SA ahead in global stakes
commercial property slowed to seven-year lows last year, our market still managed to deliver the highest return in the world, figures released last month by the Sapoa/ IPD South Africa Property index show. Direct investments in SA's commercial bricks and mortar- including shopping centres, offices and industrial property - de­livered a total return of 8,7% in 2009.That's still some way ahead of the next best global performer, Denmark, with a total return of 3,9% last year. SA's performance is in stark contrast to that of Ireland and the United States, which now rank as the world's worst performing real estate markets, deliver­ing negative returns of -23,5% and -17,5% respectively last year.
Although 8,7% is the lowest return recorded by the South African commer­cial property market since 2002 - and way down on the record return of 29,8% recorded in 2005 at the height of the boom
- SA has held up noticeably better than its counterparts offshore.
As far as sectoral performance is con­cerned, retail property just managed to pip industrial property to the post with a total return of 8,8% compared with 8,7%. Offices lagged slightly, with a total return of 8%.
Stan Garrun, MD of IPD SA, says SA has delivered the highest nominal return of the 11 countries that have already published their 2009 results. Even if SA's relatively high inflation rate is taken into account, the real returns delivered by the local property market still compares favourably with that of its international peers, says Garrun."Given the state of the domestic economy and the relationship between the national real estate market and the wider global downturn SA's real inflation-adjusted total return is still remarkably resilient."
Virtually all commercial real estate markets measured by IPD fell into negative territory over the past two years, including the United States, Canada, Australia, New Zealand and Japan.The British market - the first to be hit by the credit crisis and global recession -finally appears to be in recovery mode, with a return of 3,5% recorded last year.
Throughout the rest of Europe, 2009 annual returns published so far have been broadly positive.The notable exception has been Ireland, with a negative return of -23,3%. The Netherlands returned -0,2%, while Denmark (3,9%), Finland (3,8%) and Sweden (1,4%) managed to deliver positive returns last year. Canada, Australia and New Zealand remained in negative territory, with returns of -0,3%, -2,2% and -4,1 % respectively.
It's not only SA's directly held com­mercial property market that's holding up better than its counterparts worldwide: the JSE's listed property sector is also ahead in the global stakes. Latest figures from Catalyst Fund Managers show SA's listed property index was up 9,86% (in rand terms) in first quarter 2010, compared with an increase of 3,58% for the global real estate investors index, as measured by UBS Securities. South African listed property also outperformed in US-dollar terms, with a return of 11,51% in first quarter 2010 against the global average of 5,14%.
— Total Return
15-year average