From BusinessDayLive. Story by Alistair Anderson.

South African-listed property funds outperformed their global counterparts in the first four months of 2015, but analysts expect the sector to lose some momentum in the second half of the year.

The South African Property index delivered an 8.68-percent total return year to date while the S&P Global Real Estate Investment Trust index, which contains listed property companies from developed markets, managed 3.47 percent, said Keillen Ndlovu, Stanlib’s head of listed property funds.

South Africa’s property market has performed well amid slow economic growth thanks to strong demand for housing, consistent performances from retail property, more investment in the sector from domestic and offshore sources, and better-than-expected distribution growth.

Increased demand for residential property over the past two years has seen companies in the listed sector buy into this property type and boost their earnings by charging higher rents because of pent-up demand. Shopping centres have also boosted distributions as consumers continued to shop regardless of pressure on disposable income from higher utilities.

Also, international retail brands are seeking a presence in South Africa.

…Various local traditional-equity investors showed increased interest in listed property this year as other equities started looking comparatively expensive, said Old Mutual Investment Group portfolio manager Evan Robins.

But local property looks set to lose some of its shine this year.

“Offshore property is looking more attractive relative to the local property market. It is trading at a forward yield of 3.8 percent, which is comfortably above bond yields and on average 2 percent above global developed markets bond yields,” Ndlovu said.

 

Read more at BusinessDayLive.