Real Estate Investor Magazine South Africa November 2013 | Page 16
COVER STORY
of investing in income-producing and capital
growth-generating property assets, including
a high level of current income, inf lationhedged income growth and long-term capital
appreciation.
Further benefits
There are a few other benefits to investing in
listed property that should be considered.
An investment in listed property will provide
individual investors exposure to the commercial
property sector, which may otherwise not be
possible. Thus, an investment in listed property
will provide individual property investors
with the all-important diversification in their
investment portfolio, not only across property
sectors but also across geographical areas, even
offshore.
Secondly, listed property investments are
highly regulated and tightly managed to
reduce risk and protect investors. For example,
listed property companies must conform to
significant disclosure levels and are managed
by professionals with experience to select the
best properties and manage these scientifically.
Of course, there are higher investment costs
associated with listed companies, but the level
of protection this option affords investors may
be worth the premium.
Thirdly, the investments are highly liquid
and investors can access to their capital at very
short notice, should they, for example, have an
opportunity to invest directly into a property.
Fu r thermore, an investment in l isted
property provides property investors with an
opportunity to share in the returns created by
investments in income-producing and capital
growth-generating property assets, but without
the management responsibilities that are part
and parcel of direct property ownership.
There is no doubt that, over the long term,
listed property is the star performer among the
traditional asset classes, which also include
equities, bonds and cash.
Over the past 14 years, the listed property
sector has outperformed other asset classes
eight times. The average return a year, over 10
years, has been 22%. Despite the recent bonddriven share price volatility on the JSE REIT
board, listed property in South Africa had a
14
November 2013 SA Real Estate Investor
“Over the past 14 years, the
listed property sector has
outperformed other asset
classes eight times”
rolled yield of over 7% for the sector as a whole
by the end of August 2013. And while the
sector’s short-term outlook remains cautious,
with income distributions expected to grow at
about 6% to 7% over the next 12 months, listed
property as an asset class could deliver total
returns of between 10% and 12% per annum
over the next five years.
a reputable stockbroker to select and acquire
shares on their behalf. Investors who do not
want to pick stocks can opt for Exchange
Traded Funds (ETFs), which simply track
market performance, or outsource stock
picking to experts by selecting a unit trust, such
as the STANLIB Property Income Fund.
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