By Ray Mahlaka | From Money Web

It seems like the unprecedented run of South Africa’s listed property sector which has firmly entrenched the sector as an attractive asset class is starting to show indications of cooling down.

While many industry players viewed the sector as reaching the top of the cycle, given that property share prices hit an upward curve over many months, the sector has recently seen a correction.

The FTSE/JSE South African listed property index (Sapy), a measure of the sector’s performance, has lost 9.5% of its valuation (as of Monday), since its peak of 9% in April.

The losing streak of the sector started in May as the Sapy index delivered its first negative return since May last year, losing 5.9%, according to latest figures from Sesfikile Capital.

During the month, listed property has been the worst performer compared with other asset classes; as equities pulled back by 4% and bonds contracted by 0.7%.

“This correction was not unexpected and the recent exuberance had been cautioned… This is not to say a further correction is not possible, in fact, we believe that the market can credibly pull back another 5% to 10%,” Sesfikile Capital wrote in a research note.

Despite the sector’s pullback, the asset class in the first five months of the year delivered a total return (including dividends) to investors of more than 7%.

The decline seen in the sector is a result of bond yields weakening, as the listed property sector and bond yields generally trend together over the long term.

Read more at Money Web