There’s a silver lining for South African real estate investors, despite the turbulence in the global markets.
Source: SA REIT Association. Chart Book 2025.
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.