LISTED
International Property
Funds
Global property exposure
offers better prospects
BY MIKE BROWN
F
ollowing on the history of over 20% per
annum returns in local listed property
shares and indices on the Johannesburg
Stock Exchange ( JSE) over the past five years
and more, many analysts are now suggesting that
global property exposure rather than local property
companies, may offer better prospects.
Taking funds offshore to invest in such global
property is, however, a very time consuming, costly
and frustrating exercise, tied up by plenty of red tape
and layers of fees.
“Investing in such
companies gives access
to global income streams
and also provides a
Rand hedge.”
Another alternative is to purchase property
companies on the JSE that give access to global
commercial property portfolios. Capital & Countries
Property PLC, which has a portfolio of central
London properties and Intu Properties PLC, one
of the United Kingdom’s largest listed property
companies, comes to mind.
Smaller global property companies with a JSE
listing include New Europe Property Investments
PLC (NEPI) and Redefine International PLC.
Also, of course, many local property companies
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Commercial Handbook 2016
have significant offshore property investments,
including Growthpoint Properties Ltd and Redefine
Properties Ltd.
Investing in such companies gives access to global
income streams and also provides a Rand hedge.
Is there, however, any way global property
exposure can be easily obtained in a segregated fund,
unit trusts or Exchange Traded Funds (ETFs), rather
than through individual property shares?
There are currently nine unit trust funds that are
classified as global real estate funds. They do not
report in their Total Expense Ratios (TERs) to the
Performance Surveys, but are understood to be quite
expensive, difficult to access and trade.
As yet, there are no offshore ETF securities listed
on the JSE, but it is understood that some products
are in the pipeline.
In the interim, one option to consider is the
CoreShares PropTrax Ten ETF, issued by Grindrod
Bank. This Fund equally weights it’s portfolios across
the ten largest property companies in South Africa,
many of them wholly invested offshore (NEPI) or
with substantial global property holdings (Redefine,
Growthpoint, Emira, etc.). Many of these property
companies are also increasingly looking to expand
into Africa, outside of South Africa’s borders.
It is only a matter of time before global property
funds become readily available to the retail investor
in South Africa, particularly in low cost, easily
accessible, liquid and tradable ETF form. This can
only help in the development of listed property as an
asset class in South Africa.
RESOURCES
etfSA.co.za
www.reimag.co.za