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Property Investors Must Look Harder for Generous Returns

Listed property investors need to be more selective of the stock they choose to invest in this year. This is due to equities narrowing the gap on listed property towards the end of 2015, leading to much of the ‘easy money’ already having been made in the sector. Add to this a weak economy and more limited acquisition opportunities, and listed property companies face more difficulties in delivering strong returns.

There are a few success stories out there that paints a positive picture, such as the Mall of Rosebank which is set to boost Hyprop Investments, its parent company’s African operations. Hyprop invested in shopping centres in Ghana, Zambia and Nigeria through different partnerships.

Property Funds Merging

Capital Property Fund merged with Fortress Income Fund in 2015 to create an ultra mega fund worth over R50bn. Fortress B shares have also been enjoying a positive experience since its listing in 2009, and has now been the best performing stock on the exchange for two consecutive years. They could also still manage to bring market beating returns given how it dominates industrial listed property.

There are also more offshore funds that are expected to list on the JSE. Fewer South African funds are likely to join as they are dealing with the aftermath of a shoddy Rand and weaker economy. There may also be more consolidation of local funds, as opposed to new funds that join the exchange.

The Accelerate Property Fund could do well, as its Fourways Mall development grows. The Fourways suburb is enjoying great improvement, with residents of the suburb desiring and supporting the larger mall. The Resilient Property Income Fund had a great 2015 and could be set to repeat its impressive performance this year, as it has grown to become a company that lives up to its name. All in all, it is not as bleak an outlook for 2016 as the beginning of the year might have alluded to.

Image courtesy of : The World Property Journal

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