Balwin Properties’ shareholders will again go without a dividend for the firm’s latest financial year as inflation triggered by the Iran sparks fears across South Africa’s property sector.
The group said in its latest annual results a review of current trading conditions and market sentiment has forced it to shift its focus towards prudent capital allocation and reducing debt exposure, rather than rewarding shareholders.
As Iran and America’s effective blockade of the Strait of Hormuz continues to disrupt global trade and hike energy prices, consumer confidence has taken a hit in the past two months.
Real estate is one of the sectors most immediately and severely threatened by the sudden reversal in interest rate expectations. Hopes of a rate cut this year have vapourised, and South African Reserve Bank officials have warned of lasting pain for South African consumers.
The latest announcement by Balwin extends a dry spell for investors in the real estate company, who have not enjoyed a dividend since June 2023, even as it continues to report steady earnings and revenue growth.
In the 12 months ended February, Balwin enjoyed a strong macroeconomic environment, in which inflation moderated and interest rates fell, stimulating investment demand and residential sales as loans became more affordable.
The Reserve Bank cut its key rate three times during the period, from 7.5% to 6.75%, stimulating investment in residential property, where most of the group’s growth strategy is focused.
Revenue rose by more than a fifth to R2.7bn for the year, while profit climbed 9% year on year to R254.5m.
Headline earnings per share, a key indicator for South African investors, rose 4% to 47.72c each. The group’s net asset value per share was up 7% at 976.89c.
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