South Africa listed property stocks bounce back despite unsteady global markets
According to Ian Anderson, head of Listed Property and portfolio manager at Merchant West Investments and the compiler of the SA REIT Association's monthly Chart Book, the local REIT sector is in significantly better shape today than it was five years ago.
Anderson draws a stark contrast between the present and the sharp downturn the sector experienced during the Covid-19 pandemic. 'The current turmoil in global financial markets comes almost exactly five years after the last major drawdown for South Africa's listed property sector, when the South African economy was shuttered at the start of the pandemic.
"Between March 2017 and March 2020, South African REITs, on average, lost more than 70% of their value - in the years since, the sector has clawed back nearly 68% in value (excluding dividends), though it remains more than 50% below March 2017 levels.'
Understandably, with fresh waves of political and economic uncertainty spreading across global markets, investors are questioning whether history might repeat itself. Anderson is quick to offer reassurance.
'Large drawdowns from current levels are highly unlikely,' he said, citing several key reasons. Firstly, South African REITs are trading at significant discounts to net asset value—unlike the premium conditions seen at the end of 2017.
"Secondly, the sector has spent the post-pandemic years strengthening its balance sheets through lower payout ratios, strategic asset recycling and timely equity capital raises. This has helped bring down loan-to-value ratios across most of the sector.
Fundamentals show resilience
Anderson said while economic growth may be sluggish or even turn negative, the context is vastly different from 2020. 'Economies remain open, tenants continue to trade and rents are being paid. That's a far cry from the conditions during April and May of 2020.'
He does caution, however, that short-term volatility is likely to persist, particularly as global headlines are dominated by geopolitical tensions and trade disputes - especially between the United States and China.
Beneath that noise, property fundamentals in South Africa continue to improve. 'Companies that reported results in March, including sector heavyweight Growthpoint Properties all reported improved trading conditions in their South African portfolios,' Anderson said.
Growthpoint, for example, has revised its guidance upward - from a decline in distributable income per share (DIPS) to expected growth between 1% and 3% for the year ending June 2025. The company saw a 6.2% increase in South African net property income for the six months to December 2024, while the V&A Waterfront recorded a 16.6% surge in like-for-like net property income, driven by increased tourism.
Other REITs are also showing positive momentum. Resilient exceeded its dividend guidance after posting a 7.5% increase in comparable net property income, while Hyprop Investments delivered improved results and raised its dividend payout ratio thanks to a healthier balance sheet.
While 2025 has so far been more subdued than 2024, Anderson maintains that the path forward for the sector remains promising. 'The improving property fundamentals in South Africa continue to point towards a return to net property income and dividend growth for the sector over the next two to three years,' he said. 'Investors should not lose sight of that.'
In his view, the South African REIT sector is not only stronger than it was five years ago - it's also better positioned to weather the uncertainty that lies ahead.
All rights reserved. © 2022. Bizcommunity.com Provided by SyndiGate Media Inc. (Syndigate.info).
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Zawya
24 minutes ago
- Zawya
India's June gold imports fall to two-year low as record price dents demand
India's gold imports in June fell 40% from a year ago to their lowest level in more than two years, as a price rally to a record high sapped demand, a government and two industry officials told Reuters. Imports to India, the world's second-largest gold consumer, fell to 21 tons, the lowest since April 2023, said a government official, who declined to be named as he was not authorised to talk to the media. In value terms, gold imports fell to $1.84 billion in June from $2.48 billion a year ago, the official said. In the past decade, on average, India imported 52.4 tons of gold in June. In the first half of 2025, India's gold imports fell 30% from a year ago to 204.1 tons, the lowest since the first half of 2020, when the COVID-19 outbreak led to lockdown, the trade ministry data showed. The rapid surge in prices has been discouraging retail buyers from making jewellery purchases, said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji. Domestic prices hit an all-time high of 101,078 rupees per 10 grams in June. Gold prices have risen 27% so far this year after rising 21% in 2024. Gold imports would remain subdued even in July, as demand is still tepid because of higher prices, Jain said. Silver imports in June nearly doubled from a year ago to 197 tons, but were significantly lower than the 544 tons imported in May, the government official said. In recent months, Indian investors, traditionally obsessed with stockpiling gold, are increasingly turning to silver , as its returns this year outpaced those of gold. (Reporting by Rajendra Jadhav Editing by Ros Russell)
Web Release
3 hours ago
- Web Release
Hikma, IFC sign $250mn deal, marking a 40-year partnership driving access to quality medicines in the MENA region
