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Q
I want to invest in REITs , but I don ’ t know how the REITs industry is doing , is it the best time to invest now ?
When looking at the 2021 outlook for South African
REIT investors , we do need to break down the investment market into local and global property , and the divergent outlooks for both .
A
Local REITs In terms of the outlook for local REITs in 2021 , despite South African REITs seeing a strong rebound in the last quarter of 2020 , the outlook remains one of severe pressure . The South African economy continues to be roiled by harsher lockdowns introduced in December 2020 and the continuing economic malaise . Several South African REITs will be facing the crunch decision of keeping prudent cash levels and potentially losing their REIT status , or paying distributions and depleting reserves even further .
GARRETH E . ELSTON Chief Investment Officer Rietway Global
We have already seen Redefine believing that it can retain its REIT status and not pay required distributions , and are awaiting the JSE ’ s ruling on the matter . Redefine will likely not be the only company facing this dilemma in 2021 . We therefore remain wary of SA REITs until South Africa starts to demonstrate a tangible way out of the COVID quagmire , this path is not clear yet .
Global REITs Global REITs are also still facing several issues this year but the outlook is more positive , driven by widespread vaccinations and quicker potential returns to normalised economic situations . Many Asian markets , New Zealand and Australia are already operating at almost normal levels , the USA , Europe and UK remain under pressure but there are rays of light emerging . The difficult questions facing large global landlords are primarily around the return to offices and malls , the stickiness of WFH , and will online shopping growth continue ?
The answers are still not clear , but the strength , diversity , incredibly low cost of debt , and liquidity of the global property sector should deliver good returns for South African investors .
4 FEBRUARY 2021 SA Real Estate Investor Magazine