The SA listed property sector has not risen on the new positive outlook for South Africa, like other SA Inc. sectors, such as the banks and retailers. Concerns around the Resilient group of companies (which consists of Resilient, NEPI Rockcastle, Fortress A&B as well as Green Bay, with a combined weight of 40% on the SA Listed Property Index (SAPY) at the end of 2017) resulted not only in a sharp sell-off on these companies, but also a negative impact on sentiment towards the sector as a whole since the start of year. The SAPY is down 20% in the last two months.
Excluding the Resilient group, the SAPY is yielding around 8% and is forecast to grow approximately 8% to provide a possible return of 16% for the year. We view the property sector as high risk and it should only form part of an aggressive investment portfolio.
The Nedgroup Property Fund avoided the Resilient collapse and is well positioned to benefit from a positive economic outlook for South Africa.
See Nedgroup Property Fund comments here.