The combined market value of South Africa’s real estate investment trusts (Reits) has breached the R300bn mark, circling back to the position they last held in 2019, before Covid upended years of market gains. In November, Reits recorded a 9.1% total return, following October’s 10.8% surge and significantly outperforming equities, which returned 1.7%, and bonds at 3.4%, according to the South African Reit Association. “The sector’s momentum remains firmly intact.
Strong and accelerating dividend growth, combined with lower interest rates and long bond yields, has driven a sharp narrowing in the discounts to net asset value that emerged during the Covid-19 pandemic,” said Ian Anderson, head of listed property and portfolio manager at Merchant West Investments and compiler of the monthly South African Reit Chart Book. The gains signal that the sector is no longer simply recovering. Having crossed the red line, Reits are now firmly on a growth trajectory, anchored by stronger dividends, healthier balance sheets and measurable operational improvements.
The performance mirrors the broader South African property market, which has outpaced the global sector by 44.7% over the past year, according to Global Property Research. The rally has been building steadily. Growthpoint’s share price has surged more than 30% this year, buoyed by improving office vacancies, new developments — which include retail, logistics, and mixed-use projects — and its secured right to co-invest in and develop the Cape Winelands Airport precinct.
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Redefine has trailed Growthpoint with a 26.59% gain in its share price, propelled by a resilient industrial portfolio, as demand for modern logistics facilities shows no signs of slowing. Meanwhile, for retail-focused Reits, Vukile’s share price hovered around 27.7%, driven by strong Spanish gains in Eastern Europe and its local defensive malls in rural township regions. Hyprop, another retail-focused Reit, rose 17.7%, trailing Vukile, as this year saw a clear trend of smaller shopping centres outperforming large super-regional malls, which make up most of its portfolio.
Since end-May 2024, South African Reits have reported a staggering 84.3% return, shrugging off earlier headwinds from high interest rates and load-shedding. “Most companies are now reflecting this in their outlooks. Medium-term distributable income is expected to grow 6%-8% a year over the next three years, supporting current valuations. Investors can continue to expect low double-digit returns from the sector over the medium term,” Anderson said.
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