the sector’s earlier rerating was built on expectations of declining interest rates. That has now all but evaporated as events in the Persian Gulf and the Middle East prompted the Reserve Bank to keep rates on hold.
According to the Reit Association report, the Iran war filters through to real estate mainly through oil prices, which influence inflation and interest rates. Brent crude rose above $100 a barrel for the first time since 2022, peaking at $119.50 a barrel on March 9, adding pressure to costs and sentiment across the listed property sector.
“The conflict introduced significant short-term uncertainty for all asset classes, not just Reits. However, our sector enters this period of volatility from a position of strength, with improving distribution growth and healthier balance sheets,” SA Reit Association CEO Joanne Solomon said.
Worldwide, Reits’ shares fell 12.5% on average in March, though the association said historical trends suggest that geopolitical events typically trigger short-term volatility rather than long-term damage.
“Across 40 major geopolitical events spanning 85 years, equity markets lost an average of 0.9% in the first month but recovered to gain 3.4% over the following six months,” the report states.
The association said the trajectory of the war will be the main factor shaping near-term market sentiment. Should hostilities resume and continue for a long period, feeding into core inflation, the sector’s recovery could be stalled.
“The next phase of returns will be driven more by execution than multiple expansion,” Anderson said. “Funds with strong retail and logistics exposure, disciplined leverage, and credible capital allocation are well positioned, with improving distribution growth, positive operating trends, and lower finance costs supporting earnings.”
On Wednesday, the JSE’s property index rose about 5% as sentiment improved on the news of a ceasefire. Stocks fell again yesterday as concerns about the ceasefire led to a gain in oil prices once more, and the index fell 1.87%.
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