Johannesburg - The JSE's real estate sector emerged as the top performer in global property markets in 2008, according to a new report.
The latest Global Listed Property Review from Cape-based Catalyst Fund Managers confirms that South African property stocks are proving more resilient to the global downturn than their offshore counterparts.
The report shows that listed real estate values in many stock markets across the globe took a major beating in 2008, as risk-averse investors bailed out of bricks and mortar and anything else associated with high levels of debt funding.
That saw the returns for the Global Real Estate Investors index, as measured by UBS Securities, plunge by -46% (in US dollar terms) in 2008. Australian property stocks were worst hit, losing 61.5% (in US$) in 2008. European, North American and Asian listed property markets fell by 53%, 39.5% and 37.5% (in US$) respectively over the same time.
Although SA listed property didn't escape the carnage entirely unscathed, the sector managed to outperform other countries, both in dollar and rand terms. SA property was down - 32% (in dollars) and -4.47% (in rand) in 2008.
The report highlights the fact that 2008 will be remembered as one of the worst years ever for listed property as a global asset class. Within the space of only 12 months, the combined market cap of the UBS global universe of listed property (excluding SA) lost a massive US$400bn in value.
On the local front, listed property pipped general equities for the fourth year running. SA listed property's total negative return of -4.47% (26.52% in 2007) for 2008 compares with to the all-share index's -23.23%.
JSE winners and losers
But property stocks didn't manage to beat cash and bonds. Investors who stashed their cash in money market accounts would have earned a total return of 11.7% in 2008, while bonds delivered a total return of 16.97%.
Despite the relatively weak performance of property stocks in 2008, investors who entered the sector five years ago are still sitting pretty. Catalyst figures show that an investment of R100 in the SA listed property index five years ago was worth R328.84 on December 31 2008. That translates into an annualised return of an attractive 26.88%.
The JSE's three top-performing property stocks for 2008 are Ambit Properties, Capital Property Fund and Growthpoint Properties with total returns of 17.25%, 6.55% and 5.25% respectively.
The three losers are Madison Property Fund Managers (-31.6%), SA Corporate Real Estate Fund (-27,74%) and Premium Properties (-23,16%).
It remains to be seen whether SA property will retain its lead on global property markets in 2009 and whether the sector will again outperform the Alsi. What is certain, though, is that the predictable income streams delivered by bricks and mortar investments should see listed property again prove itself as a defensive play.
Catalyst Fund Managers MD Andre Stadler says the market expects distribution growth of about 10% for the sector in 2009, which will be supported by contractual rental escalations and positive rental reversions.
Although that is down from 12% in 2008, listed property investors can still expect to see their income payouts rise by double digits in 2009, while cash and bond investors will not see any growth on their income.
- Fin24.com