Real Estate Investor Magazine South Africa November 2015 | Page 35

INVESTING

Listed REITS

REITs now outweigh retailers
and hospitality on the JSE

L

isted REITs (real estate investment trusts) have
become an increasingly important force in the
South African economy. Today REITs listed on
the JSE comprise 5.8% of the FTSE/JSE All Share
Index, making it a bigger sector than retailers at 5.7%
and healthcare 3.9%. This includes South African and
non-South African JSE-listed REITs.
Over the past year the market capitalisation of SA
REITs has increased around 43%, to around R340
billion.
Laurence Rapp, SA REIT Association Chairman,
notes this sector growth has been achieved in some of
the most challenging economic times South Africa has
faced.
“It’s tough out there. We’re dealing with low
economic growth, an electricity crisis and job losses,”
says Rapp. “We also find ourselves in a ‘schizophrenic
economy’, with the threat of rising interest rates, yet
there is global liquidity and low base yields.”
Despite this the REIT sector has etched out
an impressive growth trajectory, with its defensive
investment qualities, solid track record of performance
and drive for international best practice.
According to Ian Anderson, Chief Investment
Officer of Grindrod Asset Management, the listed
REIT sector raised about R25 billion in net equity over
the past year.
Anderson notes the monthly value traded in listed
REITs averaged R10.3 billion over the last 12 months.
This is a 25% increase over the preceding 12-month
period and 220% higher than five years ago. “The
average monthly trade was recently boosted after
several SA REITs were included in global equity
indices for the first time,” says Anderson.

www.reimag.co.za

In addition, investors have really started to recognise
listed property as a separate asset class. This sector has
significantly increased its base of investors, both local
and international, since introducing South Africa’s
REIT dispensation in 2013.
“Property is a long-term game,” says Rapp. “For
sustained success a focus on long-term value creation
is imperative for REITs. This is one reason the listed
property sector has continued to grow, especially over
the past dozen or so years.”
He adds with the sectors’ increased size and
economic impact, it is also bringing greater influence
to bear on all areas of business, from legislation and tax
to governance and social responsibility.

“Property is a long-term game.
For sustained success a focus
on long-term value creation is
imperative for REITs.”
“Investment has become a global arena, so the
listed REIT sector and our members strive to be on
par with international best practice. We are incredibly
proud to count member companies of the SA REIT
Association among the country’s leaders in important
areas of our economy and society, not to mention our
industry’s extensive contribution to South Africa’s
social infrastructure,” says Rapp.

RESOURCES
The SA REIT Association
NOVEMBER 2015 SA Real Estate Investor

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