Hikma Pharmaceuticals PLC (Hikma), a multinational pharmaceutical company, and the International Finance Corporation (IFC), a member of the World Bank Group, have signed a $250 million six-year financing agreement focused on expanding access to medicines to support Hikma's operations across the Middle East and North Africa region (MENA), by strengthening local medicine production. This financing builds on IFC's anchor role in Hikma's $500 million, five-year bond issuance, which included a $50 million subscription from IFC. The latest investments mark another milestone in a 40-year partnership and reaffirm IFC's commitment to supporting Hikma's mission of providing high-quality, affordable medicines across key MENA markets. Over four decades, IFC has offered Hikma financing and advisory tailored to the company's growth trajectory and helping reinforce its operational resilience. In 2017, IFC extended a loan to facilitate Hikma's regional expansion and later, in 2020, provided a financing package that enabled the uninterrupted distribution of medicines across the MENA region during the COVID-19 pandemic. 'Our longstanding partnership with IFC has supported our expansion into new markets over the past four decades, most recently through the strategic $250 million loan and contribution to our $500 million bond issuance. This has allowed us to respond effectively to critical healthcare needs in the regional markets we serve.' said Mazen Darwazah, Hikma's Executive Vice Chairman and President of MENA. 'Our partnership transcends monetary transactions and reflects our long-term alignment and shared values on corporate governance and sustainability. Together, we have grown strategically while staying focused on what matters most; supporting our patients by addressing high unmet healthcare needs across the region.' Hikma operates in over 50 countries across MENA, North America, and Europe, reporting revenues of over $3 billion in 2024. The company's growth has been driven by investments in local manufacturing and a series of strategic acquisitions and partnerships with multinational companies aimed at expanding access to high-quality medicines. Hikma has been listed on the London Stock Exchange since 2005 and was recognised in the FTSE4Good Index for ten consecutive years for its sustainability performance. In 2012, IFC honoured Hikma with its Client Leadership Award in recognition of its achievements in sustainability and corporate governance. Khawaja Aftab Ahmed, IFC's Regional Director for the Middle East, Pakistan, and Afghanistan, added: 'IFC's 40-year partnership with Hikma continues to demonstrate what's possible when global development institutions and private sector leaders collaborate. Together, we've expanded access to high-quality medicines across emerging markets, enabling the company to grow into new territories and deliver critical medicine when it was needed most, including during the COVID-19 pandemic. Our recent engagements build on that strong foundation and open the door for even greater impact by supporting local medicine production and continued regional growth, despite ongoing conflict and uncertainty.' The 40-year anniversary of our partnership was celebrated at Hikma's Amman headquarters on 14 July, with senior leaders and partners in attendance to honour their shared commitment to building stronger, more resilient health systems across the MENA region and beyond.
Arabian Post
16 hours ago
- Arabian Post
Exports Collapse: South African Cars Shut Out of U.S. Market
South African vehicle shipments to the United States have plunged after U. S. import tariffs were escalated, posing a serious threat to jobs and industrial hubs across the country. Export volumes dropped by 73 per cent in the first quarter of 2025 and declined a further 80 per cent in April and 85 per cent in May, according to figures from the National Association of Automobile Manufacturers of South Africa. The tariffs, introduced under U. S. trade policy changes that began on 2 April and expanded in April and May, include a 25 per cent levy on cars, widened to cover auto components, and a looming 30 per cent rate on all South African vehicle imports from 1 August. These measures have effectively stripped away benefits previously enjoyed under the African Growth and Opportunity Act, under which U. S.-bound South African vehicles had duty-free access. Naamsa CEO Mikel Mabasa warned that the crash in exports is 'not just a trade issue – it's a socio‑economic crisis in the making', highlighting the potential for factory shutdowns and mass unemployment, particularly in assembly centres such as East London, where the industry forms the backbone of local economies. South Africa's auto sector accounted for 64 per cent of AGOA trade with the U. S. in 2024, generating 28.6 billion rand in revenue. ADVERTISEMENT The export decline has already begun, with only 1,703 vehicles and light commercial units shipped in the first quarter of 2025, compared to 6,840 in the same period of 2024—a drop of more than 75 per cent, according to BusinessLIVE. The situation deteriorated further in subsequent months, pushing total declines beyond 87 per cent in certain reports. Industry leaders warn that automakers such as Mercedes‑Benz South Africa may be forced to scale back operations, absorb rising production costs or even delay future investments. The wider supply chain feels the strain too; component manufacturers, logistics firms and related service providers are all facing potential closures and layoffs. Efforts to negotiate relief have so far foundered. A diplomatic proposal submitted in May envisaged a mutually beneficial trade package—including a duty‑free quota of 40,000 South African vehicles per year and duty‑free access for locally produced components—but it failed to prevent the August tariff imposition. Trade and Industry Minister Parks Tau confirmed in parliamentary responses that ongoing negotiations include broader requests, such as increased U. S. investment in South African liquefied natural gas in exchange for auto exemptions. South African President Cyril Ramaphosa has criticised the U. S. tariff rating as misguided, noting that half of U. S. exports to South Africa are untaxed and the remainder attract an average tariff of only 7.6 per cent. He remains optimistic that diplomacy can mitigate losses—stressing that the August 1 date could still bring modifications, contingent on negotiations. The broader economic impact is already being projected. South Africa's GDP growth estimate for 2025 was reduced by 0.3 percentage points to 1.2 per cent in May, a downgrade partly attributed to the fallout from these tariffs. The South African Reserve Bank has responded with a repo rate cut to 7.25 per cent, seeking to support domestic activity. With the U. S. set to enforce its tariffs under Section 232, targeting vehicles, auto parts, steel and aluminium, the South African rand has remained volatile—trading near 18 to the dollar—amid investor uncertainty. Meanwhile, South Africa is fast-tracking plans to diversify export partnerships, targeting markets in Asia, Europe, the Middle East and within Africa. Naamsa has called for government support to cushion the economic blow, including incentives for exporters and support schemes for affected workers. Industry analysts argue that while diversification holds promise, it cannot be implemented swiftly enough to offset the immediate losses from the U. S. market collapse.
