SA vs global property companies

African listed property companies have outperformed the rest of the globe for the 1st quarter of 2010, by posting an average 9.7% total return. In its quarterly review the GPR 250 Global Index lists the Americas as the second runner up at 9,0% over the same period. The worst performer was Oceania, which includes Australia and New Zealand at -1.5%.

Netherlands based Global Property Research, tracks 250 of the most liquid property companies in the world. All eight of the African companies tracked by GPR are South African. The top performers in the Africa Index were Hyprop Investments, Redefine Properties, Growthpoint Properties and Pangbourne Properties.

GPR's figures indicate a strong turnaround in total returns across the board over the past 12 months, but pessimists have warned that the upswing won't last for the US and Asia. The Americas and Europe have seen the most significant improvements at 104.1% and 70.8% respectively, with a global average of 73.3% over the last year. In this race Africa is at the bottom of the leader board, averaging only 25.4% over the past 12 months, but unlike the rest of the world, the growth in total returns has been steady for the continent.

When looking at the three year average, the picture changes significantly and sees Africa as the only continent posting a positive total return at 31.7%. This should be encouraging for investors, considering that this period includes two of the most difficult years in the South African property market since the transition.

The ravages of the subprime crisis is evident in the global three year figures of -38.7%, yet listed property companies in the Americas where not the hardest hit. Oceania (Australia & New Zealand) companies saw total returns take a -51.8% knock over the three years, while Europe faired second worst at -47.1%. Total returns for Asian companies were at a -38.7% average and the Americas at -30%.

At home several asset managers and property analysts have become more bullish about listed property in the past few weeks, all believing that South African commercial property is headed for the peak of the rental vacancy cycle by the final quarter of the year.

If the latest house price indices from South Africa's three largest banks (Absa, FNB & Standard) are anything to go by, it seems that the local property market has finally turned a corner. The indices indicate a slight year on year increase in real house prices for the first time since the 20% house price decline from March 2008 to July 2009.

The jury is still out on whether this is the end of the property market downturn, or just a temporary reprieve.

Article by: