PROPERTY & INVESTMENT
The JSE ’ s ETF
In May , the Johannesburg Stock Exchange ( JSE ) launched the NewFunds Reitway Global Property Exchange Traded Fund ( ETF ), which listed on the JSE Main Board . It was launched in conjunction with Absa , and gives South African investors exposure to the Americas , Asia Pacific , Europe and the Middle East .
Greg Rawlins , Reitway Global CEO , says : ‘ The NewFunds Reitway Global Property ETF is a conduit for South African investors to a broader universe of Property Equities , thus improving diversification . Furthermore , the ETF tracks an innovative Index that is constructed to adhere to a set of rules with enhanced performance as a primary objective .’
Listed property fund variety
It ’ s really unfair to tar all listed property funds with the same brush as there are so many options and ways that investors can gain exposure and diversification . Andrew Bradley , CEO of Fiscal , explains : ‘ Some funds focus exclusively on South Africa , and some include offshore property securities . Right now , they are all general broad-based funds .
‘ A property Unit Trust fund is one that invests in listed property owing securities , e . g . someone lists a fund on the JSE , and they get capital to buy shopping centres , office parks , etc ., as physical properties , in SA or elsewhere in the world .’
REITs
Meanwhile , SA Real Estate Investment Trusts ( REITs ) allow investors to invest in property through buying shares in JSE-listed real estate companies . Evan Robins , Portfolio Manager at Old Mutual Investment Group , explains : ‘ With REITs , the companies themselves do not pay tax on the income they distribute to shareholders ; the shareholders pay the tax at their own rates .’
There are many other benefits to REITs , including that they can be held within a retirement annuity , pension , provident or preservation fund . Also , when a REIT sells an investment property , it does not attract Capital Gains Tax ( CGT ).
Realistic returns ?
Bradley points out that it ’ s important to establish the potential vacancies in the property portfolio . He adds : ‘ Depending on how well managed the property portfolio is , if the rental yields go up in time , this will result in capital appreciation too .’
Ultimately , investors entering this type of asset class will need some patience . Bradley says : ‘ Over the last two years , it has been a very tough time for property in SA , so returns have not been great – in most instances they have been negative ; however , in the preceding 20 years it was a very good period for property investments . Over the long run one can expect a 5 – 6 % real rate of return all in ( capital grown and income yield ) from a property fund – but over the short term it can be very volatile .’
Listed property funds may not be for everyone , but they certainly give the average investor decent exposure to returns on property assets that they could generally never own outright – such as a shopping mall .
09 P R O P E R T Y N E W S
In addition , unlike real bricks and mortar , it ’ s easier to get out if you change your mind . ‘ Should you need to sell , you can do so relatively quickly ,’ says Bradley .
Angelique Ruzicka